The trillion-dollar stablecoin war: Binance decides to rejoin the fray.

Original title: "The Trillion-Dollar Stablecoin War: Binance Decides to Enter the Fray Again"

Original author: Lin Wanwan, Beating

In 2024, the total on-chain transaction 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 close to zero ten years ago.

On December 18th, a project called United Stables launched a new stablecoin, $U, in Dubai. Its reserves are not US dollar cash or government bonds, but a combination of three stablecoins: USDC, USDT, and USD1. Using stablecoins as collateral for other stablecoins is known in the industry as "nested dolls."

Binance Wallet was integrated immediately, officially endorsed by BNB Chain, and fully supported by PancakeSwap and Four.Meme.

The implications of this setup in the crypto world are clear: Binance is getting involved directly.

$U itself may be insignificant. But it represents a trend: stablecoins are transitioning from a period of rapid, unregulated growth to a more fragmented market, and a new battle is underway.

Stablecoin 1.0 Era: First-mover Monopoly

Stablecoins are essentially "on-chain dollars." Users deposit $1 with the issuer and receive 1 token, which can circulate 24/7 on any blockchain in the world, 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 approval. A wallet address is all that's needed.

In 2014, when Tether issued USDT, the entire cryptocurrency market capitalization was less than $5 billion. Therefore, Tether capitalized on a window of opportunity where traditional banks were generally refusing to provide services to cryptocurrency companies. The only way to secure profits after trading cryptocurrencies was to convert crypto assets into USDT, locking in dollar-denominated gains.

USDT's rise is not only due to its excellent product, but also because users have no other choice. This "passive monopoly" has continued to this day. As of December 2025, USDT's market capitalization was approximately $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 custody by regulated financial institutions, and embracing the US securities regulatory framework. The subtext was that Tether's opaque model was bound to run into problems sooner or later.

In 2022, USDC's market capitalization once approached 70% of USDT's. Wall Street bet that the compliance camp would ultimately prevail.

In March 2023, Silicon Valley Bank collapsed. Circle held $3.3 billion in reserves there. The USDC briefly de-pegged to $0.87, a 13% drop for an asset that was promised to always be equal to $1.

The lesson the market has learned is that compliance is a plus, but not a moat. Banks can fail, 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.

In the era of stablecoins 1.0, there was only one rule for survival: first-mover advantage is everything.

Binance's three turns

Trading platforms are the hubs of the crypto world, and stablecoins are the unit of account for transactions. Whoever controls the mainstream stablecoins holds the pricing power. Binance cannot afford to relinquish this position.

In 2019, Binance partnered with Paxos, a licensed trust company in New York, to issue BUSD. This is a compliant stablecoin regulated by the New York Department of Financial Services, and its peak market capitalization reached $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, alleging that BUSD was 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 United States, and Binance paid a $4.3 billion fine.

$16 billion in stablecoin assets were wiped out under the crackdown on regulation.

Binance reacted swiftly. Shortly after BUSD was suspended, Hong Kong-based First Digital launched FDUSD, coinciding perfectly with the launch of Hong Kong's virtual asset licensing system. FDUSD quickly became one of Binance's main stablecoins, although the two companies never publicly confirmed their partnership.

Moving from BUSD to FDUSD is a passive survival strategy; moving from FDUSD to $U is an active strategy.

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

The lesson from Binance is that stablecoins that rely on a single regulatory framework are always in the hands of others.

Presidential family enters

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

In March 2025, the Trump family issued the USD1 stablecoin through World Liberty Financial. According to public disclosures, Trump family-affiliated entities hold a 60% stake in the parent company and receive 75% of its 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 more than $1 billion from the project.

Two months after its issuance, USD1 saw its first major transaction: Abu Dhabi's sovereign wealth fund MGX invested $2 billion in Binance, with USD1 serving as the payment instrument.

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

As of December, USD1 had a market capitalization of approximately $2.7 billion, ranking seventh among stablecoins and becoming one of the fastest-growing stablecoins.

Now, USD1 has been included in the reserves of $U. This implies a hidden chain of interests: the trading volume of the Binance ecosystem is partly converted into USD1 usage scenarios; and the usage scenarios of USD1 are partly converted into income for the Trump family.

