In the first half of 2025, stablecoins solidified their dominance in institutional over-the-counter (OTC) cryptocurrency trading, accounting for 74.6% of all spot transaction volume. This marks a dramatic rise from just 46% in the same period the previous year and a mere 23% in 2023. According to data analyzed from over 4.1 million OTC trades between January and June, stablecoins have become the preferred medium for institutional players navigating the digital asset landscape.
The surge underscores a broader shift in market behavior: institutions are increasingly favoring fiat-pegged digital currencies for settlements, hedging, and cross-border transfers. Overall OTC spot volume grew by 112.6% year-over-year, while the number of individual trades rose by 57.6%—indicating both higher transaction values and growing participation.
Explosive Growth in Stablecoin Transaction Volume
Stablecoin transaction volume skyrocketed by 154%, far outpacing the 48.5% growth seen in general crypto-to-crypto trading. Even more striking was the 277.4% surge in flows from volatile cryptocurrencies into stablecoins—a clear signal of risk mitigation and capital preservation strategies among institutional investors.
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This shift reflects growing confidence in stablecoins as reliable, efficient, and programmable alternatives to traditional fiat rails. Their ability to settle transactions nearly instantly—without intermediaries or banking delays—makes them particularly attractive in fast-moving markets.
USDC Leads the Charge with 29x Transaction Growth
Among all stablecoins, USDC (USD Coin) emerged as the standout performer, recording a staggering 29-fold increase in transaction volume during the first half of 2025. Analysts attribute this surge to several factors, including regulatory clarity surrounding Circle, its issuer, and evolving compliance standards in key markets like Europe.
The upcoming MiCA (Markets in Crypto-Assets) regulation in the European Union has prompted many exchanges and financial institutions to reassess their stablecoin offerings. As a result, some platforms have begun delisting or deprioritizing non-compliant or less-transparent alternatives—most notably Tether’s USDT, USDC’s primary competitor.
While Bitcoin and Ethereum remain core holdings in institutional portfolios, their combined share of OTC volume dropped relative to stablecoins. Altcoins such as Cardano (ADA), Litecoin (LTC), Solana (SOL), Tron (TRX), and XRP also gained traction, collectively capturing 16.7% of OTC volume—highlighting diversification beyond the top two digital assets.
Institutional Adoption Drives Innovation and Investment
The growing reliance on stablecoins has catalyzed a wave of product innovation and strategic acquisitions across the fintech and crypto infrastructure space.
- Stripe, the global payments giant, acquired blockchain-based payments infrastructure provider Bridges for $1.1 billion, shortly after launching blockchain-powered treasury management tools.
- Legacy financial institutions like JPMorgan and Fiserv announced new initiatives focused on stablecoin integration and tokenized asset settlement.
- Venture capital continues to pour into the sector: Galaxy Digital raised $175 million for a DeFi and stablecoin-focused fund, while startup **Ubyx** secured $10 million to develop a next-generation clearing network.
These developments signal a maturing ecosystem where traditional finance and decentralized technologies are converging—driven largely by the utility and scalability of stablecoins.
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Core Keywords Driving Market Trends
Key themes shaping this transformation include:
- Stablecoin adoption
- Institutional OTC trading
- USDC growth
- Fiat-pegged cryptocurrencies
- Blockchain settlement
- Digital dollar
- Tokenized assets
- Crypto market liquidity
These keywords reflect both investor behavior and regulatory momentum, especially as governments explore central bank digital currencies (CBDCs) and clearer frameworks for private stablecoins.
Risks Amid Rapid Expansion
Despite the optimistic outlook, experts warn that rapid growth brings systemic risks. Konstantin Shulga, CEO and co-founder of market analytics firm Finery, cautions that increased reliance on multiple stablecoin issuers could lead to market fragmentation and amplified contagion risks.
“As more stablecoin issuers emerge across different blockchains, the potential for market splits and risk escalation grows,” Shulga said. “A depegging event at one issuer could trigger a broad run on others, significantly expanding systemic exposure.”
He emphasizes that secondary market liquidity must grow in tandem with issuance rates to act as a buffer during volatility or confidence crises. Without deep, resilient markets, even minor shocks could cascade into larger instability—particularly if redemptions spike during periods of macroeconomic stress.
Regulatory Outlook and Future Projections
U.S. officials have expressed strong support for the dollar’s dominance in digital finance. Treasury Secretary Scott Bessent recently projected that the dollar-pegged stablecoin market could exceed $2 trillion by 2028, especially if favorable legislation is enacted to reinforce regulatory clarity and consumer protection.
However, not all forecasts are bullish. Analysts at JPMorgan have offered more conservative estimates, citing regulatory uncertainty outside the U.S. and competition from emerging market CBDCs.
Frequently Asked Questions (FAQ)
Q: Why are stablecoins so popular in OTC trading?
A: Stablecoins offer price stability, fast settlement, and global accessibility—making them ideal for large-volume institutional trades where minimizing volatility during transfer is critical.
Q: What caused USDC’s 29x transaction growth?
A: Increased trust due to regulatory compliance, transparency audits, and MiCA-driven shifts in Europe have boosted institutional demand for USDC over less-transparent alternatives.
Q: Are stablecoins safer than other cryptocurrencies?
A: While generally safer due to their pegs and reserves, they still carry risks—especially related to issuer solvency, regulatory actions, or sudden loss of confidence leading to depegging.
Q: Could stablecoins replace traditional banking rails?
A: They’re already complementing them—especially in cross-border payments. Full replacement depends on scalability, regulation, and interoperability with legacy systems.
Q: What happens if a major stablecoin loses its peg?
A: A depegging event can trigger panic selling and withdrawals across multiple platforms. Strong reserve backing and deep secondary markets help mitigate such risks.
Q: Is the rise of stablecoins good for crypto overall?
A: Yes—it brings institutional capital, improves liquidity, and enhances usability. However, it also concentrates power among a few issuers, raising concerns about centralization.
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Conclusion
The first half of 2025 has cemented stablecoins as the backbone of institutional crypto activity. With USDC leading a historic surge and OTC volumes multiplying, the trend points toward a future where digital dollars play a central role in global finance. Yet as adoption accelerates, so must safeguards—ensuring liquidity depth, transparency, and resilience keep pace with innovation.
For investors, institutions, and policymakers alike, understanding the dynamics of stablecoin growth isn’t optional—it’s essential to navigating the next phase of financial evolution.