Regulatory Clarity Accelerated Volume While Increasing Pressure

The acceleration in activity followed regulatory developments in the United States and Europe. The GENIUS Act in the U.S. and the EU’s MiCA framework reduced legal uncertainty for institutional participants. As decision cycles shortened, Ethereum became a more frequent choice for cross-border liquidity management. At the same time, rising usage intensified network congestion. Scalability limits and transaction costs are back at the center of the debate.

Ethereum Leads the Market as Competition Tightens

Ethereum maintains a 57% share of the stablecoin market. Roughly 60% of Tether’s USDT supply remains hosted on the network, reinforcing its dominant position. Tron follows with a 27% share, supported by lower transfer costs. This competitive pressure is expected to grow. In 2026, several European banks are preparing euro-denominated stablecoin initiatives that could challenge existing balances.

Where the Stablecoin Activity Is Actually Taking Place

The $8 trillion figure does not reflect activity on Ethereum’s mainnet alone. A growing portion of stablecoin transfers now occurs on Layer-2 networks such as Arbitrum, Optimism, and Base. This shift suggests that the mainnet increasingly serves as a settlement and finality layer rather than a venue for high-frequency transactions.

In this structure, Ethereum functions as the system’s financial endpoint. While this supports gas revenues and validator incentives, it also makes long-term sustainability more dependent on the performance of the Layer-2 ecosystem.

Network Activity Hits Records as Resilience Is Tested

By the end of December, monthly active addresses reached 10.4 million, while daily transactions climbed to 2.23 million. The data indicates that network growth is driven by operational and institutional usage rather than speculation alone. Even so, how Ethereum manages this intensity over time remains unclear. Technical capacity and cost efficiency are set to remain critical themes throughout 2026.

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This initiative could accelerate institutional crypto adoption in Europe and expand the use of euro-based digital assets. At the same time, banks intend to offer customers faster, safer, and lower-cost payment options.

Consortium and Licensing Process

The consortium of European banks is applying for a license as an e-money institution based in the Netherlands and supervised by the Dutch Central Bank.

This process will ensure the stablecoin operates within a legal framework and fully complies with the EU’s Markets in Crypto-Assets (MiCA) regulations. Consortium officials say this step will increase trust in financial transactions across Europe and strengthen the digital asset ecosystem.

“The launch of a euro-denominated stablecoin is an important step to reduce transaction costs and increase the use of digital assets among institutional investors,” said a consortium representative.

Euro-Backed Alternative to USD Coins

One of the main goals of the stablecoin is to provide Europe with a euro-backed alternative to U.S. dollar coins, strengthening the region’s strategic independence in payments. Europe’s cross-border payments market is substantial, expected to exceed $250 billion in 2025 and reach $320 billion by 2030.

While stablecoins are rapidly growing, with a market size of $290 billion this year, euro-backed coins currently make up less than 1%. This highlights the clear gap the consortium aims to fill. Launching a euro-based stablecoin could provide strategic advantages for the European economy and enhance digital financial sovereignty.

Stablecoin Launch and Institutional Adoption

The stablecoin launch will be carried out in accordance with the EU MiCA framework, which comes into effect from December 2024. Euro-based stablecoin transactions are designed to meet the growing demand among institutional investors seeking an alternative to USD-pegged assets. In particular, European financial institutions plan to integrate digital assets into traditional banking products, offering more flexible and faster financial solutions.

Banca Sella has partnered with Fireblocks to launch an internal pilot project testing custody services for stablecoins. These initiatives demonstrate that banks are committed to developing innovative financial products and increasing engagement with digital assets.

Future Expectations

The launch of a euro-denominated stablecoin is expected to accelerate the adoption of blockchain-based financial solutions in Europe. Banks’ investment in digital assets may drive higher institutional demand and reduce costs in financial transactions.

In the coming years, euro-backed stablecoins could become a widely used payment method, especially for cross-border and corporate transactions. These developments signal a faster digital transformation in the European banking sector and broader adoption of blockchain-based innovations.

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Background of the GENIUS Act and Its Global Impact

The GENIUS Act is widely seen as a crucial step in U.S. stablecoin regulations. The law encourages issuers to shift from yield-based models to payment-focused use cases. Fabian Dori, Chief Investment Officer at Sygnum, explains that the act aligns the U.S. regulatory framework more closely with the European Union’s MiCA (Markets in Crypto Assets) regulations. This move paves the way for global consensus on stablecoin regulation, creating a solid foundation for real-world use cases.

You Might Be Interested In: Sonic SVM Research: Can New Stablecoins Shake Up the Old Order?

