Disclaimer: This reflects my own perspective. This is me thinking out loud. It does not represent the views of my employer or any other organisation.
Niall Ferguson, in his sweeping history of money book The Ascent of Money, makes an important observation
"The evolution of money has been a process of gradual dematerialisation."
From gold coins to paper notes to digital ledger entries, each step in the evolution has moved money further away from a physical thing toward a shared belief. Nowhere is this more relevant today than in our world of fiat currencies based on notional values, which are themselves moving steadily toward digital form, adding another layer of abstraction. And digital assets, like stablecoins, are at the next dimension in this shift.
And the growth has been real. Adoption is happening fast, and the talk now is that this marks the start of a wholesale replacement of the financial system. That part is not wrong.
Why? Because that's a historical claim before it's a technical one. This essay is not meant to be a technical account of reserves, blockchain mechanics or about the way local settlements happen. It's closer to a historical perspective – and while history may not repeat itself, we can always learn from the patterns. In this case, watching where trust has concentrated before, and asking whether it concentrates again.
The US Dollar's dominance, present from the start of this shift, is what stablecoins are now carrying into this new layer. Digital dollarisation, and not unfortunately digital currency diversity. But that concentration should not be left to be a footnote. If one currency becomes the default rail for global finance, it becomes a competition problem, and a problem for the resilience of the monetary system as a whole, as the Bank for International Settlements (BIS) has recently flagged.
Origins:
Money has been changing shape for centuries, and right now it's in the middle of its biggest shift yet: going fully digital. Cards, transfers, ledgers, all of it has been pointing this way for a while. Digital currencies are just the next, more literal version of that. Let's get specific about stablecoins, since that's where this essay's focus lies. So, what is a stablecoin? It is a digital token that lives on a blockchain, but unlike Bitcoin or Ethereum, its value is pegged to something stable. This something stable is usually a currency, like the US dollar.
So one unit of a US dollar backed stablecoin is supposed to always be worth one dollar. The issuer holds reserves — cash, treasury bills etc — to back that promise. And it is worth noting, that the two major issuers today, Circle and Tether, are private enterprises, not governments or central banks.
In 2026, focusing on the most dominant stablecoins tells us a lot about what we need to know about where the market consensus has currently landed. More than 90% of fiat-backed stablecoins are pegged to the US dollar, with Tether's USDT and Circle's USDC together accounting for 93% of the total stablecoin market. That concentration has only deepened with regulatory support — in July 2025, the US Government passed the GENIUS Act, establishing the first formal federal regulatory framework for stablecoins, which has effectively reinforced dollar-linked stablecoins as the standard.
Why stablecoins exist at all
Stepping back a little, why did stablecoins come to exist at all? it came down to crypto market settlements. Back in early 2010s, as Bitcoin trading was gaining real ground on early exchanges, crypto markets were trading around the clock, 24 hours, 7 days a week. Whenever people wanted to take profits or reduce risk, they needed somewhere to park value that was not volatile. But moving money in and out of bank accounts is slow. The banking system runs on business hours. The crypto market doesn't. So people needed a stable asset that could move on a crypto network, any time, without going through a bank. Stablecoins solved that.
Over time however, stablecoins stopped being just a workaround for crypto traders. They became genuinely useful for moving money across borders, faster and more cheaply than traditional bank transfers. The cross-border benefits were realized, almost like a familiar pattern of accidental usefulness that we have seen in other industries.
Viagra started life at Pfizer as a treatment for angina, meant to widen blood vessels and ease chest pain, but it was a weak one. What gave it away was that trial participants kept asking to hold onto their leftover pills at the end of the study, which is what pushed Pfizer to look closer.
Post-it notes followed the same path. Spencer Silver, a 3M chemist, was trying to build a super-strong adhesive for aircraft construction in 1968 and ended up with a weak, reusable one instead; it sat unused for years until his colleague Art Fry used it to stop his hymnal bookmarks from falling out, and that became the product.
This dynamic has precedent in history of banking and financial transactions.
A financial instrument created to solve one problem and then becoming very useful for something much bigger, has of course happened before. In 17th century Amsterdam, merchants trading across long distances faced a version of the same challenge of moving value faster than the available infrastructure could carry it. Economic historian Jan de Vries, writing about the commercial revolution of early modern Europe, describes how merchants needed financial instruments that could move faster than coins could physically travel. They created bills of exchange: IOUs between trusted parties that circulated as a kind of proxy money. Not officially issued by any state. But accepted widely enough to do the job.
