Stablecoin's "GPT Moment": The Application of Blockchain in Finance and Public Sectors

1. The time for large-scale adoption of Blockchain has come

The year 2025 is expected to be the "ChatGPT moment" for the application of Blockchain in the financial and public sectors. The main reasons include:

• The support stance of U.S. regulatory agencies for Blockchain is expected to change the industry landscape.
• Continued focus on transparency and accountability in public expenditure

These changes are built on the developments of the past year, including the EU MiCA regulation, cryptocurrency ETF issuance, institutional trading, and custody.

Despite the increased participation of banks, asset management companies, and government agencies in Blockchain, it still lags behind optimistic expectations. We are seeing the accelerated integration of internet-native technology, currency, and Blockchain and digital-native use cases.

The government's adoption of Blockchain is mainly divided into two categories:

1. Empowering new financial tools
2. System Modernization

Stablecoins have now become the main holders of U.S. Treasury bonds and have begun to influence global financial flows. Their increasing popularity reflects the ongoing demand for dollar-denominated assets.

stablecoin 正在崛起

Clarity from U.S. regulators will be a major catalyst for the broader acceptance of stablecoins. This can help stablecoins and Blockchain integrate better into the existing financial system.

By the end of March 2025, the total value of stablecoins will exceed $230 billion, which is 30 times more than five years ago. We expect that by 2030, the total supply of stablecoins could reach $1.6 trillion in the baseline scenario and up to $3.7 trillion in an optimistic scenario.

The regulatory framework for US stablecoins will support the demand for risk-free assets in US dollars. By 2030, the amount of US Treasury bonds held by stablecoin issuers may exceed the total of any current jurisdiction.

Future challenges

Challenges faced by the development of stablecoins include:

• Non-U.S. policymakers may view stablecoins as tools of dollar hegemony.
• China and Europe may promote CBDC or domestic currency stablecoins
• Emerging markets remain vigilant against the risks of dollarization.
• Stablecoins are subject to redemption risks and potential systemic risks.

We expect that the stablecoin market will still be dominated by the US dollar in the coming years, with about 90% of the supply denominated in US dollars by 2030.

The demand for Blockchain in the public sector

Blockchain introduces a trust-based decentralized approach to data management in the public sector. Its immutability ensures that once information is recorded, it cannot be changed, providing tamper-proof records for sensitive public data.

Cross-border activities, especially those involving the payment of international funds through institutions like the World Bank or humanitarian aid projects, are an important use case for Blockchain. Blockchain can provide transparency for complex transactions, even in remote areas where financial institutions are not functioning well.

2. The "GPT Moment" of stablecoins

The operating mechanism of stablecoins

Stablecoin is a type of cryptocurrency designed to stabilize its value by pegging it to underlying assets. The main components include:

• Stablecoin issuer
• Blockchain ledger
• Reserve and Mortgage
• Digital wallet provider

As of April 2025, the total circulation of stablecoins has exceeded $230 billion. Tether(USDT) and USD Coin(USDC) account for over 90% of the market share.

The driving factors behind stablecoin adoption

The main driving factors include:

• Practical advantages ( fast speed, low cost, available 24/7 )
• Macroeconomic demand ( inflation hedge, financial inclusion )
• Recognition and integration with existing banks and payment providers
• Regulatory clarity
• User experience enhancement
• Innovation and Efficiency

potential market for stablecoin

Our prediction for the stablecoin market size in 2030:

• Benchmark scenario: $1.6 trillion
• Optimistic scenario: $3.7 trillion
• Pessimistic scenario: $0.5 trillion

It is expected that by 2030, approximately 90% of the stablecoin supply will still be denominated in US dollars.

stablecoin market outlook and use cases

Main use cases include:

• Cryptocurrency trading: expected to account for about 50%
• B2B payment: may account for 20-25%
• Consumer remittances: may account for 10-20%
• Institutional trading and capital markets: may account for 10-15%
• Interbank liquidity and funds: may be less than 10%

Comparison of stablecoin with bank cards and CBDC

The stablecoin market may evolve like the bank card market, leading to national-level plans. Many countries may focus on developing their own CBDCs as tools for national strategic autonomy.

The opportunities and risks of stablecoins for banks

Stablecoins provide banks with new business opportunities, but they may also have similar effects to "narrow banking," impacting the lending capacity of banks.

3. The Application of Blockchain in the Public Sector

Public Expenditure and Finance

Blockchain can enhance the transparency, efficiency, and accountability of government spending. Major applications include:

• Real-time tracking of expenses
• Simplify the bidding process
• Automated Tax Collection
• Issuing digital bonds

disbursement of public sector funds and grants

Blockchain can simplify the fund disbursement process, improving transparency and efficiency. The World Bank's "Supply Chain" initiative is a great example.

Public Record Management

Blockchain provides a secure and reliable platform for public record management, ensuring data integrity and accessibility. Application areas include educational certificates, land ownership, and more.

humanitarian aid

Blockchain can improve coordination, fund mobilization, and supply chain management during crises. The case of the United Nations High Commissioner for Refugees using the Stellar blockchain to distribute humanitarian aid demonstrates its potential.

asset tokenization

Tokenization can improve the management efficiency of government debt instruments and infrastructure assets. The European Investment Bank and the city of Lugano in Switzerland have explored the application of Blockchain in digital bonds.

Digital Identity

Blockchain-based digital identity can provide a decentralized and tamper-proof authentication mechanism, expanding the coverage of basic services. The new national identity card launched in Brazil based on Blockchain is an example.

Challenges Facing Public Sector Blockchain Applications

The main challenges include:

• Lack of trust
• Interoperability and scalability issues
• Transformation Challenges
• Regulatory uncertainty
• Abuse Risk
• Resistance to change and public perception

4. Appendix

stablecoin regulation: GENIUS Act and STABLE Act

The two main stablecoin legislations being reviewed by the U.S. Congress aim to integrate stablecoins into the mainstream financial ecosystem.

Public Blockchain vs. Private Blockchain

Public chains and private chains each have their own advantages and disadvantages, and careful consideration is needed when making a choice. The main advantages of public chains include decentralization, transparency, and interoperability, but they face challenges in scalability, privacy, and regulatory compliance.