The trillion-dollar stablecoin battle, Binance decides to join the fight again

Title: “Trillion-Dollar Stablecoin War: Binance Decides to Enter the Arena Again”

Author: Lin Wanwan, Dongcha Beating

In 2024, the total on-chain transfer volume 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 was nearly zero ten years ago.

On December 18, a project called United Stables launched a new stablecoin, $U, in Dubai. Its reserves are not cash or government bonds but a combination of USDC, USDT, and USD1 stablecoins. Collateralizing stablecoins with stablecoins, industry insiders call this “dolling.”

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

This setup clearly signals in the crypto world: Binance is personally entering the game.

$U may seem insignificant on its own. But it represents a trend: stablecoins are shifting from wild growth to feudal fragmentation, and a new battle has begun.

Stablecoin 1.0 Era: Monopolies of the Pioneers

The essence of stablecoins is “on-chain USD.” Users deposit $1 with the issuer and receive 1 token, which can circulate 24/7 across any blockchain worldwide, with instant settlement and transaction fees of a few cents.

Compared to Alipay or bank transfers, the core advantage of stablecoins is that they require no real-name verification, no bank account, and no regulatory permission. A single wallet address is all that’s needed.

In 2014, when Tether issued USDT, the entire crypto market cap was less than $5 billion. So Tether’s opportunity window was: traditional banks generally refused to serve crypto companies. After profiting from trading, the only way to lock in gains was to convert crypto assets into USDT, locking in dollar-denominated returns.

USDT’s rise was not only due to its excellent product but also because users had no other choice. This “passive monopoly” has persisted to this day. As of December 2025, USDT’s market cap is about $199 billion, accounting for 60% of the stablecoin market.

In 2018, Circle partnered with Coinbase to launch USDC, emphasizing compliance: monthly reserve audit reports, funds held in regulated financial institutions, embracing the US securities regulatory framework. The implicit message was that Tether’s opaque model would eventually face issues.

In 2022, USDC’s market cap once approached 70% of USDT. Wall Street bets that the compliant faction will ultimately prevail.

In March 2023, Silicon Valley Bank collapsed. Circle had $3.3 billion in reserves stored there. USDC briefly de-pegged to $0.87, a stable asset promising always to be worth $1, but it fell 13%.

The lesson from the market is: compliance is a plus, but not a moat. Banks can fail, regulations can shift, and the real barrier is network effects—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 Turnarounds

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

In 2019, Binance partnered with New York licensed trust company Paxos to issue BUSD. This is a compliant stablecoin regulated by the New York Department of Financial Services, reaching a peak 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 rights.”

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 cease minting new BUSD. Nine months later, Binance founder CZ pleaded guilty in the US, and Binance paid a $4.3 billion fine.

The $16 billion stablecoin assets evaporated under regulatory crackdown.

Binance responded swiftly. Shortly after BUSD was halted, Hong Kong-based First Digital launched FDUSD, just in time for Hong Kong’s virtual asset licensing regime. FDUSD quickly became one of Binance’s main stablecoins, despite no public confirmation of cooperation.

From BUSD to FDUSD was passive survival; from FDUSD to $U was proactive strategic positioning.

U’s design logic is entirely different: it does not directly compete with USDT, USDC, or USD1, but incorporates all of them into its reserve pool. In a sense, U is a “stablecoin of stablecoins,” or a “stablecoin ETF.”

Binance’s lesson: stablecoins relying on a single regulatory framework are always at the mercy of others.

Family Entering the Arena

$U ’s reserves include USD1, which is most noteworthy.

In March 2025, the Trump family issued the USD1 stablecoin through World Liberty Financial. Public disclosures show that entities related to Trump hold 60% of the parent company’s equity and receive 75% of net income. Trump himself serves as “Chief Cryptocurrency Advocate,” with his son Eric and Donald Jr. appointed as “Web3 Ambassadors.”

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

Two months after USD1’s launch, the first major deal occurred: Abu Dhabi sovereign fund MGX invested $2 billion in Binance, paid entirely in USD1.

This was the largest crypto payment in history, instantly providing a $2 billion “practical endorsement” for a new stablecoin.

As of December, USD1’s market cap was about $2.7 billion, ranking seventh among stablecoins and one of the fastest-growing.