What is similar about the Amsterdam example and what we just saw with crypto markets is how these bills evolved. They started as a simple workaround for slow settlement between trading partners. But over time, as historian Herman Van der Wee noted in his research on Antwerp and Amsterdam's financial markets, the bills of exchange became the circulatory system of European trade, moving value across cities and countries in ways that the underlying coin-based system never could have managed at that speed or scale.
Stablecoins are following a similar arc. Started as workaround, but now taking on other roles.
Why trust always concentrates
Trust isn't distributed equally, it concentrates around whatever has already earned it. The Amsterdam bills of exchange reached for the most trusted thing available when it came to collateral. The bills clustered around the most accepted currencies of their day.
But why did trust concentrate the way it did? Tommaso Contarini, Governor of Verona in 1541, observed in his proposal to the Venetian senate that the Antwerp market succeeded precisely because of an abundance of trust and a scarcity of fraud. So much so that it obviated the need for public records altogether. Trust, in other words, was the table stakes, as it is in banking and finance today. Finance after all is always playing at the intersection of trust and technology.
You can see this play out even further in Amsterdam. Herman Van der Wee, in The History of European Banking, describes how the private merchant system that preceded the Bank of Amsterdam already understood this:
The merchants were building and operating for convenience, but on the back of a promise. That what you put in is what you get back, undiluted. The Bank of Amsterdam came along and made official what trust had already worked out. Stephen Quinn and William Roberds describe exactly how, in their study of the Bank of Amsterdam's rise in the American Economic Review:
The point to note here is this - trust was not built top down by central banks. Private merchants built trust informally first. But backed by a stable value surrogate. Because it was reliable. Then banks and institutions formalised it.
You can see this play out even further in Amsterdam. Herman Van der Wee, in The History of European Banking, describes how the private merchant system that preceded the Bank of Amsterdam already understood this:
"...the foundation of the deposit bank in Amsterdam had been preceded by private initiatives of merchants who deposited full-bodied coins... Lenders were protected from repayment in debased coin, for the bankers undertook to pay back the deposits in the same high-quality coins as they had received."
The merchants were building and operating for convenience, but on the back of a promise. That what you put in is what you get back, undiluted. The Bank of Amsterdam came along and made official what trust had already worked out. Stephen Quinn and William Roberds describe exactly how, in their study of the Bank of Amsterdam's rise in the American Economic Review:
"The Bank [of Amsterdam] provided a uniform and secure money (bank money) for the settlement of large-value transactions... By providing a stable unit of account and a secure means of payment, the Bank reduced the transaction costs and risks associated with the use of a variety of circulating coins."
The point to note here is this - trust was not built top down by central banks. Private merchants built trust informally first. But backed by a stable value surrogate. Because it was reliable. Then banks and institutions formalised it.
That is a sequence worth noting and observing. Trust concentrates first driven by the market, and institutions show up later to reinforce and lock it in. Stablecoins are running that same sequence today, just with the US dollar in the role that bank money played in Amsterdam in 17th century Europe.
The shift:
The shift:
This next stage of money's digitalisation hasn't just been gathering pace, it's blossomed into something much more fundamental. What started as a workaround for crypto traders has opened the door to an entire category of digital asset innovation, each one becoming mainstream faster than expected, and each pulling at a different thread of the same broader shift.
Governments are piloting central bank digital currencies, or CBDCs, across dozens of countries, treating digital cash as the natural next step for sovereign currency itself. Banks, meanwhile, are starting to tokenise deposits and other assets, putting traditional financial instruments onto blockchain rails. And stablecoins continue to grow exponentially on top of all this, acting as the most visible proof that digital money already works at scale.
Put all of that together, and you get real momentum behind a single idea: that digital money is heading toward something like the internet itself — open, interoperable, borderless. And this has given cause for the digital asset optimists to be genuinely excited.
Momentum has a way of outrunning the harder questions, and this is no different. Focusing on stablecoins specifically, the non-dollar numbers are real. Euro-denominated stablecoin volume grew twelvefold in 15 months, from USD 69 million to USD 777 million between January 2025 and March 2026. Singapore's XSGD saw card transaction volume jump 40 times over between Q4 2024 and Q4 2025. Brazil's BRLA went from near zero in 2023 to roughly USD 400 million a month by early 2026.
