Stablecoin Activity Spikes After Tariff Wars-Induced Market Rout

Stablecoin activity increased dramatically over the past 24 hours as the trade war between the US and other countries wreaks havoc on the markets.

Data from IntoTheBlock has shown that daily stablecoin usage has surged, with active addresses hitting 300,000, while on-chain stablecoin volume reached $72 billion.

Stablecoin Activity Surges

The increase marks the highest level of stablecoin activity since February 2025 and demonstrates how investors have embraced the relative stability of stablecoins amid the prevailing volatility in the crypto market. Analysts are not surprised with the investor pivot towards stablecoins given the recent plunge in cryptocurrency prices. Bitcoin and other cryptocurrencies have struggled in recent weeks due to economic uncertainties and President Trumps tariffs. As a result, the crypto market registered one of the biggest declines in recent memory on Monday. Bitcoin crashed from $81,000 to $74,000, while other cryptocurrencies like ETH, XRP, and SOL registered double-digit losses.

Volatility heightened after rumors swirled about a possible 90-day pause in tariffs. As a result, markets raced upward. However, a clarification issued by the White House saw prices crashing again.

Long And Short Positions Liquidated

Market volatility also impacted long and short positions, resulting in over $200 million in liquidations in just one hour. While the markets have become relatively stable, the overall sentiment is still bearish, with the crypto market cap down over 2% in the past 24 hours. Additionally, trade war and tariff tensions wont be easing anytime soon, with several countries threatening retaliatory tariffs and import bans against the US. The Crypto Fear & Greed Index is at 19, firmly in the Extreme Fear zone.

Stablecoins Register Robust Growth Despite Market Struggles

Stablecoins have continued to grow despite the volatility and an overall bearish trend in the crypto market, with a total circulating supply of around $234 billion, a 13% growth year-to-date for the sector, primarily due to the increase in USDC and USDT supply. The stablecoin market is projected to grow more in the coming months as new players enter the space, including the Trump family-backed DeFi project, World Liberty Financial (WLFI), which plans to launch the USD1 stablecoin. The project plans to distribute the stablecoin to all WLFI token holders.

Global regulators are also creating legal frameworks for stablecoins, a move experts believe will allow the stablecoin ecosystem to thrive. Kenya recently proposed a bill to regulate stablecoins and crypto. The US is also creating a regulatory framework for stablecoins, while the UK plans to introduce a stablecoin regulation in 2026. Industry experts believe these measures will improve the credibility of stablecoins. However, they will also impact offshore stablecoins like USDT.

The SECs Stance On Stablecoins

The United States Securities and Exchange Commission (SEC), in a formal statement, clarified its stance on stablecoins. The agency stated that reserve-backed, USD-pegged stablecoins meeting specific criteria, defined as covered stablecoins, do not qualify as securities under existing federal law. The SECs statement is expected to shape how these assets are issued, marketed, and used in the US financial system. According to the SEC, covered stablecoins must maintain a one-to-one peg with the USD, be redeemable at a fixed rate, and be fully backed by low-risk, liquid assets held in a segregated reserve.

Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

Text source: Crypto Daily™

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