Reeve Collins, the founder of blockchain neo-bank WeFi, said the number of viable stablecoins will grow as AI agents and account abstraction simplify management for users, who will no longer have to actively manage decentralized finance operations or execute complex trading strategies to generate yield.
Collins told Cointelegraph that demand for yield-bearing assets such as synthetic dollars, algorithmic stablecoins, and other next-generation real-world assets will grow as simplified user experiences emerge — creating a vibrant ecosystem of products.
Once the technical barrier to entry is lowered, these yield-bearing instruments will compete for investor attention because they’re easier to use and offer yield opportunities. Collins said:
“When the application layer gets a little more mature and when AI is integrated all of the complexity in this space will be gone, then the only thing that will drive which token to use is which one makes you the most money, which one is the easiest to use.”
Most crypto users rely on traditional, overcollateralized stablecoins backed by fiat cash or short-term cash equivalents that offer no yield and retain the fundamental characteristics of the underlying fiat reserves.
Current stablecoin sector market capitalization. Source: DefiLlama
Related: Stablecoins will see explosive growth in 2025 as world embraces asset class
Stablecoins come under regulatory scrutiny
Although overcollateralized stablecoins have been pitched to extend US dollar dominance, government regulators still see the nascent asset class as a potential threat to the current financial system.
On Dec. 6, the United States Financial Services Oversight Council (FSOC) published a report outlining systemic risks of stablecoins. The authors argued that overcollateralized stablecoins are vulnerable to withdrawal runs due to a lack of sufficient risk management policies.
Coinbase recently delisted Tether's USDt (USDT) stablecoin in the European Union to remain compliant with the EU's Markets in Crypto-Assets (MiCA) regulatory framework.
A Coinbase spokesperson told Cointelegraph the exchange will reassess its stablecoin listings at a later date and relist assets that have achieved MiCA compliance.
Unsurprisingly, a recent report from Kaiko shows that MiCA-compliant stablecoins dominate the European market, with stablecoin issuer Circle commanding approximately 91% of the stablecoin market share in the region.
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