Why Stablecoins Matter: Liquidity, Investment, and the Future of Crypto Regulation
Stablecoins — the programmable digital assets tied to an underlying asset such as fiat or commodities to maintain stability — are sure in the news lately. According to a December 2024 Chainalysis report, “Stablecoins 101: Behind crypto’s most popular asset,” stablecoins have represented “more than two-thirds of the trillions of dollars worth of cryptocurrency transactions recorded in recent months.”
Stablecoins haven’t lost momentum, either. As blockchain analytics firm Glassnode reported on February 11, the stablecoin market has risen in value, gaining another $16.97 billion in 2025.
Why is this important? Well, stablecoins provide liquidity and serve as a crucial medium of exchange to bridge transactions between traditional finance and the crypto ecosystem. They also play an essential role in cross-border payments.
Plus, greater amounts of liquidity can reduce slippage risk, which can attract more institutional investors. As a February 2025 Forbes article titled “Stablecoin Surge Signals a Rubicon for Institutional Crypto Investment” shares, increased trading has occurred in conjunction with this boost in stablecoin supply, “signaling heightened market sentiment and investor confidence.”
Chainalysis notes one missing piece, though, in the U.S.: clear stablecoin regulation to reduce remaining uncertainty. Fortunately, the 119th Congress is prioritizing stablecoins in their efforts to legislate a regulatory crypto framework. The House of Representatives has proposed the STABLE Act, which would give the OCC the “authority to approve and supervise federally qualified nonbank payment stablecoin issuers.” The Senate, meanwhile, has proposed the GENIUS Act, which would address stablecoin issuer oversight at a state or federal level in ways similar to banking regulations.
Assuming that, through Congressional debate, stablecoin legislation gets passed and signed into law, the concern by Chainalysis should be effectively addressed, opening up brand new potential — for stablecoins, specifically, and crypto investments, more broadly.
