East vs West Stablecoin Cold war Emerges in Battle for the First Trillion Dollar Stablecoin

Cryptocurrency

Forex

Summary:

Can non USD rails break out as AxCNH joins $463M ruble bloc push amid $2T target.

MetaMask’s mUSD, the European Union’s digital euro initiative, and Hong Kong’s offshore yuan token AxCNH set up a three-way contest for on-chain payments.

The prize is not trading volume or speculative flows, it is the share of real-world settlement that could reach $2 to $4 trillion annually if 1 to 2 percent of global cross-border payments move to tokenized rails.

According to the IMF and industry research, such as McKinsey, the addressable base for cross-border activity ranges in the hundreds of trillions of dollars, depending on scope, making even low single-digit penetration material on a one-year to two-year horizon.

US dollar holds significant stablecoin advantage

Dollar rails have the immediate advantage because distribution is already embedded in retail and developer workflows. mUSD ships inside MetaMask, is issued through Stripe’s Bridge, and uses M0 for on-chain mechanics. Reserves are structured for 1:1 backing and reporting.

The product launched in mid-September 2025 on Ethereum and Linea with wallet-level issuance and redemption that connects to existing card and merchant pathways.

The combination puts issuance, spend, and on and off-ramps in the same user interface and developer stack, a configuration that can compress settlement steps without introducing new front ends.

The United States also now has a federal rulebook. The GENIUS Act, enacted in 2025, requires fiat-referenced tokens to hold liquid reserves with monthly disclosures and may be issued by banks or licensed nonbanks. This creates a path for payment companies to distribute stablecoins within existing merchant networks.

Europe is building a different strategy. The digital euro aims to reduce dependence on foreign card networks for retail payments, and finance ministers are moving legislation toward early 2026.

Per Reuters, policymakers are working through privacy, holding limits, and bank funding risk, and the European Central Bank has signaled a multi-year implementation plan after the enabling law. MiCA already shaped the competitive field before any central bank token existed.

According to professional guidance summarizing MiCA’s payment usage thresholds, non-euro stablecoins used for everyday payments inside the bloc face usage ceilings of 1 million transactions or 200 million euros per day on a quarterly average, which nudges point of sale activity toward euro-denominated instruments and, eventually, a digital euro scheme once live.

Asia focuses on policy over market cap

China-aligned rails add a third vector focusing on corridors, not global share. AxCNH, an offshore yuan stablecoin, has launched from Hong Kong with a licensing path under the city’s stablecoin regime and messaging oriented to Belt and Road settlement.

Hong Kong’s stablecoin regime provides the compliance venue while convertibility and mainland policy remain the swing factors for scaling CNH tokens across trade platforms, custodians, and exchanges.

Mainland caution over tokenization has also surfaced, with the securities regulator reportedly asking some brokers to pause RWA activity in Hong Kong.

The bloc approach already appears in sanctioned markets. Recent ruble stablecoin activity demonstrates that policy-linked tokens can move value in specific ways even if aggregate market capitalization remains far below the dollar supply.

Market capitalization, not transactional flow, is the scoreboard for the next phase because it captures durable float.

The current baseline, per DeFiLlama, shows dollar pegged stablecoins at about $291.7 billion with Tether at roughly 59 percent share, euro pegged supply at about $480 million with EURC near half the total, and other pegs still small by comparison.

The share mix has shifted during the last two months as USDT’s dominance fell below 60 percent while USDC regained ground and new entrants began to seed supply.

The key test for mUSD is whether embedded distribution accelerates float growth faster than exchange-led minting models, and whether Stripe’s merchant network shortens the distance from wallet to receipt. East vs West Stablecoin Cold war Emerges in Battle for the First Trillion Dollar Stablecoin_1

East vs West Stablecoin Cold war Emerges in Battle for the First Trillion Dollar Stablecoin_1

Race to $1 trillion market cap

A 12 to 24-month framing clarifies what it takes to reach the first $1 trillion in market cap.

From a starting point near $292 billion, reaching $1 trillion in 24 months requires roughly 85 percent annualized growth, in 18 months about 127 percent, and in 12 months above 240 percent.

Those rates don’t pass judgment on feasibility but represent the hurdle rates implied by the math and set the bar for product distribution and compliance readiness.

The most credible catalysts line up in the United States because the GENIUS Act lowers policy risk for payment companies, card partners, and banks that want to issue or distribute stablecoins, while yield on short-term Treasurys continues to make fully reserved tokens economical to hold for working capital and treasury operations.

If payment processors route settlement into stablecoins at the edge, inventory will migrate from exchanges toward wallets with direct merchant links.

