The stablecoin market looks settled when read as a leaderboard. Dollar-backed stablecoins dominate supply. The largest networks, deepest liquidity pools and most familiar trading pairs all run through the U.S. dollar. Non-dollar stablecoins remain tiny by comparison. Recent market data show non-dollar stablecoins account for less than 0.5% of the total stablecoin supply, with dollar-pegged tokens controlling nearly the entire market.

Many investors have drawn a simple conclusion from those numbers: USD stablecoins won, and everything else is a niche experiment. I think the market is too focused on today’s dominant pairs.

Three years ago, when USD stablecoins were becoming the obvious next piece of crypto infrastructure, I was spending more time thinking about the assets most of the market ignored. Euro, yen and other local-currency stablecoins had been tried before. Most attempts struggled for the same reason: they lacked the liquidity to attract users, and they lacked the users to attract liquidity.

The Cold Start Loop Is Breaking

Users can move in and out of the largest dollar stablecoins with low slippage, deep venue support and familiar settlement paths. Smaller currency stablecoins expose every weak point in the route: thin pools, bad pricing, limited exchange support, unreliable off-ramps and fragmented compliance coverage.

Anyone building around DeFi infrastructure learns quickly that token creation is the easy part. The harder work sits in execution quality. A user does not care that a euro or yen stablecoin exists if the route into it is expensive, the exit path is uncertain or the final conversion back into a local account breaks at the last mile.

Recent data shows the loop beginning to loosen. Since MiCA, euro stablecoin volume has held between $15 billion and $25 billion a month. Brazil’s real-backed BRLA went from near zero in early 2023 to about $400 million in monthly transfers, and across local currencies, transfer volume is up 16-fold since 2023. Holder addresses alone have grown from about 40,000 to more than 1.2 million.

Those figures sit far below the dollar market. More importantly, they show usage beginning to cluster around specific currencies and corridors where local settlement has a real purpose.

Regulatory Clarity Changes the Liquidity Conversation

The industry usually views regulation as an anchor, but for stablecoins, it is closer to a prerequisite. Reserves, redemption, banking access and institutional trust all shape whether liquidity providers are willing to support an asset.

MiCA gave euro stablecoin issuers and their counterparties a clearer operating base. The framework imposed constraints on some products, yet it also made the asset class easier for market makers, exchanges, and enterprises to evaluate. Liquidity providers can price risk more confidently when rules are legible. Payment companies can build pilots around assets that have a defined legal status. Treasury teams can begin to assess whether a euro stablecoin belongs in a settlement or working-capital workflow.

Other jurisdictions are moving through the same process at different speeds. The Bank of England has revised parts of its proposed sterling stablecoin framework after industry pushback. Japan has created a regulated pathway for yen stablecoins. Brazil’s market shows how local digital payment behavior can support stablecoin adoption once the asset is connected to domestic demand. In each case, clearer rules reduce the uncertainty that keeps liquidity providers, payment companies and enterprise treasury teams on the sidelines.

Beyond Issuing Another Token

Issuer-level competition still absorbs most of the attention. The deeper infrastructure opportunity is on-chain FX.

The current FX system serves large institutions well in the deepest corridors, especially during normal market hours. Smaller businesses and payment companies still rely on correspondent banks, with the settlement delays, off-hours liquidity gaps, and expensive local payout networks that come with them. None of this reaches the end user, but it sets what a cross-border payment costs and how reliably it lands.

On-chain FX can compress that process, and the clearest early use cases are already more practical than speculative. Remittances and card top-ups both depend on cheap, reliable conversion into the currency people actually spend. A user funding a euro card balance should not need to move through a dollar stablecoin first if a euro stablecoin can settle more directly into euros. The same logic applies to cross-border payouts into markets such as Brazil or Nigeria, where every extra FX leg adds cost, delay, and execution risk.

The hard part is route quality. Liquidity needs to sit in the right places. Routes need to account for chain fees, settlement delays, counterparty risk and local off-ramps. Compliance checks need to fit into the transaction flow without turning every transfer into a manual process. Slippage tolerance matters. The last mile into a bank account, wallet or merchant balance matters just as much.

Reliable euro-dollar conversion can make a euro stablecoin more useful than a larger token trapped in one venue. In Brazil, domestic payment demand gives real-backed stablecoins a reason to exist outside crypto trading narratives. In Japan, regulated issuance and credible liquidity may matter well before headline supply does.

Where the Flows Are Heading

The next phase will reward infrastructure that connects currencies, venues, compliance environments and local payment systems. Issuance will remain important, although the deeper value will sit in routing, liquidity aggregation, market-making relationships, risk controls and on- and off-ramps.

Dollar stablecoins will remain central to the market. Deep U.S. capital markets, global dollar demand and years of crypto-native liquidity give them advantages that local-currency stablecoins cannot quickly replicate.

A multi-currency stablecoin market will develop unevenly. Some regions will move faster because regulation, payment habits and local demand already align. Other markets will need more time because liquidity remains scattered or banking access stays fragile. The growth curve will look less like a single breakout moment and more like a series of corridors that become usable one by one.

The market’s blind spot is non-dollar stablecoins as raw material for on-chain FX. As more currencies develop usable liquidity, stablecoins can move beyond crypto-dollar balances and start functioning as settlement rails between local economies. The dollar built the first stablecoin market, but the next layer depends on teams that can make cross-currency movement feel as reliable as movement within a single currency.

Benzinga Disclaimer: This article is from an unpaid external contributor. It does not represent Benzinga’s reporting and has not been edited for content or accuracy.