Join Glenbrook’s Russ Jones and Ashley Lannquist for a detailed discussion on the state of stablecoins, focusing on market developments, regulatory and policy impacts, usage patterns, and competition from other improved payments systems.

Learn more about the stablecoin landscape in our 2-hour, self-paced course, Stablecoin Essentials.

 

 

 

 

Russ Jones: Hello, I’m Russ Jones, a partner at Glenbrook and your host for Payments on Fire. Welcome to another Fanning the Flames, where we convene some of the Glenbrook team to discuss hot topics in the payments industry. For this episode, we’re going to look at stablecoins. What developments caught our eye in 2025, and what we’re watching for 2026.

Joining me in this episode is Ashley Lannquist, who joined the firm last fall. She’s worked in the digital currency space for a number of years and we’re excited to have her on the Glenbrook team. Hello, Ashley. I’ve been looking forward to this discussion since we came back from the New Year’s break.

Ashley Lannquist: Hi, Russ. Likewise.

Russ Jones: Good. Can’t tell you how much I’m interested in your perspective on some of these things. I have my own thoughts about what were the key developments, and I look at stablecoins as a payments professional, not as a cryptographer, not as a blockchain technologist, but just where does it fit in the payments industry, and I’m watching it pretty closely as you know. You and I spent a fair amount of time last fall sending money back and forth to one another and it helped me a lot sort of come to grips with how a lot of these things work.

Just thinking about the major things that happened in 2025, what’s your top take on the key development last year, if you will?

Ashley Lannquist: There was a lot of political tailwind in support of stablecoins and cryptocurrencies last year, I will say that. So the GENIUS Act was approved in the summer. This provided clear guidance to stablecoin issuers about the requirements they have, new requirements to 100% back customer reserves, for instance, and a couple other measures. And that provided some clarity to the market, the stablecoin issuers, and in general with the administration, there’s regulatory support in tailwind across cryptocurrency, including stablecoins.

That’s been a major development and there’s been continued growth in the market cap of stablecoins. It’s over $300 billion now. Tether, which has, for a long time, many years, been the largest stablecoin issuer with USDT, a US dollar backed stablecoin, the market cap of that stablecoin is now $187 billion. It’s about 60% of the stablecoin market cap.

And Russ, I remember having conversations with folks back when I was at the World Economic Forum. I was on the digital currency blockchain policy team. And we were thinking at a $10 billion market cap, regulators might start to want to scrutinize Tether a little bit more. And we remember when the stablecoin market cap hit 10 billion, 20 billion, 50 billion, and now it’s at 300 billion. So the market is huge and continuing to grow.

USDC by Circle is still the number two stablecoin. It’s about 24% of the stablecoin market cap. And then we have a proliferation of a lot of small, smaller size, single million dollar, couple hundred million dollar stablecoins on US dollar backed side, and a couple other new currencies.

Russ Jones: When I think about the size, the capitalization size, first of all, when you talk about capitalization and stablecoins, they’re not talking about stock market capitalization, right? They’re talking about how many, what’s the economic value of the stablecoins that have been issued.

I guess coming in from the outside as a payments person, that’s typically not something you think about, right? Like if you asked me, what’s the amount of US dollars circulating in the economy? I’d be like, gee, I don’t know, a lot? And while these numbers have gotten big, it’s a very stablecoin specific thing, I think, that people worry about the market cap of these things.

And it’s interesting that you’re already highlighting different stablecoins. Even though both of the two that you highlighted are pegged to the US dollar, these are different things, USDC and USDT. I wonder your perspective on, you see a lot of different issuers, particularly after the GENIUS Act made it legitimate, if you will, offered clarity, offered all these types of things, but really made it legitimate to issue stablecoins.

One of the big trends I saw last year was just a wild proliferation of the number of stablecoins. And it’s like every payments provider in the world now wants to have their own stablecoin. Even the state of Wyoming wants to have its own stablecoin. There’s something like well over 100 of these different stablecoins. Is that a ballpark number right or is it more than that these days?