Europe’s path centers on domestic retail. If non-Euro tokens run into MiCA usage ceilings inside the bloc, merchants will emphasize Euro instruments for day-to-day transactions, and the digital euro could become the default rail after live launch.

That outcome would not immediately raise the euro stablecoin market cap to the dollar scale because cross-border and offshore flows would still prefer the deepest liquidity pools. Still, it would shape the point of sale mix in the single market.

The implementation clock also matters

Legislation in early 2026 would still leave two and a half to three years for buildout, testing, and rulebook finalization, which places mass availability closer to 2027 or 2028.

AxCNH and other state-aligned tokens point to a corridor strategy rather than a global capture strategy. The question is not whether CNH can replace dollar liquidity, it is whether licensed offshore issuance in Hong Kong plus trade finance platforms can sustain settlement volumes in defined routes.

Issuance scale will depend on convertibility mechanics, bank participation, and China’s stance toward private tokenization experiments. Local licensing, anti-money laundering requirements, and supervision can solve compliance at the venue level, while currency controls and onshore policy will govern depth and velocity.

The macro base case behind the $2 to $4 trillion payments figure remains intact.

According to the IMF and payments industry analysis, cross-border value processed annually is measured in the hundreds of trillions of dollars, and the mix is migrating to ISO 20022 and data-rich formats that pair well with programmable settlement.

Stablecoins provide instant finality at the edge and predictable redemption into bank money, which is why payment companies are moving from card-linked crypto rewards toward direct stablecoin settlement in merchant flows.

If even one percent of the conservative $200 trillion base settles on token rails, annual on-chain payments would reach $2 trillion, and at two percent, $4 trillion, with float requirements and working capital buffers driving market capitalization above transactional averages.

Three operational questions will separate winners.

First is distribution, which means how quickly mUSD, USDC, and peers bind issuance to checkout, invoicing, and payroll with settlement that converts into bank depositories without manual steps.

Second is rulebooks, which means whether U.S. licensing produces bank-grade programs and whether MiCA’s daily caps push EU retail toward euro instruments before the digital euro arrives.

Third is corridors, which means whether Hong Kong’s licensing, custody, and exchange infrastructure can lift CNH tokens into trade settlement without policy whiplash.

Key facts

USDT’s share is below 60 percent, and the rise of alternatives gives the market headroom to reallocate float as new rails become available. mUSD’s wallet native issuance creates a direct line from user to merchant.

The digital euro legislative plan puts law in 2026 and multi-year build-out thereafter.

AxCNH has gone live with a compliance path focused on offshore yuan.

mUSD is live inside a distribution channel, the digital euro legislation is targeted for early 2026, and AxCNH has launched in Hong Kong.

Given that Tether’s USDT currently has a higher market cap than all other stablecoins combined, it is easy to assume the first $1 trillion stablecoin will be pegged to the dollar.

However, institutional adoption into traditional payment rails outside the US could realistically create a ‘Tortoise and the Hare’ race in which the encumbrance loses out.

Source: Cryptoslate

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Manuel

Political

Cryptocurrency

Nine House Financial Services Committee members sent a letter to SEC Chairman Paul Atkins on Sept. 22, urging swift implementation of President Donald Trump’s Aug. 7 executive order enabling cryptocurrency investments in 401(k) retirement plans.

The bipartisan coalition expressed support for expanding access to alternative assets to help 90 million Americans secure dignified retirement outcomes.

The Sept. 22 letter, led by Committee Chairman French Hill and Subcommittee on Capital Markets Chairman Ann Wagner, applauds the executive order’s policy:

“Every American preparing for retirement should have access to funds that include investments in alternative assets when the relevant plan fiduciary determines that such access provides an appropriate opportunity to enhance the net risk-adjusted returns.”

Congressional push for regulatory clarity

The lawmakers encouraged the SEC to swiftly assist the Department of Labor and make necessary revisions to current regulations and guidance regarding alternative asset access in participant-directed defined-contribution retirement savings plans.

The letter specifically requests the SEC review of bipartisan legislation concerning accredited investors advanced in the 119th Congress.

Trump’s executive order directs the Secretary of Labor to consult with the SEC to determine necessary parallel regulatory changes.

The order also instructs the SEC to facilitate alternative asset access by revising applicable regulations and guidance, potentially including consideration of accredited investor and qualified purchaser status modifications.

As of March 31, the defined-contribution market had assets of $12.2 trillion, with $8.7 trillion in 401(k) plans. Even modest default allocations could generate substantial crypto demand through systematic payroll contributions and employer matches.

