Ren Zeping: Five major opportunities to stabilize the currency industry chain

# A Wave Driven by Stablecoins: Reshaping the Global Asset and Payment Landscape

Source: Selected Brokerage Research Reports

Author: Zeping Macro Team

A wave driven by stablecoins—one that will reshape the global asset and payment landscape—has arrived. This article aims to systematically analyze the five core investment opportunities across the upstream, midstream, and downstream of the stablecoin industry, and accurately identify the value of this track amid a historic transformation.

## 1. Upstream Investment Opportunities in the Stablecoin Industry: Issuance and Custody

Investment opportunities in any emerging industry start from the source of its value creation. In the upstream segment of the stablecoin track, **issuance** and **custody** together form the cornerstone and trust anchor for the entire ecosystem’s operation. Stablecoin issuers mark the starting point of the ecosystem, with a clear profit model that merits attention.

### Opportunity 1: Stablecoin Issuers – The Starting Point of the Stablecoin Ecosystem

The business model of stablecoin issuers is noteworthy: it is the clearest and most direct profit model in the entire track, centered on **cost-free fund absorption** and **interest spread income**. When a user exchanges $100 for 100 stablecoins, that $100 becomes the issuer’s reserve capital. Since stablecoins do not pay interest to users, this essentially equates to the issuer obtaining a cost-free deposit. The issuer then invests this large reserve pool in highly liquid, low-risk assets such as short-term U.S. Treasuries. After deducting operational costs (e.g., custody and auditing fees), the interest generated from these investments constitutes the issuer’s net profit.

When scaled up to a reserve size of hundreds of billions of dollars, this model yields substantial profits. For example, Tether—the world’s largest stablecoin issuer—has a team of around 100 people. By the end of 2024, its reserve assets exceeded $140 billion, with annual net profit surpassing $13 billion, outperforming Citigroup. Most of this profit came from investment returns on reserves, while a small portion came from transaction fees for fiat-to-stablecoin exchanges.

#### Global Duopoly格局与Future New Entrants

Currently, the global stablecoin issuance market is dominated by a duopoly, though more players are expected to enter in the future. Tether and Circle are the two largest issuers, with their stablecoins (USDT and USDC) accounting for over 90% of the market share. Both promise a 1:1 peg to the U.S. dollar, but differ in positioning and profit models:

- **Positioning**:

Circle adopts a **compliant and transparent approach**, aligning closely with regulatory requirements and publishing rigorous, regular audit reports. Since January 2023, it has collaborated with Deloitte to conduct monthly audits of its reserve proofs and publicly release the results.

Tether, by contrast, takes a **market-driven approach**. The transparency of USDT’s reserves has long been a subject of market debate: while Tether occasionally releases reserve audit reports, these often lack detailed information and strict verification by independent third parties. In October 2021, Tether was fined $41 million by U.S. regulators over reserve-related issues.

- **Profit Models**:

- **Revenue Side**: Tether’s reserve asset structure is more diversified. Its 2024 audit report showed that USDT’s reserve assets totaled approximately $143.7 billion, allocated across six categories—over 80% in cash equivalents (primarily U.S. Treasuries), 5% in Bitcoin, and the remainder in corporate bonds, precious metals, and secured loans.

Circle’s reserves, however, consist mainly of cash and short-term U.S. Treasuries (80% in U.S. Treasuries and 20% in cash deposits).

- **Cost Side**: Circle incurs higher compliance costs and platform fees. It maintains a large compliance team of over 800 people, pays monthly verification fees to Deloitte, and shares 55% of its reserve income with trading platforms. In contrast, Tether has lower costs and no need to split profits with platforms.

As a result, Tether demonstrates higher profit margins. In 2024, with $143.7 billion in reserves, it achieved a net profit of $13.7 billion (primarily from investments): ~$5 billion from gold and Bitcoin, ~$7 billion from U.S. Treasuries, and ~$1 billion from other traditional investments. By comparison, Circle—with $37 billion in reserves (a quarter of Tether’s scale)—posted a 2024 net profit of only $156 million, less than 1% of Tether’s.

#### Emerging Issuers in Hong Kong

With the upcoming implementation of Hong Kong’s *Stablecoin Ordinance*, a group of potential local issuers is emerging, offering opportunities to identify "the next Circle."

On July 18, 2024, the Hong Kong Monetary Authority (HKMA) officially announced participants in its stablecoin sandbox program, marking the launch of Hong Kong’s stablecoin ecosystem. A "sandbox"—a security mechanism in cybersecurity that provides an isolated environment for program testing—allows technical trials in a controlled setting. Participants in the sandbox (potential future stablecoin issuers) include:

- JD Coin Chain Technology (likely to develop the JD-HKD stablecoin);

- Round Dollar Innovation Technology (developing the HKDR stablecoin);

- Standard Chartered Bank (collaborating with Animoca Brands and HKT to develop HKDG, a Hong Kong dollar-pegged stablecoin).