Ashley Lannquist: Yeah, it’s certainly the case that there’s so many stablecoins coming out now and a lot of new issuance. And I’m going to pull it up on DefiLlama.com, not endorsing them, but they have the best data for stablecoins. And I’m scrolling down, there’s, I think, three hundred and thirty, three hundred and twenty-nine stablecoins now. A lot of them are of course, very tiny, a couple thousand dollars on the very small end.

What I will note is that you need to go down pretty far already to get to non-US dollar stablecoins. The first stablecoin that’s not US dollar is Russian ruble backed. It’s called A785.

Russ Jones: That’s obviously a Russian marketing thing, right?

Ashley Lannquist: It has a market cap of $500 million. It’s mostly transacting over Tron. I’ll digress to just quickly highlight that these stablecoins, they generally don’t have their own blockchains themselves. They are sent over other blockchains. So USDC for instance, and Tether, they could be sent over Ethereum. They could be sent over Solana, depending on what the stablecoin is. Tron is another one.

And A785, by the way, is responsible for a substantial amount of sanctions evasion. According to Chainalysis, a research firm, last year, I think about $90 billion they quoted in sanctions evasion through that ruble backed stablecoin.

But I bring that up simply to mention that you have to go down the list a while to get to non US dollar stablecoins. That’s number 21 on the list.

Russ Jones: For my sort of immersion in the world of stablecoins last year in 2025, the two big things that really struck me were how US dollar pegged the world of stablecoins is, and if we step out of stablecoins for a second back into the real world, most of the real world doesn’t transact in US dollars.

US dollars is a big part of the real world of payments, but it doesn’t dominate the real world of payments the way it dominates stablecoins. So that was like a big wow. In a lot of ways, it’s kind of amazing and I’m sure there’s a lot of thought that people, a lot of theories about why it’s developed that way. But that’s what it is. I’ve also seen a lot of backlash around the world of countries wanting to not be so, if you’re pro stablecoins, do we have to be pro US pegged stablecoins? So there’s been a lot of development in that area.

The other thing that really surprised me was how simultaneously big and small the transaction volume is, right? It’s like the stablecoin advocates, in layman’s terms, have you believe stablecoins are on track to be as large as the Visa transaction volume in a very short amount of time. And when you peel back the onions, peel back the different layers of the onion, I think a lot of people are realizing now that that transaction volume is not economic volume, it’s more mechanical volume. It’s stuff in the back office, if you will.

I just saw a report yesterday, I think from McKinsey that they concluded that stablecoin volume that was represented economic value movement of pegged funds from one end party to another party was about two basis points of stablecoin volume. The absolute numbers are really big, but they don’t really represent the transfer of value between end parties, which is economic value.

Ashley Lannquist: I really liked this new report as well from McKinsey and Artemis Analytics. And they had come out with similar information in the past, but this time around they seem to clarify that while the number they gave as of, the report came out this January, is $390 billion of real economic payment activity in stablecoins.

But as you said, that’s less than 1% of global payments activity. They did point to stablecoins being used in B2B transactions between companies who want to make the same day transactions that they may find lower cost or faster on stablecoins. And there was a little bit as well in remittances and usage in global payroll transactions. But each of these, B2B payments and payroll and remittances, were also each less than 1% of the payments activity happening, within the actual payments landscape itself.

So this number 1%, I’m using a lot, so let me clarify. These actual use cases, B2B payments, payroll, remittances, stablecoins are constituting less than 1% of the vehicle of payment being used. But also what you started off to say is that real payments activity happening within stablecoins, within the substantial amount of all, the entire volume of stablecoin activity, less than 1% is real payments, and a lot of it is large trading activity in terms of the dollar values, the payments volumes, it’s trading activity.

It’s automated bots who might use smart contracts to trade across different exchanges with stablecoins. It’s exchanges and custodians who are holding large pools of stablecoins and moving money between their accounts. And it’s a lot of defi, decentralized finance, blockchain native trading activity.