A 0.1% default allocation across 10% of plans would produce $1.22 billion in crypto investment flows. Meanwhile, broader adoption scenarios suggest potential ranges from $15.3 billion at 0.5% defaults across 25% of plans to $61 billion if 1% defaults were implemented across half the market.

Implementation mechanics

The executive order builds on the Labor Department’s May 28 rescission of its 2022 crypto compliance release, which warned fiduciaries to exercise “extreme care” regarding crypto menu design.

Distribution will likely run through target date funds and collective investment trusts, where most participant dollars flow automatically.

The signatories include Representatives Frank Lucas, Warren Davidson, Marlin Stutzman, Andrew Garbarino, Michael Lawler, Troy Downing, and Mike Haridopolos. The letter was copied to Ranking Member Maxine Waters and Subcommittee Ranking Member Brad Sherman.

Implementation now depends on agency guidance, product filings, and recordkeeper integrations before plan committees can update investment policy statements to include cryptocurrency allocations.

Source: Cryptoslate

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Central Bank

Economic

Several factors weigh on housing construction, including a weak jobs market, higher supply costs from tariffs, and labor shortages due to immigration crackdowns. However, high borrowing costs might be the biggest headwind for construction.

Last week’s interest rate cut will help, but the troubled industry will likely need more than that.

High Rates Keep Construction Levels Low

Homebuilding has been struggling for years and declined again in August. Census Bureau data showed that new housing construction was down 8.4% from 2024 levels. Homebuilder confidence in September also remained low.

“Fed rate relief and lower mortgage rates can't come soon enough for the struggling U.S. housing market,” wrote Sal Guatieri, BMO senior economist.

Now that the Federal Reserve has made the first of what could be several interest rate cuts, homebuilders and home buyers alike could soon see relief from high borrowing costs. Federal Reserve Chair Jerome Powell acknowledged that the central bank’s interest rate levels affect the housing market.

“Housing is an interest-sensitive activity,” Powell said during a Sept. 17 press conference. “When inflation gets high and we raise rates, it does burden the housing industry.”

Housing has a lot of catching up to do. August's rate of construction starts indicates that only 1.3 million new homes will be built in 2025, down 6% from the same period last year.

Heather Long, chief economist at Navy Federal Credit Union, estimates that the U.S. needs to build about 2 million homes a year to bridge America's inventory gap. And August building permits were down 11% year over year, signaling that construction isn't likely to pick up any time soon.

“The United States is in desperate need of more homes, especially more moderately priced homes, but it’s not happening,” Long wrote. “Lower mortgage rates would help, but the affordability crisis won’t end until more homes are built.”

Rate Cuts Could Also Help Buyers

It's also possible that lower interest rates could help prospective homebuyers as well, boosting sales.

While mortgage rates are primarily tied to yields on the 10-year Treasury note, lowering the federal funds rate could also have an impact, Powell said.

“Our policy rate changes do tend to affect mortgage rates,” Powell said.

But not always. Mortgage rates hardly budged after the Fed cut rates in late 2024. Those persistently high mortgage rates have been a problem for many buyers who have been priced out of the housing market.

“While mortgage rates are starting to ease, further relief is needed to meaningfully improve affordability in many regions and inspire builders,” Guatieri wrote.

Source: Investopedia

To stay updated on all economic events of today, please check out our Economic calendar

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Political

The US Supreme Court said it will hear a Trump administration appeal that could topple a 90-year-old precedent and put the White House in control of federal agencies that have long been independent.

The court’s conservative majority also refused to let the person at the center of the case, Federal Trade Commission member Rebecca Kelly Slaughter, return to her job during the appeal. President Donald Trump is trying to fire Slaughter despite a law that says commissioners can be removed only for specified reasons.

The showdown gives conservatives and regulation opponents the chance to achieve a long-sought goal and overturn the Supreme Court’s 1935 Humphrey’s Executor ruling. That decision allowed the FTC job protections and opened the way for the independent agencies that came to proliferate across the federal government.

The decision to let Trump fire Slaughter temporarily drew a pointed dissent from the court’s three liberals, who said the majority was abusing the court’s emergency docket. That docket shouldn’t be used “to transfer government authority from Congress to the president, and thus to reshape the nation’s separation of powers,” Justice Elena Kagan wrote.

In addition to revisiting Humphrey’s Executor, the court said it will consider whether federal judges have power to prevent the president from firing a public official. The administration contends that, even if a person is wrongly fired, the most a court can do is to award back pay.

A ruling for the administration on that issue could affect Trump’s high-stakes bid to oust Federal Reserve Governor Lisa Cook for alleged mortgage fraud.