But stretching that growth into a story about non-dollar stablecoins closing the gap misses a few things underneath it.
Apart from the fact that crypto settlement is one of the key uses of stablecoins, and for the other cases to truly matter, there are a few hurdles.
- Interoperability isn't trust. Different systems talking to each other doesn't answer why people pick one currency over another.
- Trust doesn't transfer easily. Trusting a dollar stablecoin is one thing. Trusting a local one means trusting a lot more behind it.
- Governments don't share currency control. A private stablecoin competing with a national currency is a threat most governments will want to closely regulate.
- Domestic strength doesn't travel. Local-currency stablecoins make sense at home, but the moment money crosses a border, it's back to the same trust problem.
One of the livelier debates in the stablecoin world right now is about interoperability: whether different stablecoins, different blockchains, and different digital currency systems will eventually be able to talk to each other seamlessly. If that happens, the argument goes, then using a Euro stablecoin or a Singapore dollar stablecoin would be just as easy as using a US dollar one. The friction is reduced.
That is a reasonable. But I think it misses something important about why people choose one currency over another in the first place. Interoperability solves a plumbing problem, but not the trust problem.
The trust problem - it does not transfer easily
Think about what happens when someone in a country with serious inflation gets access to a digital asset like a stablecoin for the first time. What do they want? They want to get out of their local currency. They want something that holds its value and is accepted widely. A stablecoin in their local currency gives them none of that. It's a digital version of exactly the thing they are trying to get away from. Making a weak currency digital doesn't make it attractive.
Beyond the simplistic take, there's a more sophisticated version of this argument too. Some institutions and local treasuries want a local currency stablecoin for reasons that have nothing to do with inflation. Avoiding double FX conversion on local transactions. Reducing dollar dependency in regional payment flows. Plugging directly into existing local payment networks instead of going through the dollar and back. These are real motivations, and they explain why Euro and Singapore dollar stablecoins have actually grown. But looking closely at where that growth is happening reveals that it is concentrated in mature financial systems with existing payment infrastructure, and it stays largely local or regional in scale. It is not yet displacing the dollar's role for global, cross-border use.
There's also a trust problem that goes beyond inflation. To trust a local currency stablecoin, you have to trust the currency itself, the company issuing it, whatever they are holding as reserves, the local regulator, the legal system around it. That's a lot of trust to stack up. A dollar stablecoin only asks you to trust the issuer and the dollar. And the dollar has been earning that trust for a long time.
That's one problem. The other is simpler and has nothing to do with trust at all: dollar stablecoins already have a first-mover advantage in a network is hard to claw back. They have liquidity, with far more buyers and sellers on either side of every trade. They have distribution, accepted almost everywhere a stablecoin gets used. And they have institutional adoption that keeps compounding on itself. For a non-USD stablecoin to actually scale, it must do more than just exist. It has to be genuinely better for a specific reason in a specific context.
The government dilemma
Governments make this more complicated too. Governments outside the US are being asked to do two things at once, and those two things don't pull in the same direction. On one hand, they need to move fast to create the conditions for their own local currency stablecoins to scale, simply to avoid getting pulled into dollar dependency by default. On the other hand, the same governments want to keep monetary control for themselves, which is what CBDC experiments are really about. Encouraging private stablecoins and building a government-run digital currency are not the same instinct. They sit in tension with each other.
The US doesn't have this problem. It is actively discouraging its own CBDC, and leaning instead on privately issued dollar stablecoins, because those stablecoins already extend US dollar hegemony without the US government having to lift a finger. There's no tension to manage when the private sector's incentive and the state's incentive point the same way.
Outside the US, that's not the case. The EU is experimenting with a digital euro, a government project. China's digital yuan exists precisely because the government wants control. Both are real signals of the instinct to hold on to monetary sovereignty. But neither is, yet, a story about governments successfully fostering market demand for their own currency stablecoins at the pace the US dollar stablecoin is moving.
That's the real source of skepticism here. That's the real source of the delay. Most governments outside the US have approached digital assets with real skepticism, and while that's changing, the hesitation has cost them time. Trying to do two things at once, encourage private adoption and retain monetary control, is hard enough on its own. Doing it from a starting point of skepticism makes it slower still.