And I’d like to bring this back to why I think so much of stablecoin is US dollar denominated. These activities, they’re happening in USD stablecoins, they’re not being motivated by real payments. Only 1% according to this data is real payments. So they’re not trying to find payment solutions for countries in local currency. They’re doing cryptocurrency trading activity or moving money already within the dollar.

These traders and the holders of these large amounts of stablecoins, they like the liquidity of US dollar stablecoins. They’re predominantly in Tether right now anyways. They like the yield that some of the stablecoins, US dollar stablecoins provide, depending on where they’re invested.

The largest Euro based stablecoin, it’s number 27 in the ranking right now. Market cap, it’s a couple hundred million. It’s called EURC. So it’s only a couple hundred million dollars compared to how large Tether is at 187 billion and Circle at upwards of 70 billion.

And the EU regulators have been quite concerned and regulators around the world about the usage of US dollar denominated stablecoins in their economies, because of the effects that it can have, let’s call it dollarization or currency substitution. They’ve been quite concerned and they’re trying to, in a way, promote the private sectors in their economies to create stablecoins in their economy. Euro, Singaporean dollar, or whatever it is, so they can help support the development of these non-US dollar stablecoins.

But yet, we don’t actually know how much of those will be used in the economy. We have Euro stablecoin available and look how little it’s being used. We need to see that the stablecoins are actually being used for real payments, rather than investing where it’s really the liquidity and the returns that people are going to choose and the access.

Russ Jones: One of my early conclusions here, and this would be a 2025 thing, is we haven’t seen the real use cases yet for stablecoins. We’ve seen a lot of, it fits here, it’s good in markets that have volatile fiat currencies, it’s good for moving funds between cryptocurrencies. These are all pretty isolated use cases, I think. They’re not what I think of as mainstream payments use cases.

So I’m wondering, if we look forward to 2026, the thing I have my eyes peeled on is not so much the infrastructure stuff going on, but where will we really see actual real world usage between everyday people or generic businesses doing things in stablecoins. And it’s not clear yet where that’s likely to be.

The one exception I would, not exception, but the one caveat I would make to that is it’s pretty clear to me that stablecoins are not a domestic economy type of phenomena. People aren’t going to buy hamburgers on Saturdays with stablecoins when they could be doing it with a debit card, in my opinion.

Where I think it is interesting and perhaps we will see some use cases is in cross border, cross border transactions. And that’s one of the strengths is stablecoins are built on blockchains. Blockchains are built on the internet. The internet’s global. Everything sort of flows, in a lot of ways. But even then, the key to keeping stablecoin payments cost effective is to avoid the obvious currency exchange fees moving in and out of different currencies as you go. The famous on-ramp fees, off-ramp fees, toggling between different currencies to meet the needs of different real world businesses.

You’re dealing in US dollars and your supplier is dealing in Singapore dollars and they demand to be paid in Singapore dollars. The world of stablecoins says it’d be a lot more cost effective if we just stayed in US dollars, and that’s absolutely true. But as we start to see global use, I think we’re going to run into a lot of FX fees.

Ashley Lannquist: Yeah. And this came up with our Payments on Fire with MANSA on November 5th as well. The usage of stablecoins itself, there’s still an FX operation if you actually have to move between two currencies. And so if there’s a high cost remittance corridor or retail payments corridor between two countries, often one of the big drivers of that cost is the foreign exchange component because one currency may not be as liquid as the other.

And that doesn’t go away with the usage of stablecoins unless you’re sticking within US dollar, as you said. And that is the same axiom as would hold in all other payment transactions and global trade, right? So moving from a stablecoin to a US dollar to Singapore dollar, you still have to exchange those base currencies.

I would like to add to ground this a bit, remind the audience about how stablecoins and blockchains and cryptocurrencies technically work, because it has an impact on cost. So every time a cryptocurrency moves over a public blockchain, which these stablecoins are doing, they’re moving over Ethereum, Tron, Solana, and Stellar and others, there is a public, open network of validators validating these transactions. That’s how public blockchains work, and those validators need to be compensated.