According to Dori, the true impact of the GENIUS Act is far beyond regulatory clarity. By offering long-awaited transparency, it boosts confidence among organizations and issuers, encouraging the development of innovative killer apps that not only meet current customer needs but also create demand for entirely new services, including payment solutions.

New Payment Services and Applications Gaining Momentum

Industry giants like Mastercard and PayPal are already laying the groundwork for compliant stablecoin usage, while companies like Amazon and Walmart are exploring applications in payroll and cross-border settlements. These developments highlight the growing potential of stablecoins for payments.

Dori suggests that with interest-bearing stablecoins being limited, issuers will focus more on features like real-time settlement, low transaction costs, and programmable functionalities integrated into payment systems. In this competitive landscape, utility is expected to trump yield, and stablecoins will drive adoption in real-world commerce.

Consumer Adoption Remains the Key to Success

Despite these changes, retail adoption is still a crucial factor. Dori emphasizes that it is not fintech companies but consumer adoption that will determine the pace of stablecoin integration. Polygon Labs Head of Payments and Fintech, Aishwary Gupta, notes that even before the GENIUS Act, there was significant growth in payment-focused stablecoin usage. Gupta points out that Polygon has seen a 67% rise in micropayments, which shows how real-world demand is shaping this shift.

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From Promises of High Returns to Frozen Funds

Launched in 2021, Ziglu attracted nearly 20,000 customers with its “Boost” product, offering yields up to 6%—a tempting offer at a time of historically low interest rates. However, these products lacked consumer protection and were not segregated, enabling the company to use customer funds for operational needs and lending.

In May, the UK’s Financial Conduct Authority intervened, leading to the suspension of all withdrawals. The company then entered special administration last week, after administrators uncovered a $2.7 million deficit.

You Might Be Interested In: Sonic SVM Research: Can New Stablecoins Shake Up the Old Order?

Court documents revealed that Ziglu directors may have redirected Boost funds to cover cash flow problems prior to applying for administration in June. An estimated $3.6 million in customer investments remains frozen, with around 4,000 individuals affected.

Ziglu’s Future Hangs on Sale or Rescue

Once valued at $170 million, Ziglu had secured a deal with U.S. fintech firm Robinhood in 2022. However, the agreement collapsed amid broader crypto market instability.

Now under the control of administrators from RSM, the company’s remaining assets may be sold to recover lost funds. Without a successful deal, most savers stand to lose a significant portion of their investments.

UK Lags in Crypto Regulation

Industry observers argue that the UK is falling behind global competitors in digital asset regulation. Unlike the EU’s MiCA initiative or the U.S. Senate’s recently passed GENIUS Act, the UK has yet to establish a firm regulatory framework or a launch date for its crypto regime.

Policy delays and uncertainty have prompted criticism from experts who say the country has squandered its early lead in blockchain innovation.

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The first part of the comprehensive analysis series prepared by Sonic SVM Research covers the infrastructure of this transformation in full detail. In this article, we will summarize the research and prepare readers for both the current landscape and future scenarios.

Transformation Driven by Regulation and Institutional Winds

The year 2025 marked a turning point for stablecoins. The GENIUS Act passed in the U.S. provided the first comprehensive regulatory framework for fiat-backed stablecoins. Hong Kong’s “Stablecoin Ordinance” law and the European Union’s MiCA regulation made these assets more legitimate and accessible globally.

If you want to read the full article by Sonic SVM Research on this topic, click here.

On the institutional side, momentum is also remarkable. Alongside giants like PayPal, Santander, and Deutsche Bank, Visa and Stripe are adapting their infrastructures to be stablecoin-compatible. In China, tech giants like JD.com and Ant Group have started licensing processes. One of the most notable developments is the stablecoin initiative called USD1, launched through World Liberty Financial Inc., owned by U.S. President Donald Trump’s family.

Market Is Not Yet Saturated, Competition Intensifies

Today, there are over 150 stablecoins, but USDT and USDC dominate 88.5% of the total market. Still, new projects like USDe, USDtb, USD1, and USDS are seeking market share through on-chain integrations and differentiated distribution strategies.

The research reveals with data how Ethereum and Tron networks stand out in this race and where stablecoin distribution is concentrated across ecosystems. While Ethereum serves as the heart of decentralized finance, Tron has become dominant in the daily transactions of USDT.

The most striking takeaway from Sonic SVM Research is this: for new players to succeed, merely creating supply is not enough. They must also be strong in real volume, transaction density, and user trust metrics. This is possible not only through chain integration but also with user experience, regulatory compliance, and innovative distribution strategies.

