The trillion-dollar stablecoin battle, Binance decides to enter the fray again

Original Title: "The Battle of Trillion-Dollar Stablecoins: Binance Decides to Enter the Fray Again"

Original Author: Lin Wanwan, Dongcha Beating

In 2024, the total on-chain transfer amount of stablecoins reached $27.6 trillion, surpassing the combined total of Visa and Mastercard for the first time.

This figure was $300 billion five years ago and nearly zero ten years ago.

On December 18, a project named United Stables launched a new type of stablecoin, $U, in Dubai. Its reserves are not in cash or government bonds but a combination of three stablecoins: USDC, USDT, and USD1. Using stablecoins to collateralize other stablecoins is referred to in the industry as "nested dolls."

Binance Wallet integrated it immediately, with official backing from BNB Chain, and full support from PancakeSwap and Four.Meme.

The implication of this setup in the crypto circle is clear: Binance is personally getting involved.

$U itself may be insignificant. But the trend it represents: stablecoins are transitioning from wild growth to fragmented territories, and a new battle is underway.

Stablecoin 1.0 Era: The Monopoly of First Movers

The essence of stablecoins is "on-chain dollars." Users deposit $1 with the issuer and receive 1 token, which can circulate on any blockchain globally 24/7, with instant settlement and fees of just a few cents.

Compared to Alipay or bank transfers, the core advantage of stablecoins is that they require no real-name registration, no bank account, and no regulatory approval. A wallet address is the only barrier.

In 2014, when Tether issued USDT, the entire crypto market capitalization was less than $5 billion. Thus, Tether seized the opportunity window: traditional banks generally refused to provide services to cryptocurrency companies. After making profits from trading, the only way to secure gains was to convert crypto assets into USDT, locking in dollar-denominated profits.

The rise of USDT is not only due to its excellent product but also because users had no other choice. This "passive monopoly" has continued to this day, and by December 2025, USDT's market cap is about $199 billion, holding 60% of the stablecoin market.

In 2018, Circle, in collaboration with Coinbase, launched USDC, focusing on compliance: releasing monthly reserve audit reports, with funds held in regulated financial institutions, embracing the U.S. securities regulatory framework. The implication was that Tether's black-box model would eventually face issues.

By 2022, USDC's market cap briefly approached 70% of USDT's. Wall Street bet that the compliant faction would ultimately prevail.

In March 2023, Silicon Valley Bank collapsed. Circle had $3.3 billion in reserves stored there. USDC briefly depegged to $0.87, a promised asset that was supposed to always equal $1, losing 13%.

The lesson the market learned is: compliance is a bonus, but not a moat. Banks can collapse, regulations can shift, and the real barrier is the network effect—when your user base and liquidity are large enough, you become the de facto standard.

The survival rule of the stablecoin 1.0 era is simple: first-mover advantage outweighs everything.

Binance's Three Turns

Trading platforms are the traffic hubs of the crypto world, and stablecoins are the pricing units of trading. Whoever controls the mainstream stablecoins holds the pricing power. Binance cannot give up this position.

In 2019, Binance partnered with the New York-licensed trust company Paxos to issue BUSD. This was a compliant stablecoin regulated by the New York Department of Financial Services, peaking at a market cap of $16 billion, second only to USDT and USDC.

BUSD once accounted for 40% of Binance's trading volume. It was the core tool for Binance to establish its own "minting power."

In February 2023, the SEC issued a Wells Notice to Paxos, accusing BUSD of being an unregistered security. On the same day, the New York Department of Financial Services ordered Paxos to stop minting new BUSD. Nine months later, Binance founder CZ pleaded guilty in the U.S., and Binance paid a $4.3 billion fine.

The $16 billion stablecoin asset was reduced to zero under regulatory pressure.

Binance reacted quickly. Shortly after BUSD was halted, Hong Kong company First Digital launched FDUSD, perfectly timed with the launch of Hong Kong's virtual asset licensing system. FDUSD quickly became one of the main stablecoins on the Binance platform, although both parties never publicly confirmed their partnership.

The transition from BUSD to FDUSD was a passive survival strategy; the shift from FDUSD to $U is an active layout.

The design logic of $U is entirely different from the previous two: it does not directly compete with USDT, USDC, or USD1 but incorporates all of them into its reserve pool. In a sense, $U is the "stablecoin of stablecoins," or a "stablecoin ETF."

Binance's lesson is: relying on a single regulatory framework for stablecoins means your lifeline is always in someone else's hands.

The Presidential Family Enters

Among the reserves of $U, the most noteworthy is USD1.

In March 2025, the Trump family issued the USD1 stablecoin through World Liberty Financial. According to public disclosures, entities associated with the Trump family hold 60% of the parent company's shares and receive 75% of the net income. Trump himself serves as the "Chief Cryptocurrency Advocate," while his sons Eric and Donald Jr. serve as "Web3 Ambassadors."

By December 2025, the Trump family had profited over $1 billion from this project.

Two months after the issuance of USD1, it secured its first major deal: the Abu Dhabi sovereign fund MGX invested $2 billion in Binance, using USD1 as the payment tool.

This was the largest cryptocurrency payment in history, instantly giving a new stablecoin $2 billion in "real-world backing."

By December, USD1 had a market cap of about $2.7 billion, ranking seventh among stablecoins and becoming one of the fastest-growing stablecoins.