And the amount of validators that are in the pool doing this activity and the amount of security that the network has, meaning the validators finding it costly for them themselves to perform a legitimate transaction than pay themselves. That amount of security and that amount of decentralization or number of validators will directly drive up the price of the network transaction fee that the user must send and pay to send the cryptocurrency over the public blockchain.

Every single stablecoin transaction has a transaction fee, which is to compensate this public network of validators. And I think that’s the number one reason why we won’t see stablecoins and we have not for several years, despite stablecoin issuers being confident that this will happen. We have not seen them being used for domestic transactions unless it’s over blockchains that have a low amount of validators and a lower amount of security.

So Ethereum, for instance, is expensive to send transactions because it’s higher on security and higher on the amount of validators. That’s why it’s more expensive and that’s why it’s not being used as much as some other blockchains for sending transactions. So I just want to remind about this.

This ends up being a practical concern to the users. They’re going to have to pay a fee for every single transaction. And in cross-border transactions, that might be more worthwhile because you’ll often send a fee to the money transfer operator anyways. But for domestic, we are not used to paying these domestic transaction fees, and it’s unclear whether users are going to be willing to do that.

Russ Jones: I was talking to a colleague, actually one of our clients, about stablecoins last year, sharing with them my take on it and where they perhaps might evolve towards and fit. We were talking about stablecoins and cross-border supplier payments. And his immediate reaction was, oh, I understand the benefit for me to do this. It gives me an opportunity to shift all the FX cost for me over to my supplier. That makes sense.

If you have the ability to do that, if the supplier says, in the example I used, I need to be paid in Singapore dollars, you’re able to say, I’m not going to pay you in Singapore dollars, I’m going to pay you in a USD pegged stablecoins. Stablecoins have all these advantages. They’re instantaneous, 24 by 7, all this. And if you want it in Singapore dollars, you can convert it to Singapore dollars. It’s up to you.

When you say that, it sounds very accommodating and very flexible. But what you’re really doing in an economic sense is you’re shifting your cost to your receiver. So we can’t get away from economics and fees in the world of payments.

Ashley Lannquist: Exactly. There’s no free lunch, as the economists would insist on. And I’d like to also take the opportunity to look a little bit closer at a couple arguments that are often used out in the market about stablecoins, benefits for cross-border payments, because I think that the other side to these arguments are not often expressed.

So for instance, it’s often said that stablecoins allow US dollar access if it’s difficult to get in certain markets, or it allows effectively this circumvention of capital controls, people who can’t get their money out of a market, or third, it’s often said that it’s providing a helpful line to people whose currencies are unstable. While it might help do these things, looking a little bit closer, some of them are problematic from a legal perspective and some of them economically, I’m not sure how long stablecoins are going to be offering a lot of value.

So, for instance, meeting interest in access to US dollars by citizens in a country, the US dollar, it’s a publicly traded asset and foreign currency providers sell US dollar all around the world. So if there really is high demand for US dollar in a certain country, we can question a little bit why the market isn’t meeting this demand in the traditional financial world. So that’s just one aspect. Because it often gets said that the stablecoin is providing the access when otherwise it’s not available.

And in some countries, there might be a capital control restriction where someone can’t move out of their currency into the US dollar because there’s a limit on how much currency they can move out, local currency they can move out of. So saying that stablecoins helps solve that, it really means that the cryptocurrency exchange in that country is allowing circumvention of the capital controls in a way that probably isn’t legally permissible because someone is loading their money from a bank account onto a cryptocurrency exchange and moving it from the local currency into a stablecoin, right, to a non-local currency stablecoin.

So maybe that’s available, that’s probably available today, but for how many more years? And is that a good thing when the capital controls might be enacted from a public policy perspective for a certain reason, right.

And then in terms of accessing stable US dollars, that can also be valuable for people, of course, in high inflation environments, but at a large scale, similar to the circumvention of capital controls, we don’t want, the policy makers, the central banks in those countries wouldn’t want a flight out of their domestic currency into US dollar or Euro because it would weaken their own currency and make it harder to manage, which would make it harder for them to manage the economic cycles in their economy and conduct monetary policy.