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TIME Honors Coinbase As A ‘Disruptor’

Coinbase was named a “disruptor” on the TIME 100 list after a landmark year where it became one of the most prominent crypto advocates in Washington, D.C. The company’s inclusion came shortly after a series of major wins, including the U.S. Senate passing the GENIUS stablecoin bill, which helped boost Coinbase’s stock from around $303 to $382 per share.

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TIME wrote, “The company, which in May became the first crypto stock to be added to the bellwether S&P 500 index, is a key driver of the industry’s policy efforts in Washington D.C. If industry-friendly bills are passed, Coinbase stands to become an even bigger hub for U.S. crypto activity.”

Expanding Globally While Reshaping Regulation

In a significant step forward, Coinbase secured a MiCA license in the European Union on June 20, authorized by Luxembourg’s financial regulator. The company announced plans to base its EU operations in Luxembourg, marking a major push into international markets.

In addition, Coinbase is seeking SEC approval to offer tokenized equities — a move that could position it alongside retail trading platforms like Robinhood and WeBull in offering hybrid assets to users.

President Trump Signals Support For Crypto

Speaking at the “Coinbase State of Crypto Summit” in June 2025, U.S. President Donald Trump pledged regulatory clarity for digital assets: “We will be working to create clear and simple market frameworks that will allow America to dominate the future of crypto and Bitcoin.”

This continued momentum signals not only confidence in Coinbase, but in the broader digital asset space as institutional and retail interest grows.

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Shawn Young, chief analyst at MEXC Research, attributes this cautious stance to volatility, regulatory uncertainty, and structural conservatism. “Central banks prioritize stability and liquidity — and Bitcoin, despite its resilience, still doesn’t consistently offer these qualities,” he said.

Shift Away from Traditional Bonds

The survey also highlights a growing appetite for diversification. While gold remains the dominant reserve asset, central banks are increasingly eyeing corporate bonds and public equities for the next 10 years. About 16% expect to reduce their government bond holdings, and 13% plan to cut cash reserves.

Meanwhile, digital assets are slowly gaining ground. Around 10% of participants said they might increase exposure to digital assets, though the focus is primarily on tokenized securities rather than mainstream cryptocurrencies.

Governments Are Holding Bitcoin?

According to Chainalysis, some governments have started to accumulate significant amounts of cryptocurrency, mainly from law enforcement seizures. Unlike in the past, these assets are now being strategically held instead of immediately liquidated. The United States is among the countries shifting toward this approach.

In China, approximately $50 billion worth of seized crypto is held, although the lack of a centralized management policy raises concerns about transparency and long-term value. Analysts believe that a unified national strategy could reshape China’s stance on digital assets.

Early Bitcoin Adopters: El Salvador and Bhutan

El Salvador made global headlines in 2021 when it became the first country to adopt Bitcoin as legal tender. While the move attracted investment and attention, it also triggered political friction, particularly with the IMF, leading the country to soften some of its policies. Young notes that El Salvador’s goal was to attract investment, tourism, and tech infrastructure.

Shifting Sentiment in Europe

In a bold departure from traditional European monetary policy, Czech National Bank Governor Aleš Michl proposed allocating 5% of the country’s reserves to Bitcoin. This view contrasts with the European Central Bank, where President Christine Lagarde continues to reject Bitcoin as a viable reserve asset due to concerns over liquidity, security, and AML compliance.

Switzerland presents a unique case: a 2024 People’s Initiative aims to amend the constitution, requiring the Swiss National Bank to hold Bitcoin alongside gold. If successful, it could lead to the world’s first national referendum on Bitcoin as a reserve asset — showcasing rising public and institutional acceptance of digital assets in a country known for financial privacy.

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Will the UK Take Action on Crypto?

As the European Union rolls out its MiCA regulations and the United States makes strides with the GENIUS Act in the stablecoin space, the UK’s vague and slow-moving approach has sparked criticism.

In a blog post published on Friday, Lewis McLellan, editor at OMFIF’s Digital Monetary Institute, and John Orchard, the organization’s chairman, argue that the UK has “squandered” its early leadership in distributed ledger technology (DLT). The post, pointedly titled “The UK keeps missing the boat on DLT finance,” calls out the country’s inability to offer clear and timely regulation.

Following Brexit, there were high expectations that the UK would set the “gold standard” for crypto regulation. Instead, the UK continues to speak vaguely about future regulations without providing a clear timeline. This regulatory ambiguity is emphasized in the FCA’s Crypto Roadmap, where no firm date is provided for when its regime will “go live.” At best, the guidance hints at some time after 2026.