The local currency case — and its limits
Now, there are genuine cases for local currency stablecoins, and private issuers will find value of this. For purely domestic activity, like doing local payments, paying salaries, paying suppliers in the same market, holding savings in a familiar currency, a local currency stablecoin makes intuitive sense. And there will be businesses and contexts where this is genuinely useful.
But here is the thing. In most markets, local banking infrastructure for domestic transactions already works reasonably well. Moving money within a country, paying staff, settling with local vendors, these are not the broken parts of the system. Even in countries where digital banking systems are not yet there, and could encourage them to leapfrog to a stablecoin based system, the potential has a ceiling.
The parts that are slow, expensive, and genuinely painful are cross-border transactions. That is where stablecoins have made their most compelling case: faster than SWIFT, cheaper than correspondent banking, available at any hour.
And cross-border is exactly where local currency stablecoins run into trouble. The moment it becomes about moving money across borders, it is back to the same questions of trust, reserves and acceptance. Who holds this currency at the other end? How easily can it be converted? A Singapore dollar stablecoin moving from Singapore to a supplier in Brazil reintroduces all the friction that a dollar stablecoin was designed to remove. None of this means local currency stablecoins won't grow. They will, especially within their own regions. But that growth will likely stay regional for a long while, and the distance between that and the scale a US dollar stablecoin already operates at is not closing anytime soon.
And cross-border is exactly where local currency stablecoins run into trouble. The moment it becomes about moving money across borders, it is back to the same questions of trust, reserves and acceptance. Who holds this currency at the other end? How easily can it be converted? A Singapore dollar stablecoin moving from Singapore to a supplier in Brazil reintroduces all the friction that a dollar stablecoin was designed to remove. None of this means local currency stablecoins won't grow. They will, especially within their own regions. But that growth will likely stay regional for a long while, and the distance between that and the scale a US dollar stablecoin already operates at is not closing anytime soon.
Cross-border is the one place stablecoins were supposed to change everything. It's also exactly where the dollar ends up winning anyway.
So where does this leave us
Three things that I see:
So where does this leave us
Three things that I see:
First, the expansion of digital money infrastructure does not automatically translate into demand for more currencies offered in digital forms, however attractive it is. Interoperability fixes the plumbing, but it doesn't change what people actually trust. It translates into faster, cheaper movement of whichever currencies people already trust.
Second, the trust and depth that dollar stablecoins have already built creates a gap that is genuinely hard to close — not impossible, but harder still because most governments outside the US are pulled in two directions at once, making the conditions slower to foster growth of stablecoins.
Third, the strongest case for local currency stablecoins is domestic, but domestic is also where the problem is least acute. Regional growth will happen, and some of it already is. The real prize, cross-border transactions, keeps pointing back to the US dollar.
The edge:
The edge:
Every few decades, a new layer of financial infrastructure gets built. And each time, the question that follows is the same: will this new layer change the balance of power, or will it simply make the existing hegemonies faster and more efficient?
New networks are supposed to level the playing field. Unfortunately, they don't. They tilt it further toward whoever already had the advantage. What happens next tends to run counter to intuition and there are examples of this.
New networks are supposed to level the playing field. Unfortunately, they don't. They tilt it further toward whoever already had the advantage. What happens next tends to run counter to intuition and there are examples of this.
The internet did not make every language proliferate equally. It amplified those which were already large. English accounts for nearly 64% of all websites, despite being spoken natively by only 16% of the world's population. And now AI is making this more entrenched, not less. The large language models powering the next layer of the internet are trained predominantly on English data, and MIT researchers have found that even when these models process inputs in other languages, their internal representations default to English as a kind of central processing hub. The technology literally thinks in English.
Cable television didn't create new cultural centres either. It extended the reach of existing ones.
Hollywood didn't shrink as the world got more screens, it grew.
There is a pattern here that the stablecoin conversation can learn from. When a new network expands, the things already flowing most powerfully through it tend to flow even more powerfully. Not because the network is designed that way, but because that is what networks do.
Stablecoins are a new network. And the thing flowing most powerfully through them, from the very beginning, has been the dollar.