Now, USD1 is also included in the reserves of $U. This signifies an implicit chain of interests: the trading volume of the Binance ecosystem partially translates into the use cases for USD1; the use cases for USD1 partially translate into income for the Trump family.

A deeper game lies in the monetization of political capital. After Trump returns to the White House, the SEC suspended investigations into several crypto projects, including cases involving Sun Yuchen, a major investor in World Liberty Financial. Treasury Secretary Yellen clearly stated at the White House crypto summit: "We will use stablecoins to maintain the dollar's status as the world's reserve currency."

Stablecoins are no longer just financial tools; they are becoming carriers of political resources.

The Logic of Nested Dolls

Using stablecoins to collateralize other stablecoins may seem redundant. However, this design is based on three considerations.

Risk Diversification. The risk of USDT lies in its opaque reserves; USDC's risk stems from its excessive reliance on the U.S. banking system, as the Silicon Valley Bank incident has already sounded the alarm; USD1's risk is deeply tied to Trump's political fate. Holding any one of them alone carries specific risks. Combining the three theoretically allows for risk hedging.

Liquidity Aggregation. A pain point in the stablecoin market is fragmented liquidity. USDT has its own liquidity pool, USDC has its own liquidity pool, and funds are dispersed across dozens of public chains and hundreds of DeFi protocols. $U attempts to connect these isolated pools, providing users with a unified liquidity entry.

Narrative Upgrade. The competitive dimensions of stablecoin 1.0 are "who is more transparent" and "who is more compliant," a narrative that has been told for ten years. $U attempts to provide a new narrative framework: "a settlement currency designed for the AI era" and "supporting gasless signature transfers."

Of course, gasless transfers are based on the EIP-3009 standard, which has existed since 2020, and USDC has long supported it. Thus, "AI-native" is more of a universal label; any on-chain stablecoin can be called upon by smart contracts and can achieve automatic payments between machines. The true differentiation of $U lies not in technology but in its ecosystem and aggregation architecture.

However, the nested doll structure also means risk transmission; if one layer has issues, all layers are affected.

If USDT were to collapse one day, $U would not go to zero completely, but it would certainly face impacts: shrinking reserves, increased redemption pressure, and rising depegging risks.

What is referred to as "diversifying risk" is more accurately described as "diversifying the impact intensity of single points of failure," ensuring that when any underlying asset has issues, holders do not lose everything. This is a safety net mentality rather than a no-risk design.

From Gray Areas to Great Power Games

2025 will be the regulatory year for stablecoins.

In June, Circle went public on the NYSE, with an IPO price of $31, closing at $69 on the first day, bringing its market cap close to $20 billion, becoming the "first stablecoin stock." In the same month, the U.S. Senate passed the "GENIUS Act" with 68 votes in favor, establishing a federal regulatory framework for stablecoins for the first time. The EU's MiCA regulation came into full effect, and Hong Kong, Japan, and Singapore successively introduced licensing systems.

For the past decade, stablecoins have existed in a gray area, with regulatory agencies lacking grounds for intervention. Now, when the transfer volume exceeds that of the world's largest payment network, no government can continue to pretend not to see.

Data shows: 34% of adults in Turkey hold USDT to hedge against the depreciation of the lira; nearly 30% of remittances in Nigeria are completed through stablecoins; technology workers in Argentina commonly use USDC to receive salaries, bypassing local currency inflation. In these countries, stablecoins have become the de facto "shadow dollars."

The foundation of dollar hegemony is not the Federal Reserve's ability to print money but the inertia of global trade being settled in dollars. If stablecoins become the new generation of cross-border payment infrastructure, controlling stablecoins means controlling dollar hegemony in the digital age.

This is the deeper logic behind the Trump family's entry, and it explains why the "GENIUS Act" was able to pass with rare bipartisan consensus: in Washington, stablecoins are no longer a niche topic in the crypto circle but a strategic resource related to national interests.

A Tipping Point

Whether $U will succeed is still uncertain. Its current circulating market cap is minuscule compared to USDT's nearly $200 billion and USDC's nearly $80 billion.

However, it represents a new paradigm in stablecoin competition.

The competition of the 1.0 era was a solo effort: Tether established a monopoly through first-mover advantage, Circle attempted to leverage compliance to gain market share, and Binance fought for pricing power through BUSD. The core question of competition was "who can survive."

The competition of the 2.0 era is about alliances and collaborations. PayPal issued PYUSD, Ripple launched RLUSD, and Robinhood partnered with Galaxy Digital and Kraken to form the USDG alliance. Traditional financial giants, crypto-native players, sovereign capital, and political forces have all entered the fray.

The new core question has become "who can bind more people together."

$U's strategy is to achieve aggregation through "nested dolls": not competing with any party but turning everyone into its "underlying assets." Binance's intention is to build a "decentralized centralized" system: using an aggregation structure to disperse regulatory risks while maintaining control over the core ecosystem.

This battle of a hundred groups has no endgame. The balance of regulation is still swaying, the boundaries of technology are still expanding, and political variables are still accumulating.

What is certain is that stablecoins have transitioned from being a supporting role in cryptocurrencies to becoming a key infrastructure in the global financial system. An annual trading volume of $27 trillion is enough to make anyone who underestimates it pay the price.

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