EU and US Make Clear Progress on Crypto

The Markets in Crypto-Assets (MiCA) framework is now active across the EU. Meanwhile, the US Senate recently passed the GENIUS Act, a federal law that clearly defines stablecoins as legitimate payment tools.

The UK, however, still categorizes stablecoins as investment assets—a stance that OMFIF analysts say has caused significant market confusion. The Bank of England’s early proposal, which required systemic stablecoins to be backed entirely by central bank reserves, was widely criticized as commercially unworkable. Though this position has since softened, the UK has yet to present a viable regulatory model.

Other Regions Are Moving Ahead

While the UK lags, others are pushing forward. In May, Hong Kong passed its own stablecoin bill and is rapidly building a tokenization infrastructure through its Project Ensemble initiative.

The United Arab Emirates has also been praised for establishing VARA (Virtual Assets Regulatory Authority), a specialized body overseeing digital assets. The UK, by contrast, is still trying to retrofit traditional institutions to manage Web3 and blockchain innovations—an approach that the report sees as insufficient.

The UK’s Early Advantage Is Eroding

OMFIF concludes the piece by noting that although the UK led the way in fintech innovation during the 2010s, and still benefits from its favorable time zone, legal system, and language, those advantages aren’t guaranteed to last.

“Financial hubs rise and fall,” the authors warn. Without bold and timely action, the UK risks falling further behind.

Their message is clear: the UK must establish a clear, fast, and adaptive regulatory framework for the crypto space—before its global influence fades further.

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VASPs Under Regulatory Scrutiny

In its 2025 NRA report, Luxembourg has classified Virtual Asset Service Providers (VASPs) as high-risk entities for money laundering. This risk is attributed to transaction volume, global client reach, legal structures, and the cross-border nature of crypto operations. The country had previously warned about the sector in its 2020 and 2022 reports, citing the digital and borderless characteristics of crypto assets as major vulnerabilities for financial crimes.

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The European Union is actively implementing the MiCA (Markets in Crypto-Assets) regulation to harmonize crypto laws across its 27 member states. Since January, crypto companies have begun obtaining licenses to operate legally. In May, Kraken launched regulated crypto derivatives trading, and Crypto.com secured a similar license. However, not all players comply—Tether (USDT) refused to align with MiCA’s rules and was consequently delisted from Binance, Coinbase, and Crypto.com across EU platforms.

Crypto’s Role in Money Laundering Grows

With crypto’s increasing role in global finance, it’s also becoming a tool for illicit activity. Earlier this month, Hong Kong authorities arrested 12 individuals for laundering $15 million using over 500 bank accounts and cryptocurrency. Meanwhile, in Europe, 17 suspects were detained in connection with a “mafia crypto bank” accused of laundering €21 million ($23.5 million). Authorities seized over $5 million in cash, crypto, firearms, and luxury vehicles during the crackdown.

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All Crypto Transactions to Be Reported Starting 2026

Beginning January 1, 2026, UK-based crypto companies will be required to report all customer transactions, including trades and transfers. This is part of a broader initiative by the UK government to enhance crypto tax reporting and align with global standards.

The information to be collected and reported includes:

• Full legal name
• Home address
• Tax identification number
• Type of cryptocurrency used and the amount transferred

Additionally, entities like companies, trusts, and charities involved in crypto transactions will also fall under this reporting regime.

You Might Be Interested In: Elon Musk Talks About the Name of a New Memecoin!

Non-compliance or inaccurate reporting may result in penalties of up to £300 ($398.4) per customer.

Transparency Without Compromising Growth

This move is part of the UK’s adoption of the OECD’s Crypto-Asset Reporting Framework, which aims to balance market innovation with regulatory oversight.

UK Chancellor Rachel Reeves emphasized that the country remains open to business but is closing its doors to fraud, abuse, and instability. In April, she also introduced a draft bill that brings crypto exchanges, custodians, and brokers within the regulatory perimeter to better combat scams and financial misconduct.

UK vs EU: Diverging Paths in Crypto Regulation

While the UK is integrating crypto regulation into its existing financial structure, the European Union has opted for a dedicated framework through MiCA (Markets in Crypto-Assets Regulation). One major difference is that the UK will allow foreign stablecoin issuers to operate without registration, and it won’t impose volume caps — unlike the EU, which may restrict large stablecoin operations to mitigate systemic risks.

A recent survey by the UK’s Financial Conduct Authority showed that 12% of UK adults now own crypto, up from 4% in 2021. With growing adoption, a well-regulated ecosystem is becoming essential.

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