"Stablecoins are more likely to reproduce the existing hierarchy of currencies than to flatten it."So here we are — and here is where I think this goes. The following seem likely.
First, dollar stablecoin dominance will deepen, not dilute. The dollar goes more digital, spreads further, embeds deeper. Digital dollarisation, not digital currency diversity at scale. Unless something changes that, and changing it is hard and will be disruptive.
Second, local currency stablecoins will grow selectively and slowly and well be hoisted by regulation and regional necessity and geopolitics. Genuine user preference will have to follow regulatory clarity. The Euro, Singapore dollar, Hong Kong dollar, renminbi will each find their contexts. But there is a difference between existing and mattering at scale, and that difference will take much longer to resolve looking at current trajectory.
"What if stablecoins are actually how dollar dominance gets written into the new layer of global finance, faster and more embedded than before?"That question doesn't answer itself. But it's worth pushing past the question mark.
But a trend is a trend is a trend; until it bends
I am not saying local currency stablecoins won't exist or won't find their footing. They will. But the burden of proof has to reckon with the fundamental human motivations of what provides trust.
And on top of trust, a local currency stablecoin has to solve a problem that the dollar stablecoin doesn't already solve.
As one economist, David Lubin, put it at a Chatham House discussion on dollar dominance.
“the dollar is the QWERTY keyboard of the international monetary system.”
A world running on one digital currency layer is not a healthier one, no matter whose currency it is. But wanting that and getting it are different things. The US dollar carries an encoded advantage into this new layer, the same way bank money once did in Amsterdam, and that advantage does not erode on its own. It erodes when market forces are allowed to actually compete, and when governments outside the US stop sitting in regulatory limbo and start building the conditions for their own currencies to scale. Paralysis dressed up as caution is not neutral. It is a choice that hands the field to whoever moved first.
Wrong battlefield:
Wrong battlefield:
And then there is the question nobody is quite asking yet. When things become digital, costs tend toward zero. That's true for music, for communication, for software. Is that true for money too?
And if the cost of moving money approaches zero, does that change anything about which money people want? Or does it just make it easier to want what they already wanted?
If it is, then every excuse that has been a cost to entry disappears. And that opens up new opportunity. The factors that made trust expensive to build is exactly what kept new entrants out, and once that infrastructure stops mattering, trust can be built in ways nobody has tried yet. That's the real edge: not whoever already has the advantage, but whoever moves first to build trust differently.
I don't have a clean answer to how that will emerge. But I think it matters. The real innovation in this space is happening at the edges, where the USD versus local currency stablecoin battle barely registers. That's probably the only way the encoded advantage gets broken at all.
I don't have a clean answer to how that will emerge. But I think it matters. The real innovation in this space is happening at the edges, where the USD versus local currency stablecoin battle barely registers. That's probably the only way the encoded advantage gets broken at all.
“Create uncontested market space and make the competition irrelevant.” - W. Chan Kim and Renee Mauborgne, Blue Ocean Strategy
Origins & Edges is an essay series written as thinking-in-public. Tracing where ideas come from, where they are going and what they might mean next. Across marketing, culture, tech and the craft of designing the self.
References
References
- Niall Ferguson: The Ascent of Money: A Financial History of the World (2008, updated 2018)
- TRM Labs: 2025 Crypto Adoption and Stablecoin Usage Report — source for 90%+ USD stablecoin dominance and GENIUS Act
- Federal Reserve: Stablecoins in 2025: Developments and Financial Stability Implications (April 2026) — source for GENIUS Act detail
- Jan de Vries: The Industrious Revolution: Consumer Behavior and the Household Economy, 1650 to the Present (Cambridge University Press, 2008)
- Herman Van der Wee: The History of European Banking (1994, 2nd Ed. 2000), p. 89
- Stephen Quinn and William Roberds: "The Bank of Amsterdam and the Leap to Central Banking" — American Economic Review (2007)
- The impact of stablecoins on the international monetary and financial system, BIS
- Centre for Democracy and Technology: Report on AI language bias — source for English accounting for 63.7% of websites
- MIT News: Large Language Models Reason About Diverse Data in a General Way (2025) — source for English as internal processing hub
- David Lubin, Chatham House: Members' discussion — "Is this the end of dollar dominance?" (2025)
Note: All images were imagined and created with help of Claude (for image prompts), ChatGPT and Gemini.
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