“…My hope is that the stablecoin market will grow or diminish on the merits of their benefits to consumers and the broader economy.”
—Federal Reserve Governor Chris Waller
October 2, 2025 — Stablecoins have proceeded rapidly from being a grey zone through which capital would traverse as it moved into or out of the crypto-economy, to becoming an extension, if not a nascent pillar, of the fiat money system itself.
Coinbase Head of Institutional Research David Duong sees the market cap for stables hitting $1/2 trillion by 2028 (which would be somewhere between a 4X and 5X from where we are now).
Demetri Kofinas recently interviewed Charles Calomiris, former Chief Economist at the US Office of the Comptroller of the Currency, and it was eye-opening to hear someone of his stature speak so matter-of-factly about how the structure of the banking system is evolving in realtime, to wit:
• Stablecoins could replace checking accounts for dollar-denominated payments, potentially eliminating the need for traditional banks as intermediaries in the payment system.
• The separation of lending and payments through stablecoins could lead to a reduction of systemic risk in areas where bank lending has become increasingly overconcentrated.
• Yields will approach, if not surpass those provided by money-market accounts and t-bills.
Which is why…
• Incumbent banks are actively trying to slow down the adoption of yieldbearing stablecoins by blocking interest payments to consumers as part of a political compromise.
But it ultimately won’t matter because:
• Stablecoin issuers will likely use derivatives to work around any prohibitions on paying interest.
The ultimate upshot of this, which is not surprising, is that stablecoins are in the process of becoming significant buyers of government debt (we’ve already covered how Tether is one of the top holders, and now buys more US T-bills than Germany).
If we needed more evidence that stables were in the process of being baked into the financial system, the US CFTC (Commodity Futures Trading Commission) is now looking at allowing tokenized assets, including stablecoins ; they’re soliciting comments from 3 stakeholders until October 20th.
Even the IMF, who has traditionally loathed crypto and holds an acute animosity towards Bitcoin in particular, published a piece in their early September edition of Finance and Development, to: “assess the macroeconomic and geopolitical implications of widespread adoption of US dollar–denominated stablecoins around the world.”
It’s rife with the requisite rumination around financial stability and crime, but they do say the quiet part out loud: “New entrants like fintechs and big techs, and new products like crypto and stablecoins, are challenging incumbent financial institutions.”
They’re not wrong, which is why we’re all about owning those fintech challengers.
A stablecoin is just a tokenized dollar, which is itself a representation of central bank liability (debt).
Eye on EvilCoin
EvilCoin is our shorthand for Central Bank Digital Currencies and Digital IDs.
The momentum behind US-denominated stablecoins is alarming the technocrats of Europe, who view it as means by which US interests could exert control over the Eurozone.
To that end, they’re dramatically accelerating the rollout of the Digital-Euro. As per ECB president Christine Lagarde, the new system is “not just a means of payment, it is also a political statement concerning the sovereignty of Europe.”
Contrast with stablecoins, which will be largely privatized entities ranging from Tether and Circle, to Big Tech and Big Biz – including banks – the Digital Euro will be a fullblown CBDC backed by the European Central Bank.
And it’ll have characteristics we’ve been expecting from CBDCs, like limits on individual holdings of digital euros.
“According to the ECB’s 2024 progress report, holding limits have been the primary focus of the CBDC debate. The report also pointed out disagreements between the ECB and the national authorities, especially on how to curb bank deposit risks without compromising the effectiveness of monetary policy. This agreement offers a guideline to such decisions without concluding on the quantities that individuals can hold.”
Individual holding limits are being framed as a way of protecting bank stability; whatever the rationale, it’s right in line with what we would expect.
A couple of troubling datapoints (or anecdotes) coming out of the Far East, but nothing truly surprising, given our long-term thesis of widespread capital controls and fiat money morphing into social credit systems.
In Thailand, a full-blown banking crisis has erupted after policymakers enacted an antimoney laundering (AML) initiative using AI and automated systems to detect “unusual” transaction patterns.
The algos seem to have gone bonkers, freezing innumerable accounts of individual citizens and small businesses, as per The Thai Examiner:
“A banking crisis has exploded across Thailand’s financial system after large numbers of small business owners and everyday account holders woke up to find their bank accounts suddenly frozen. The freeze, triggered by aggressive new tactics from the Technology Crime Suppression Division (TCSD) and senior bank officials, is part of a sweeping crackdown on online scam networks. But the dragnet has ensnared countless innocent people, sparking outrage and panic. On Saturday night, the Bank of Thailand scrambled to contain the fallout, with a top official promising urgent action to reverse the damage.”
Initial reports were that people whose accounts had been wrongfully frozen were waiting up to two or three weeks to have access restored.
Banks have been given new directives ordering them to reinstate account holder access within four hours, or one working day.
Vietnam has gone one further, having enacted mandatory biometric verification laws for all bank accounts. On September 1st, the process commenced of permanently closing the 86 million of that country’s estimated 200 million bank accounts that had not been verified.
The State Bank of Vietnam (SBV) defended the move as essential for fighting fraud and preparing Vietnam for a “cashless future.”
There is still theoretical recourse for impacted account holders, which involves appearing in person at their bank. It is unclear what will happen in the long term to any remaining funds in the permanently closed accounts.
Mark Jeftovic
The Bitcoin Capitalist & Grey Swan Investment Fraternity
P.S. from Addison: As you can see from today’s excerpt from Mark Jeftovic’s latest Bitcoin Capitalist newsletter, stablecoins represent a chance for fiat currencies to get another lease on life… although they can also be used to deprive their citizens of rights.
We call the rise of stablecoins the Dollar 2.0. And again, history repeats…
1971: By flooding the system with an endless trove of physical dollars, Nixon’s actions led directly to the boom in gold prices… thus hatching an entire generation of gold millionaires.
And now…
Due to the (official) arrival of government-mandated stablecoins — by way of the newly-passed GENIUS Act — the price of the “Dollar 2.0” could double over 20 times. Thanks to Mark for his essays and for his insightful comments on today’s Grey Swan Live!
If you’d like, you can drop your most pressing questions right here: Feedback@GreySwanFraternity.