Now, USD1 has been incorporated into $U ’s reserves. This creates an implicit利益链: Binance’s transaction volume partly translates into USD1 usage scenarios; USD1’s usage partly translates into income for the Trump family.

Deeper strategic play involves monetizing political capital. After Trump returned to the White House, the SEC paused investigations into several crypto projects, including cases involving Sun Yuchen, a major investor in World Liberty Financial. Treasury Secretary Bessente explicitly 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.

Dolling Logic

Collateralizing stablecoins with stablecoins may seem redundant. But behind this design are three considerations.

Risk Diversification. The risk of USDT lies in opaque reserves; USDC’s risk is over-reliance on the US banking system, with the Silicon Valley Bank incident serving as a warning; USD1’s risk is deeply tied to Trump’s political fate. Holding any one alone entails specific risks. Combining all three can theoretically hedge risks.

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

Narrative Upgrade. The competition in the Stablecoin 1.0 era was about “who is more transparent” and “who is more compliant,” a discourse that has lasted ten years. $U seeks to offer a new narrative framework: “Settlement currency designed for the AI era” and “supporting gasless signed transfers.”

Of course, gasless transfers are based on the EIP-3009 standard, existing since 2020, and supported by USDC long ago. So “AI-native” is a versatile label; any on-chain stablecoin can be called by smart contracts and enable automatic machine-to-machine payments. The real differentiation of $U is not in technology but in ecosystem and aggregation architecture.

Of course, the dolling structure also entails risk transmission: if one layer fails, it affects all layers.

If USDT suddenly collapses one day, $U wouldn’t completely vanish, but it would definitely suffer shocks: reserves shrinkage, redemption pressure spike, de-pegging risk increase.

The so-called “risk diversification” is more precisely “reducing the impact of single point failures,” ensuring that when any underlying asset encounters issues, holders do not lose everything. This is a risk mitigation mindset, not a risk-free design.

From the Gray Zone to Great Power Competition

2025 will be the year of stablecoin regulation.

In June, Circle went public on the NYSE, with an IPO price of $31, closing at $69 on the first day, with a market cap approaching $20 billion, becoming the “first stablecoin stock.” That same month, the US Senate passed the GENIUS Act with 68 votes, establishing the first federal regulatory framework for stablecoins. The EU’s MiCA regulation fully took effect, and Hong Kong, Japan, and Singapore introduced licensing regimes.

Over the past decade, stablecoins have been in a gray regulatory area, with authorities lacking a basis for intervention. Now, when their transfer volume exceeds that of the world’s largest payment network, no government can continue to turn a blind eye.

Data shows: 34% of Turkish adults hold USDT to hedge against lira devaluation; nearly 30% of Nigeria’s remittances are done via stablecoins; Argentine tech workers widely use USDC to receive salaries, bypassing local currency inflation. In these countries, stablecoins are effectively “shadow dollars.”

The foundation of US dollar hegemony is not the Fed’s printing capacity but the inertia of global trade settled in dollars. If stablecoins become the new cross-border payment infrastructure, controlling stablecoins means controlling the dollar’s dominance in the digital age.

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

Imminent Eruption

$U ’s success is still uncertain. Its current circulating market cap is tiny compared to USDT’s nearly $200 billion and USDC’s nearly $80 billion.

But it represents a new paradigm in stablecoin competition.

Era 1.0 competition was solo: Tether built a monopoly through first-mover advantage; Circle tried to leverage compliance to shake the market; Binance fought for pricing power with BUSD. The core question was “who can survive.”

Era 2.0 competition is about alliances. PayPal issues PYUSD, Ripple launches RLUSD, Robinhood joins forces with Galaxy Digital and Kraken to form USDG. Traditional financial giants, crypto-native players, sovereign capital, and political forces are all entering.

The new core question becomes “who can bind more people together.”

$U ’s strategy is to achieve aggregation through “dolling”: not to oppose any party but to turn everyone into its “underlying assets.” Binance’s goal is to build a “decentralized centralized” system: using an aggregation architecture to disperse regulatory risks while maintaining control over the core ecosystem.

This hundred-crew battle has no end. Regulatory balances are still shifting, technological boundaries are expanding, and political variables are accumulating.

The only certainty is: stablecoins have shifted from a minor role in crypto to a key infrastructure of the global financial system. With $27 trillion in annual transaction volume, anyone underestimating this will pay a price.