From Tether to National Legislation: The Full History of Stablecoins — Understanding Crypto’s Most Hardcore Sector
When it comes to the buzz around stablecoins, there’s no need for much introduction. Open any media portal, and you’ll see they’re always front and center.
SuperEx has published many analyses recently — Circle applying for a U.S. trust bank charter, Hong Kong’s stablecoin regulations going live in August, Trump publicly endorsing legislation, BlackRock launching an on-chain dollar fund, and the latest combinations of “Stablecoin + RWA + DeFi” driving ETH’s value narrative.
Put simply: whether you’re an OG in crypto or a newcomer, if you want to truly understand blockchain, stablecoins are a core pillar you cannot ignore.
But many friends have messaged saying,“These articles are too specialized — can’t we have one that just explains the whole story of stablecoins from scratch?”
Absolutely.
This piece is here to give you a comprehensive primer on how stablecoins evolved from “bootleg dollars” into a centerpiece of national regulation.By the end, you’ll understand why people say stablecoins may be the real killer app of crypto.
What Is a Stablecoin? In One Sentence
Before diving into history, let’s get the definition straight:
A stablecoin is a cryptocurrency pegged to a stable asset (most commonly fiat currency, like the U.S. dollar).Put simply: it looks like a dollar, but it lives on the blockchain — free to flow globally, cross chains, participate in DeFi, act as collateral… and you don’t even need a bank account to use it.Depending on how the peg works, stablecoins fall into three categories:
Fiat-collateralized: For every 1 stablecoin issued, $1 is held in a bank. Examples: USDT (Tether), USDC (Circle)
Overcollateralized: Users lock up digital assets (e.g., ETH) to generate a stablecoin. Example: DAI (MakerDAO)
Algorithmic: Pegs are maintained by supply/demand algorithms — though most have already collapsed. Example: UST (Terra/LUNA crash)
Today, USDT and USDC dominate over 90% of the market cap, and their rise captures the entire saga of stablecoins over the past few years.
11 Years of Stablecoin Evolution
- The Starting Point: A “Crypto PayPal” Dream (2014–2017)
The story begins in 2014.
Back then, the crypto world was still in the primordial era of Bitcoin and altcoins. Markets were hyper-volatile — if you bought coffee with BTC, an hour later the price could double or crash by 50%.This was obviously terrible for payments.
So someone asked:“What if we issued a crypto token pegged to the U.S. dollar — so it can live on the blockchain but stay stable?”
Thus, the first “modern stablecoin” was born: Tether (USDT).The core logic was simple:
You deposit $1 in Tether’s bank account
They mint 1 USDT for you
You can redeem it any time
In theory, 1 USDT = $1
USDT quickly became the universal unit of account on exchanges. Bitcoin prices stopped being quoted in dollars and switched to BTC/USDT. For a while, Tether was essentially the “crypto dollar.”
But problems emerged just as fast:Where exactly were Tether’s bank accounts? Did they really have all those dollars in reserve?
These questions triggered repeated media exposés and regulatory probes, leading to massive “depegging panics” at times. USDT even fell close to $0.90.Though Tether ultimately survived, the episode taught the industry a hard lesson: Trust cannot be based on slogans. Either be transparent, or be regulated.
- The Compliance Era: USDC, DAI, and BUSD Emerge (2018–2020)
After USDT’s trust crisis, a second wave of compliance-focused stablecoins arrived:
USDC: Launched by Circle and Coinbase, with quarterly audits and transparent bank reserves, becoming the default on U.S. exchanges.
DAI: The MakerDAO protocol’s overcollateralized stablecoin, created by locking ETH to mint “decentralized dollars.”
BUSD: Issued by Binance and Paxos, with global reach and strong exchange integration.
This phase marked a shift: stablecoins were no longer just settlement tools for exchanges — they were gradually integrating into DeFi:
Supplying USDC on Compound and AAVE to earn yield
Providing DAI liquidity on Uniswap for farming
Using BUSD as collateral for synthetic leverage on Synthetix
Stablecoins became the fuel and blood of DeFi. By late 2020, the DeFi Summer boom had exploded. Total stablecoin market cap crossed $30 billion, solidifying their place on crypto’s main stage.
- The Turning Point: UST’s Collapse and Industry Reshuffling (2021–2022)
What truly brought stablecoins into the mainstream spotlight was a catastrophic collapse.
In May 2022, algorithmic stablecoin UST (Terra) imploded due to flawed design and mass redemptions. Within days, it fell from $1 to below $0.10, wiping out over $40 billion in value and taking down multiple major firms.It became one of crypto’s biggest black swan events.This crisis had two major consequences:
Markets abandoned algorithmic stablecoins: Confidence evaporated, and capital flowed back into transparent reserves like USDC.
Global regulatory scrutiny intensified: Governments started viewing stablecoins as “systemic financial instruments” that needed comprehensive oversight.
At that point, issuers began pivoting aggressively toward compliance — no longer “just making coins,” but applying for financial licenses and engaging with regulators.
- Stablecoins Enter National Policy: The Vanguard of a Digital Dollar (2023–2025)
From 2023 onward, stablecoins fundamentally changed status. They shifted from “crypto tools” to strategic assets in the eyes of sovereign nations and financial giants.Three critical developments defined this era:
A. Stablecoins Became the “Private Sandbox” for a Digital Dollar
Circle’s USDC and Tether’s USDT effectively became “private-sector pilots” for dollar digitization.Figures like Trump and Ron DeSantis publicly endorsed leveraging stablecoins to maintain the dollar’s dominance in global settlements.Circle went public at an $18 billion valuation and immediately applied for a trust bank charter. BlackRock launched the BUIDL on-chain dollar fund, tokenizing treasuries on Ethereum, already surpassing $2.8 billion AUM.
These moves signaled: Stablecoins are now a cornerstone of America’s digital finance strategy.
B. Global Regulatory Acceleration: Hong Kong, Singapore, the EU
Hong Kong: The Stablecoin Ordinance goes live on August 1, defining licensing requirements, bank support, and compliant use cases.
Singapore: Licensed entities can issue stablecoins for cross-border settlement.
EU MiCA Regulation: Requires 1:1 reserves, audit disclosures, and cross-border issuance procedures.
Together, these form a new global regulatory network giving enterprises and institutions the legal confidence to enter crypto.
C. Deep Integration with RWA and DeFi
Stablecoins are no longer just “units of account.” They’re the middleware linking real-world assets (RWA) and crypto protocols (DeFi).Examples:
USDC supporting tokenized treasury trading
BUIDL deploying funds on Ethereum, generating sTokens for DeFi
Ethena using USDtb as a strategy asset to ensure yield stability
Stablecoins have evolved from crypto utilities into the operating system of on-chain finance.
Conclusion: Stablecoins Are Not “Supporting Cast” — They Are the Main Character
Looking back at crypto’s entire evolution — from Bitcoin and Ethereum to NFTs, GameFi, and RWA — every hype cycle has relied on stablecoins.
But stablecoins have never been mere sidekicks. They are crypto’s dollars — the bridge connecting virtual and real, traditional and future finance.
Today, as Circle moves onto Wall Street, BlackRock issues on-chain dollar funds, and national laws take shape, stablecoins are transforming from settlement tools into the foundation of the next-generation global financial system.
If you’re looking for your path in Web3 over the coming years, this sector is one you must study and watch closely.