In June 2025, reports indicated that Ant Digital Technology (under Ant Group) would apply for a stablecoin license in Hong Kong, making it another potential issuer.

### Opportunity 2: Custody Institutions – The Trusted Pillar of the Stablecoin Ecosystem

Stablecoin custody institutions are financial entities responsible for the secure storage of stablecoin reserve assets. They are critical to the stablecoin ecosystem, directly influencing market trust in stablecoins. For instance, during the collapse of Silicon Valley Bank (SVB) in March 2023, Circle held 8% of USDC’s reserves at SVB, triggering a market run and mass sell-off of USDC.

Stablecoin issuers are required to deposit their fiat reserves with licensed custody institutions. These institutions ensure the secure storage, transparent management, and compliant operation of reserve assets, and earn custody fees—positioning them to benefit from the stablecoin wave.

#### Regulatory Requirements for Custodians

Custodians play a vital role in the ecosystem and thus face strict regulatory requirements:

- **Hong Kong’s *Stablecoin Ordinance***: Mandates that reserve assets be held independently, separated from the issuer’s own business assets. Issuers may manage reserves themselves or entrust them to institutions such as banks, with regular verification, auditing, and disclosure requirements.

- **U.S. GENIUS Act**: Requires reserves to be segregated from the issuer’s operating funds and held by qualified third-party custodians. Reserves must be publicly disclosed monthly (in terms of composition and value), audited quarterly by independent accounting firms, and annual reports must be submitted to regulators and made public.

#### Core Functions of Custodians

Custodians perform key roles including:

- **Asset Safekeeping**: Holding reserves for stablecoin issuers to ensure 1:1 peg backing.

- **Fund Segregation**: Separating reserve assets from the custodian’s own assets (per regulatory requirements) to prevent misappropriation.

- **Audit and Disclosure**: Undergoing regular independent audits and publicly disclosing reserve composition to enhance transparency.

- **Liquidity Management**: Ensuring reserves remain liquid to meet redemption demands.

#### Key Players in Custody

Both traditional financial giants and emerging digital banks have begun offering stablecoin custody services:

- Circle entrusts approximately 86% of its reserves to The Bank of New York Mellon (custodian) and BlackRock (asset manager), opening a new growth avenue for these traditional institutions.

- Tether has confirmed a partnership with Deltec Bank & Trust Limited—a 72-year-old financial institution headquartered in the Bahamas.

- In Hong Kong, ZA Bank has become the first digital bank to provide reserve banking services for stablecoin issuers, partnering with Round Dollar Innovation Technology (a sandbox participant).

#### A Notable Trend: Issuer "Self-Custody"

A rising trend is issuers seeking bank licenses to gain self-custody capabilities, transforming stablecoins from mere payment tools into integrated financial infrastructure:

- Circle has officially applied to the U.S. Office of the Comptroller of the Currency (OCC) to establish a national trust bank—the First National Digital Currency Bank. If approved, Circle will self-custody over $60 billion in reserves.

- In January 2021, Anchorage became the first fully compliant digital asset national trust bank in the U.S. If Circle’s application is successful, it will become the second.

## 2. Midstream Investment Opportunities in the Stablecoin Industry: Stablecoin Trading Institutions

The midstream of the stablecoin industry centers on **exchanges**—the core hubs that provide deep liquidity, diverse trading scenarios, and secure settlement services for stablecoins. As the link between upstream issuance and downstream applications, exchanges facilitate large-scale value flow and price discovery.

### Opportunity 3: Stablecoin Exchanges – The Core of Circulation

Exchanges are the primary venues for stablecoins to fulfill their role as "universal mediums of exchange." They not only offer basic fiat-to-stablecoin on/off-ramp services but also build extensive stablecoin-pegged trading pairs (e.g., BTC/USDT, ETH/USDC) to provide pricing and liquidity for thousands of crypto assets. Additionally, derivative trading settled in stablecoins further amplifies the hub value of stablecoins. For investors, the track has already seen clear differentiation, with three key areas to focus on:

#### Focus Area 1: Global Leading Exchanges with Super Traffic and Liquidity

In stablecoin and crypto trading, network effects are significant, and the market exhibits a highly concentrated oligopolistic structure. Exchanges with traffic advantages merit attention. According to TokenInsight’s Q2 2025 report, Binance, OKX, Bybit, and Bitget are the top four exchanges globally, with combined market shares of over 70% in spot and derivatives trading (35.39%, 14.34%, 12.26%, and 11.45% respectively). All four support stablecoin services and leverage their large user bases, deep trading liquidity, and diverse product lines to build strong competitive moats.

