Reeve Collins, founder of blockchain neobank WeFi, said the number of viable stablecoins will increase as AI agents and account abstraction simplify user management. Users no longer need to actively manage decentralized finance operations or execute complex trading strategies to generate returns. .
Collins told Cointelegraph that demand for yield-generating assets such as synthetic dollars, algorithmic stablecoins and other next-generation real assets will increase as simplified user experiences emerge, creating a vibrant product ecosystem.
As technical barriers to entry are lowered, these yield holding products will compete for investor attention because they are easy to use and offer yield opportunities. Collins said:
“As the application layer becomes more mature and AI is integrated, all the complexity in this space will disappear. The only thing that determines which token to use is which token makes the most money, and which token makes the most money. “It’s the easiest to use.”
Most cryptocurrency users rely on existing over-collateralized stablecoins backed by fiat cash or short-term cash equivalents, which do not provide yield but maintain the fundamental characteristics of underlying fiat reserves.
Current market capitalization of the stablecoin sector. source: Dipilama
relevant: Stablecoins will see explosive growth in 2025 as the world embraces the asset class
Stablecoins come under regulatory scrutiny
Although overcollateralized stablecoins have been proposed to extend the dominance of the US dollar, government regulators still view the nascent asset class as a potential threat to the current financial system.
On December 6, the U.S. Financial Services Oversight Commission (FSOC) released a report outlining the systemic risks of stablecoins. The authors argued that over-collateralized stablecoins are vulnerable to withdrawals due to a lack of sufficient risk management policies.
Coinbase recently delisted Tether’s USDt (USDT) stablecoin from the European Union to comply with the EU’s Markets for Cryptocurrency Assets (MiCA) regulatory framework.
A Coinbase spokesperson told Cointelegraph that the exchange will later reevaluate its stablecoin listings and relist assets that comply with MiCA regulations.
Unsurprisingly, MiCA-compatible stablecoins dominate the European market, with stablecoin issuer Circle holding approximately 91% of the region’s stablecoin market share, according to a recent report from Kaiko.
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