Stablecoins Might Not Be Crypto's Sexiest Asset, But They're Going Through a Metamorphosis.

They're at the centre of a global arms race of banks, tech firms, and governments vying for their slice of a quarter-trillion-dollar pie.

Ant Group, the fintech giant backed by Jack Ma and known for its role in Alibaba's e-commerce empire, is preparing to apply for stablecoin licences in Hong Kong, Singapore and Luxembourg, unnamed sources close to the matter told Bloomberg.

If approved, the licences will allow Ant to issue its own regulated stablecoins for use in cross-border payments and treasury operations.

The news outlet noted that the initiative will be spearheaded by Ant International, the Singapore-based arm of Ant Group, which is ultimately owned by mainland Chinese stakeholders. This makes the stablecoin ambitions particularly noteworthy, considering China's crypto policies are generally ambiguous but ultimately restrictive.

Ant International did not immediately respond to a request for comment.

Stablecoin summer

The timing couldn't be better, as the stablecoin market just hit an all-time high of over $250 billion in circulation. This is being driven by a growing institutional demand and a global push toward clearer rules for this class of digital assets.

"Packing my bags for stablecoin summer," crypto investor and Bankless founder Ryan Sean Adams tweeted.

Indeed, Asia, the US and Europe are all racing to legally define how this digital money should be issued, governed and taxed.

And if favourable regulations fall into place, some analysts believe that $250 billion could be just the beginning. Standard Chartered analysts forecast the market could grow to $2 trillion by 2028. Bitwise CIO Matt Hougan sees the path as even faster, projecting a 10-fold surge to $2.5 trillion "in no time." Meanwhile, Citigroup analysts believe stablecoins could hit $3.7 trillion within five years - more than the current size of the entire crypto market.

Much of that growth, however, hinges on how the US handles the Genius Act, a stablecoin bill that cleared a key Senate hurdle this week.

"It feels like quite a moment in the development and history of stablecoins and banking," a former economist at the St. Louis Federal Reserve, William Emmons, told the Financial Times.

Circle rises, Tether expands

For the time being, the stablecoin market is a two-horse race, with Tether's USDT and Circle's USDC making up over 86% of the entire supply.

Last week, Circle took a big step with its IPO on the New York Stock Exchange, sending shares soaring and bolstering its image as the go-to stablecoin for regulated institutions.

The move comes as USDC is now the second-largest stablecoin, with a market cap of around $60 billion, trailing only USDT's $156 billion.

Meanwhile, top dog Tether is backing a new blockchain called Stable, which will allow USDT to be used for transaction fees and target financial institutions with high-speed "enterprise lanes."

Even the Trump family is getting in on the action. Their affiliated project, World Liberty Financial, recently borrowed $7.5 million in USDT to boost USD1, a self-branded stablecoin pitched at sovereign investors and institutional players.