#### Focus Area 2: Compliant and Regulated Participants

As institutional capital gradually enters the market and regulatory frameworks become clearer, trading volume is no longer the sole measure of an exchange’s value. **Compliance and reputation** have emerged as core competitive advantages for attracting incremental capital.

Forbes’ January 2025 ranking of the "World’s Most Trusted Crypto Exchanges" used compliance, security, and financial health as core evaluation criteria. CME Group topped the list, followed by Coinbase and Bitstamp. Other ranked exchanges included Binance, Robinhood, Kraken, Crypto.com, Fidelity, Bitget, OKX, HTX, and Bybit.

CME Group—a traditional exchange—claimed the top spot because it offers regulated crypto derivative products (e.g., Bitcoin futures, Ethereum futures, and options on these futures) globally. This trend indicates that compliant exchanges capable of winning institutional investors’ trust will undergo higher value revaluation in the next phase of stablecoin trading competition.

#### Focus Area 3: "License Dividends" for Regional Compliant Exchanges (Hong Kong as an Example)

Hong Kong is actively building an international financial center for the Web3 ecosystem, making exchanges with local regulatory licenses worthy of attention. To ensure market safety, Hong Kong enforces a strict licensing system for virtual asset trading platforms, with 11 institutions currently licensed. Platforms like OSL and HashKey (both licensed) have gained first-mover advantages in serving institutional and retail investors. For investors, regional exchanges that proactively embrace regulation and obtain local licenses are likely to be the first to capture "license dividends" as compliant regional capital flows in.

## 3. Downstream Investment Opportunities in the Stablecoin Industry: Key Application Scenarios

For investors, downstream application scenarios represent a relatively clear track in the stablecoin space. In the future, using stablecoins to activate and restructure massive physical assets in traditional finance, and to enable large-scale cross-border payments, will be transformative opportunities of paradigm-shifting significance.

### Opportunity 4: The Largest Application Scenario – Stablecoins + RWA: Tokenizing Trillions of Dollars in Assets

RWA (Real-World Asset) tokenization—dubbed the "third revolution in asset management"—is growing rapidly. As of June 2025, the global total value of RWA assets had exceeded $23 billion. Boston Consulting Group predicts that by 2030, the global RWA market will reach $16.1 trillion, accounting for 10% of global GDP.

RWA refers to the process of converting physical or financial assets in traditional financial markets into digital tokens via blockchain technology, enabling these assets to be recorded, traded, transferred, and managed on blockchain networks.

#### RWA vs. Asset Securitization

RWA shares similarities with asset securitization but can be viewed as its "on-chain version." Its workflow consists of three core steps:

1. **Off-Chain Asset Verification**: Confirming asset ownership and evaluating value through legal and compliance procedures.

2. **On-Chain Mapping**: Mapping asset rights to the blockchain and generating corresponding tokens.

3. **On-Chain Governance**: Automating processes such as profit distribution and collateral liquidation via smart contracts.

#### Stablecoins as an Accelerator for RWA

Stablecoins act as accelerators for the RWA ecosystem, primarily by providing a stable unit of account and payment method for RWA transactions. Their 1:1 peg to fiat currency makes them ideal for RWA trading and pricing. Unlike volatile cryptos such as Bitcoin and Ethereum, stablecoins offer a stable value benchmark, allowing investors to focus on the fundamentals of underlying assets rather than the volatility risk of the pricing currency.

#### Value of Stablecoin + RWA for Investors

The greatest significance of stablecoin-backed RWA lies in **expanding the scope of investable assets**:

- Traditionally illiquid assets (e.g., real estate, art, private equity, intellectual property) can be tokenized into small units and listed on-chain, significantly enhancing liquidity.

- In the future, standardized financial products (e.g., stocks, bonds) may gain an additional on-chain circulation market, improving the flexibility of investors’ asset allocation.

#### Advantages of RWA Over Traditional Financing

Compared to traditional financial financing, RWA offers significant advantages in **enhancing information transparency** and reducing information asymmetry between investors and projects. For investors, these advantages include:

1. **On-Chain Data Sourcing**: Large-scale infrastructure projects involve multiple parties and long construction cycles. In traditional financing, data from design, construction, and operation phases is scattered across different entities, forcing financial institutions to rely on second-hand information (e.g., audit reports, ratings). The RWA model uses IoT + blockchain to write key operational data (e.g., EV charger usage, solar power generation, battery swap frequency) to the blockchain in real time, creating an immutable, verifiable single data source—"cracking the black box" and reducing information asymmetry.