The court earlier this year hinted that it would preserve the Fed’s independence, calling it a “uniquely structured, quasi-private entity.” But that case stemmed from Humphrey’s Executor, not the separate issue of the remedies federal judges can impose for a wrongful firing.

Trump has repeatedly blasted Fed Chair Jerome Powell for not moving fast enough to lower interest rates.

Critics say Humphrey’s Executor undermines the separation of powers by leaving powerful executive branch officials unaccountable to the president. Defenders say the Constitution gives Congress the flexibility to create agencies that rely on expert leadership and are insulated from political pressures.

The court said it will hear arguments in the case in early December.

The Supreme Court’s conservative majority has chipped away at Humphrey’s Executor in recent years. The Supreme Court ruled in 2020 that the president could fire the director of the Consumer Financial Protection Bureau.

More recently, the court let Trump at least temporarily remove members of the National Labor Relations Board, Merit Systems Protection Board and the Consumer Product Safety Commission.

Trump sought to remove Slaughter from her position in March. She sued and won key rulings in the lower courts. But Roberts on Sept. 8 let Trump oust her temporarily, and the latest order means she won’t return at least until the Supreme Court issues a final ruling.

Slaughter contends her ouster flouts the FTC Act, which says a president can remove commissioners only for “inefficiency, neglect of duty, or malfeasance in office.”

In seeking to toss out that restriction, the administration says the Supreme Court doesn’t necessarily need to overturn Humphrey’s Executive. Solicitor General D. John Sauer told the justices that the modern FTC is far more powerful than the one the court shielded from presidential control in 1935.

Congress has “transformed” the FTC “into an agency that wields substantial executive power,” he said.

But Sauer also wrote that “to the extent this court concludes that Humphrey’s Executor remains controlling, this court should overrule it.”

In ruling that Slaughter could stay in the job temporarily, a federal appeals court said Trump was asking that panel to “defy binding, on-point, and repeatedly preserved Supreme Court precedent.”

Source: Bloomberg

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Commodity

Gold powered to a record in the week’s opening session after flows into exchange-traded funds hit a three-year high, with investors betting that the Federal Reserve’s rate-cutting cycle has further to run. Silver also rose, with year-to-date gains topping 50%.

The more expensive metal spiked to an all-time high above $3,700 an ounce, building on a run of five weekly gains, as the Fed cut rates and flagged further easing through to year-end. On Friday, bullion-backed ETFs surged 0.9%, the most in percentage terms since 2022, according to data compiled by Bloomberg. Gold Punches to Record on Rate-Cut Outlook as ETFs Draw in Flows_1

Gold Punches to Record on Rate-Cut Outlook as ETFs Draw in Flows_1

Gold and silver have been among the year’s best performing major commodities on a broad confluence of supportive factors, as the Fed eases policy, central banks bolster their reserve holdings, and lingering geopolitical tensions sustain a bid for havens. Major banks including Goldman Sachs Group Inc. have flagged their expectations for further gains.

“Technicals are looking pretty strong, and expectations are rising for deeper rate cuts,” said Soni Kumari, commodity strategist at ANZ Group Holdings Ltd. In silver, “resistance at $43 an ounce was broken, while gold powered through $3,708 an ounce — suggesting prices will continue to push higher.”

This week, traders will parse data including US personal consumption expenditures for August. The Fed’s preferred measure of underlying inflation likely grew at a slower pace, which may strengthen the case for more cuts. In addition, Fed Chair Jerome Powell is due to speak on the outlook on Tuesday.

For some, bullion’s rapid climb in the last month is a reason to be cautious.

“The gold price was overbought after climbing by more than 10% in the last five weeks,” analysts at Heraeus Precious Metals GmbH & Co KG said on Monday. “That raises the chance of a period of consolidation so the price could trade sideways to lower for a while.”

Silver rallied harder than gold on Monday, possibly with support from bullish options trades. The daily volume of IShares Silver Trust options surged to 1.2 million on Friday — the highest since April 2024, with call options spiking.

Spot gold was 1.6% higher at $3,746.16 an ounce at 2:53 p.m. in New York. The Bloomberg Dollar Spot Index was down 0.2%. Silver rose 2.3% to more than $44 an ounce, while platinum and palladium gained.

Source: Bloomberg

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Cryptocurrency

Ripple unveiled a roadmap for the XRP Ledger (XRPL) on Sept. 22 that introduces protocol-level lending, zero-knowledge privacy features, and expanded tokenization standards.