So I’ll just mention those three items, a bit on the nerdy side of things. But these kind of statements get thrown out broadly without looking a little bit closer, often.

Russ Jones: Yeah. The other thing, stablecoins to their credit, have made a lot of gains. They’re baked into a lot more infrastructure than they used to be. They’re becoming, a lot of what you think of as mainstream payment processors are offering stablecoin components to their solution set. All the major PSPs, Stripe and Worldpay, Visa, Mastercard, they’re all doing things in stablecoin. So there’s a lot of stuff going on there that contributes towards stablecoin momentum.

But the thing that always strikes me is that nobody gets to act in the market by themselves. The marketplace is full of actors and they’re all trying to do things better to close product gaps, to make things faster, and make things cheaper. And so the rise of stablecoins, such as it is, isn’t really happening in isolation. It is not in reaction to the way the payments industry was five years ago. The reality is it’s competing in the payments industry of today. And there’s a lot of trends that are not stablecoin trends that, in my sort of estimation, sort of eat away at the stablecoin value proposition. And I’ll just share you a couple examples here.

You’ll oftentimes see stablecoins compared to sending an international wire. International wires have gotten a lot faster. They’ve gotten a lot lower cost. Those are both things that stablecoins fix, if you will, on cross-border payments. I was sort of impressed when Swift announced at their Sibos conference last fall that 75% of international wires arrive at the recipient bank in 10 minutes. The conventional sort of assumption was this was all four to seven business days. 10 minutes is, it’s not instantaneous, but it’s pretty fast.

And then, you would say skeptically, yeah, arrive at the bank, but then they have to be processed for. They have to go through all sorts of risk screening and compliance and anti-money laundering reviews and stuff like that before they’re released to the end user. Well, so do stablecoins, really. I don’t think stablecoins are immune to financial regulation. It’s not that every regulation applies to the world of stablecoins, but in my estimation, a lot of it does.

So wires are getting fast. The average cost for a Fortune 500 companies send a wire is like six and a half dollars. It’s starting to get down into the stablecoin network fee range in some cases.

The other thing that’s a deliberate trend, not just an accidental trend, but fast payment systems all over the world are proliferating, moving money instantly between bank accounts and fiat currency and in almost every major domestic market in the world. And they’re starting to interconnect. So you can do instant payments that will require an FX conversion from one market to another market, going from bank account to bank account.

So you know the opportunity space is not as wide open as it was five years ago, I think, for the world of stablecoins.

Ashley Lannquist: And I think we can keep in mind when cryptocurrencies were developed, starting with Bitcoin, when stablecoins were developed back in 2014, 2013, through the likes of MakerDAO and then Tether coming out, the objective wasn’t to have these being used as the dominant payment system of the world, right?

They had very specific objectives. Cryptocurrency and Bitcoin were a peer-to-peer means of payment without needing to use banks. But there’s a cost. That cost is decentralization, needing to pay these validators in order for the system to be secure. It wasn’t and throughput, right? Only one block every 10 minutes will ever be passed through the system. Each block only has about 2000 transactions ever, and no amount of additional computing power is going to change that. It’s programmed in, for security purposes and by design.

When stablecoins came out, it wasn’t like, we’re going to provide a payment system for the world. It was, okay, now we’re going to have price stabilized cryptocurrency for use within the cryptocurrency ecosystem. And then we got to thinking about how we can use this in defi investing and as a one side of a trade within a cryptocurrency trade. So in a way, the cryptocurrency side wasn’t intending to make this large scale widespread usage, but industry itself has picked up on this and there’s a lot of optimism about how it perhaps it could be used. But that wasn’t even necessarily the original intention.

Russ Jones: Actually, if you go back into the Payments on Fire Archives, episode number one in Payments on Fire was about Bitcoin. At that time, payment professionals were hugely impressed by Bitcoin. I mean, it just had some remarkable innovations that had been thought out, it had a lot to admire about it.