2. **End-to-End Traceability**: Traditional bonds or loans only disclose information via prospectuses and quarterly/annual reports, making it difficult for investors to track fund flows or real-time asset status. RWA uses smart contracts to automatically record cash flows, maintenance logs, and profit distributions, with timestamps and hashes ensuring all modifications leave traces. For infrastructure projects with lifespans of over a decade, this continuous auditing function far outperforms traditional static disclosure.

3. **Direct Investor Verification**: In traditional models, investors must rely on banks, rating agencies, or government endorsements. After RWA slices underlying assets into tradable tokens, anyone can query real-time asset performance via block explorers—no need to wait for regular reports from issuers or intermediaries. This not only improves transparency but also shortens information transmission chains and reduces moral hazard.

#### Case Studies: Green Energy RWA Projects in China

With the growth of green energy infrastructure projects, investment in China’s green energy RWA sector has become increasingly active:

- In August 2024, Longshine Group collaborated with Ant Digital Technology to complete China’s first RWA project based on new energy physical assets. The project packaged the revenue rights of 1.2 million EV chargers across 28 Chinese provinces, using AntChain’s cross-chain technology to synchronize real-time charger data (e.g., charging volume, revenue) to Hong Kong’s issuance chain.

- In December 2024, GCL New Energy completed China’s first solar asset RWA project (worth RMB 200 million) in collaboration with Ant Digital Technology. The underlying assets were 82MW of distributed solar power plants across 12,000 households in Hubei and Hunan provinces. Smart meters recorded power generation data on-chain (no later than 8 AM the next day), and smart contracts enabled daily settlements, with profits automatically converted to USDC and distributed to investors’ wallets.

- In March 2025, Xuny ing Group launched China’s first RWA project on a public blockchain platform. In collaboration with Ant Digital Technology, it packaged 4,000 EV battery swap cabinets (with over 40,000 lithium batteries) from its Xuny ing Mobility subsidiary (operating in over 20 Chinese cities). Tree Graph Blockchain Research Institute provided public chain technical support.

### Opportunity 5: A Critical Application Scenario – Stablecoins + Cross-Border Payments: Challenging Traditional Systems

The application of stablecoins in cross-border payments is fundamentally challenging traditional payment systems, thanks to significant advantages in **efficiency and cost**:

1. **Faster Transaction Speed**: Traditional cross-border payments (e.g., via SWIFT) require days of settlement, while stablecoins enable near-instant peer-to-peer transfers.

2. **Lower Transaction Costs**: According to World Bank data, stablecoin-based settlements can reduce costs to less than 1/10,000 of traditional methods.

Different types of enterprises are leveraging their strengths to enter cross-border payment applications:

# Focus Area 1: Licensed Payment Institutions – Leveraging Compliance Advantages to Build Settlement Networks  

A group of fintech enterprises holding cross-border payment licenses is taking the lead in deploying stablecoin settlement businesses by leveraging their compliant status and operational experience. For instance, Lakala (28.000, -1.01, -3.48%), a third-party payment provider, is the only third-party payment institution in China with a full license for cross-border RMB transactions. Moreover, its Hong Kong subsidiary holds an MSO (Money Service Operator) license, which positions it well to meet the cross-border settlement demands related to stablecoins.  

# Focus Area 2: Hardware and Technology Suppliers – Securing Offline Entry Points to Lay the Foundation for Circulation  

The transformation of the payment ecosystem has also extended to the hardware and technology sectors. Relevant suppliers are upgrading their infrastructure to pave the way for the offline circulation of stablecoins. For example, Newland (29.370, -0.73, -2.43%), one of the leading domestic suppliers of POS terminals, has deployed its smart POS devices in 120 countries worldwide. These terminals have taken the lead in integrating the digital RMB hardware wallet function, laying a technical foundation for their future expansion into supporting offline real-time stablecoin exchange scenarios and becoming key circulation nodes.  

# Focus Area 3: E-commerce and Tech Giants – Focusing on Stablecoin B2B Scenarios to Optimize Their Own Ecosystems  

Large tech and e-commerce platforms are focusing more on using stablecoins to optimize their massive B2B and supply chain finance ecosystems, with the core goal of improving the turnover efficiency of internal funds. For example, JD Technology has participated in Hong Kong’s stablecoin sandbox through its subsidiary, aiming to explore the use of stablecoins for direct settlement with its suppliers in regions such as Asia-Pacific and the Middle East, reducing the traditional day-level settlement cycle to the minute-level. Ant Group, through its international business unit, is focusing on leveraging new technologies like stablecoins to empower its global supply chain finance and cross-border payment businesses.  

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