The roadmap centers on three core announcements: a native lending protocol scheduled for Version 3.0, confidential Multi-Purpose Tokens arriving in the first quarter of next year, and the immediate availability of compliance tools, including Credentials, Deep Freeze, and transaction simulation capabilities.

The native lending protocol will enable pooled lending and underwritten credit to be directly executed at the ledger level through Single-Asset Vaults, which aggregate liquidity and issue transferable vault shares.

The system automates loan lifecycle management, including issuance, repayment tracking, and reconciliation, while maintaining off-chain risk assessment where institutions operate established models.

Zero-knowledge privacy integration

XRPL’s zero-knowledge proof (ZKP) implementation represents the roadmap’s privacy initiative.

Confidential Multi-Purpose Tokens, scheduled for release next year, will support privacy-preserving collateral management while maintaining the compliance and auditability standards required by regulated institutions.

The ZKP integration will enable proving KYC compliance without revealing personal details, allowing auditors to verify activity while protecting counterparty transaction data, and supporting proof-of-reserves without disclosing sensitive wallet information.

These capabilities address institutional requirements for confidential yet compliant on-chain operations.

The roadmap also introduced the Multi-Purpose Token (MPT) standard, launching in October, which enables complex financial instruments to carry essential metadata, including maturity dates, tranches, and transfer restrictions, without requiring smart contracts.

MPTs allow bonds, money market funds, and structured products to be represented and traded natively on XRPL with full DEX integration planned for seamless trading and AMM liquidity pools.

Compliance infrastructure

The roadmap also mentioned three features to expand institutional adoption capabilities. The first is credentials linked to Decentralized Identifiers, which enable trusted issuers to attest KYC status and regulatory permissions.

The second is Deep Freeze, allowing token issuers to halt transfers from flagged addresses until trust lines are unfrozen, providing critical sanctions compliance tools.

The last is Simulate, which lets developers test transactions before network commitment, reducing enterprise risk for high-value operations.

The roadmap also introduced Permissioned Domains and Permissioned DEX features, which are currently undergoing validator voting. These tools create gated participation based on credential verification while preserving XRPL’s decentralized exchange efficiency.

According to the announcement, the modular compliance stack enables institutions to define participation requirements, ensure privacy through selective credential disclosure, and leverage order-book-based trading with full AML/KYC controls.

The roadmap goal is to position XRPL and its native assets, XRP and RLUSD, to service institutional stablecoin payments, collateralized lending, and tokenized asset trading natively at the protocol layer.

Version 3.0 represents the convergence of lending, tokenization, permissioned markets, and privacy features into a comprehensive institutional DeFi platform.

Source: Cryptoslate

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Central Bank

Economic

The Federal Reserve needs to be "very cautious" in removing restrictive monetary policy with inflation still above the central bank's 2% target and remaining persistent, Cleveland Fed President Beth Hammack said on Monday.

"I think we are only a short distance to neutral, and it worries me that if we remove that restriction from the economy, things can start overheating again," Hammack said in remarks that showed the divisions inside the Fed over whether interest rates will keep falling.

Hammack's comments at an event at the Cleveland Fed headquarters followed last week's decision by the Federal Open Market Committee - the Fed's interest-rate-setting panel - to lower the central bank's benchmark rate by a quarter-percentage point to a range of 4.00%-to-4.25%.

Hammack, among the most hawkish Fed policymakers, is not a voter on policy this year and did not say whether she supported the reduction. But in her remarks she emphasized that inflation remains a significant concern for her, while she sees the job market as remaining closer to the Fed's "maximum employment" mandate, even if there are emerging signs of fragility.

The latest unemployment rate at 4.3% "is right around a maximum employment number," Hammack said, and while it may edge up this year it is expected to fall again before long. "On the inflation side, we are missing by a more meaningful number, by a full percentage point. And we have been missing for four-and-a-half years, and I anticipate missing for the next couple of years."

"I think we should be very cautious in removing monetary policy restriction because I think it's important that we stay restrictive to bring inflation back down to target," Hammack said.

Along with their decision on interest rates, Fed officials last week updated their quarterly economic and policy projections.

The median expectation among the 19 officials showed an expectation for rates to drop by another half a percentage point this year, but nearly half of them did not see that as appropriate. Six of them saw the current level as appropriate through this year, and two others saw only one more quarter-point reduction this year as appropriate. Another official felt the level of rates prior to last week's reduction was the appropriate level.

Part of the judgment in rate decisions involves policymakers estimating how far current policy is from the so-called neutral rate of interest that neither stimulates nor restricts economic activity.

"I have one of the higher estimates on the committee, and I think we're only very mildly restrictive after last week's move" Hammack said. "So I think we are a very short distance to neutral."