But the two big criticisms, from just a payments point of view, were why does it have to be so slow, speaking to the transaction throughput of the original Bitcoin model, and then, why does it have to be based on fabricated currencies? Why can’t it be real world currencies?

And I think stablecoins are a step in that direction of addressing those two issues to some extent, but the ultimate goal for a lot of people is not private currencies pegged to a fiat currency, but to have the fiat currency really be digital, and that’s what Central Bank Digital Currency’s all about.

So, where do you see Central Bank Digital Currency fitting in the stablecoin world?

Ashley Lannquist: Thanks, Russ. For the audience, I come from CBDC land. I started at and led the CBDC work at the World Economic Forum for a handful of years. And then I was working on that at the IMF prior to Glenbrook. So this is more of my sweet spot, in addition to cryptocurrency in the past as well. But I think CBDC, it doesn’t have as much money behind it. It doesn’t have as much money promoting its usage as stablecoins and cryptocurrency do.

Russ Jones: Doesn’t have a marketing department.

Ashley Lannquist: Doesn’t have a marketing department, doesn’t have a lobby. It gets lobbied against by financial institutions who see it as, fairly, as a substitute for bank deposits. Instead of bank deposits, we can have central bank digital currency.

This is money, retail money that you and I can hold, not in the US, but in other countries, directly with the central bank. And I think the arguments around stablecoins for cross-border payments are valid to investigate, but why not also talk more about CBDC and cross-border payments. Certainly there’s been research about this from the IMF and others, but it’s more the academic side, the international organization side that has been been thinking about using CBDC for cross-border payments.

But here we allow direct access to the central bank accounts for end retail individuals as well as businesses and firms and fintechs, access to central bank accounts directly. No longer need for small firms and businesses to have a bank that then has a central bank settlement account so we can improve payment efficiency through that manner.

And, I think, worth highlighting again, just how the fundamental difference between CBDC and stablecoins. CBDC, as you said, is the domestic currency itself. It’s not pegged to the domestic currency, it is it issued by the central bank. And I think it’s important for central banks in an increasingly digital future to have a direct contact with citizens and be able to fulfill their responsibilities to provide payments and guarantee payments so that we’re not only relying on the private sector for payments, whoever the issuer may be.

We might want a direct central bank issued money that we can use, as we’re no longer using physical cash. So CBDC certainly comes into this, but it is not necessarily, it doesn’t need to be blockchain native. Where it is issued on blockchains, it’s on private blockchain networks with one, often just one node operating it at the central bank. So just to distinguish that from stablecoins, which are really operating on public blockchains.

Russ Jones: So bullish on CBDC, is that what I hear you saying? Except in the United States.

Ashley Lannquist: I think it has an important role to play.

Russ Jones: Okay.

Ashley Lannquist: There is no other central bank directly issued money available to the retail world that’s digital. So I do think that has an important role to play. It can support competition, it can meet a lot of policy goals. It can improve payment efficiency, as I was saying. The central bank doesn’t need to take fees on transactions. This can operate at a loss or at no cost.

There’s a lot there, but I will emphasize that it doesn’t need to be in direct competition to stablecoins. I think the cryptocurrency industry often sees them in direct competition. CBDC, rather, is direct competition to what is already fiat money, like bank deposits, rather than what’s operating on blockchains, where we don’t see it being used by more than 1% of actual payments or savings.

Russ Jones: Okay, thank you. For our listeners, if you’re interested in learning more about stablecoins, we recently launched, a couple weeks ago, an on-demand self-paced course, two hours long, on stablecoin fundamentals. And if you’d like to learn more, understand the terminology of the world of stablecoins, who the players are, the interesting initiatives that are in the marketplace, I invite you to go through that course. Just a short two hour course. You can do it over the weekend, self-paced, readily accessible.

So Ashley, thank you for joining me today and thanks to everyone for listening in. Until next time, take care and do good work.