A deeper level of competition lies in the monetization of political capital. After Trump's return to the White House, the SEC suspended investigations into several crypto projects, including the case involving Justin Sun, a major investor in World Liberty Financial. Treasury Secretary Bessenter stated explicitly 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 instruments; they are becoming a vehicle for political resources.

The logic of matryoshka dolls

Using stablecoins as collateral for stablecoins may seem redundant, but there are three considerations behind this design.

Risk diversification. USDT's risk lies in the lack of transparency regarding its reserves; USDC's risk lies in its over-reliance on the US banking system, as evidenced by the Silicon Valley Bank incident; USD1's risk lies in its deep ties to Trump's political fate. Holding any one of these individually carries its own specific risks. Combining all three theoretically allows for risk hedging.

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

The narrative has been upgraded. The competitive dimensions of stablecoin 1.0 are "who is more transparent" and "who is more compliant," a rhetoric that has been used for a decade. $U attempts to provide a new narrative framework: "a settlement currency designed for the AI era" and "supporting gas-free signature transfers."

Of course, gas-free transfers are based on the EIP-3009 standard, which has existed since 2020 and is already supported by USDC. Therefore, "AI-native" is a versatile label; any on-chain stablecoin can be invoked by smart contracts, enabling automatic payments between machines. The real differentiation of $U lies not in its technology, but in its ecosystem and aggregation architecture.

Of course, the nested structure also means risk transmission; if one layer has a problem, the rest will be affected.

If USDT were to collapse one day, $U would not go completely to zero, but it would certainly be impacted: its reserves would shrink, redemption pressure would increase sharply, and the risk of de-pegging would rise.

The so-called "risk diversification" is more accurately described as "diversifying the impact of a single point of failure," ensuring that holders do not lose everything if any underlying asset fails. This is a safety net approach, not a risk-free design.

From the gray area to great power competition

2025 will be the year of regulation for stablecoins.

In June, Circle went public on the NYSE, priced its IPO at $31 and closed at $69 on its first day, bringing its market capitalization close to $20 billion, becoming the "first stablecoin stock." That same month, the US 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 regulations came into full effect, and Hong Kong, Japan, and Singapore subsequently introduced licensing systems.

For the past decade, stablecoins have operated in a gray area, with regulators lacking a legal basis to intervene. Now, with transaction volumes exceeding those of the world's largest payment network, no government can continue to turn a blind eye.

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

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

This is the underlying logic behind the Trump family's involvement, and it's also why the GENIUS Act was able to pass with a rare bipartisan consensus: in Washington, stablecoins are no longer a niche issue in the crypto world, but a strategic resource concerning national interests.

On the verge of exploding

Whether $U will succeed remains to be seen. Its current circulating market capitalization is negligible, insignificant compared to USDT's nearly 200 billion and USDC's nearly 80 billion.

But it represents a new paradigm for stablecoin competition.

The competition in the 1.0 era was a battle of individual players: Tether established a monopoly by leveraging its first-mover advantage, Circle attempted to disrupt the market through compliance, and Binance fought for pricing power through BUSD. The core question of the competition was "who can survive."

The competition in the 2.0 era is about alliances and mergers. PayPal launched PYUSD, Ripple introduced RLUSD, and Robinhood formed the USDG alliance with Galaxy Digital and Kraken. Traditional financial giants, native crypto players, sovereign capital, and political forces have all entered the fray.

The new core question has become "who can bring more people together?"

$U's strategy is to achieve aggregation through a "nested" approach: not antagonizing any party, but turning everyone into its "underlying assets." Binance's intention is to build a "decentralized centralization": using an aggregation architecture to mitigate regulatory risks while maintaining control over the core ecosystem.

This battle among hundreds of companies is far from over. The scales of regulation are still tipping, the boundaries of technology are still expanding, and political uncertainties are still accumulating.

The only certainty is that stablecoins have transformed from a secondary role to a critical infrastructure of the global financial system. Their annual trading volume of $27 trillion is enough to make anyone who underestimates them pay the price.