In every financial era, there’s a new tool that becomes indispensable. Stablecoins look to be next in line for that, and that shift is already appearing in the data. The aggregate market value of dollar stablecoins is near $270 billion, with steady growth during the past month, which tells you where on-chain liquidity prefers to live when it wants speed and certainty. Per Motley Fool Research, some stablecoin issuers now have reserves in excess of major equity brokerages.
This matters because stablecoins are migrating from being a handy crypto accessory to behaving more like operating cash, though key differences remain. Let’s investigate why smart money is quickly adapting and becoming more fluent with using this new financial instrument.
Image source: Getty Images.
Stablecoins redeem 1-for-1 against dollars or other fiat currencies, and they can be moved very quickly. That combination turns them into cash that does not sleep or require the permission of a bank to move. To see the shift toward using stablecoins in action, it makes the most sense to follow the pipes that move money.
Crucially, the operational center of gravity in the stablecoin sector is Ethereum(CRYPTO: ETH), where roughly $137 billion of stablecoins sit today. That concentration reduces friction for routing among exchanges, custodians, lenders, and tokenized funds.
For example, Visa began testing stablecoin settlement in USDC(CRYPTO: USDC) on Ethereum, later expanding to additional partners and chains, with a fresh update in 2025 signaling broader support. Similarly, the private payment processor Stripe reintroduced crypto acceptance and USDC payouts, including, in June, new support for Shopify merchants, so now incoming revenue to merchants can land on-chain without detours. For its part, in late July PayPal launched tools that let U.S. merchants accept a wide menu of cryptocurrencies with near-instant settlement and low fees, further normalizing stable, dollar-denominated payment rails.
Financial institutions are also wiring stablecoins into their cash management strategies now that there are easier mechanisms for doing so.
Circle discloses USDC supply and the reserves backing it with monthly attestations, which is the kind of transparency that corporate treasurers expect before parking operating cash balances. So the risks for big capital in allocating some of their cash to stablecoins rather than other cash and cash equivalents are becoming lower as the standards for the asset class continue to rise.
In the same vein, Tether‘s (CRYPTO: USDT) latest attestation about the reserves backing its USDT stablecoin shows more than $127 billion in U.S. Treasury bills and billions in quarterly profit, underscoring how fully reserved, T-bill-backed tokens can function as cash equivalents.
When fully backed with highly liquid reserves and strong liquidity management, stablecoins operate as payment instruments that can clear quickly. That gives smart money an incentive to use them because they’re more efficient than the alternatives for many applications.
But, even smart investors should still be sober about these assets because stablecoins are not actually cash.
Stablecoin can lose their peg to a fiat currency. It is fully possible that a given stablecoin will not actually have the reserves required to redeem 100% of its issuance into an equivalent number of dollars. In such a case, your 10 stablecoin tokens with a face value of $1 might be suddenly worth $2 instead of $10.
Still, on average, stablecoins are redeemable for their face value. So what more could accelerate the transition from their being used as a trading tool to being more like cold hard cash? Two catalysts are already in motion on that front.
First, more payroll and supplier networks offering USDC and USDT rails out of the box, which Stripe and others are now enabling. The odds of being able to get your paycheck in stablecoins instead of fiat currency are rising.
Second, there’s a rising share of on-chain balances held on Ethereum, which already hosts about half of all stablecoin value, and the influx compounds the network effects for everything built on top, like decentralized finance (DeFi) applications.
Stablecoins are evolving to become closer to the operating cash of the internet economy than a financial oddity. There is a chance that policy or issuer stumbles could slow adoption, but the trend is very clearly in favor of more adoption.
Before you buy stock in Ethereum, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Ethereum wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Consider when Netflix made this list on December 17, 2004… if you invested $1,000 at the time of our recommendation, you’d have $649,544!* Or when Nvidia made this list on April 15, 2005… if you invested $1,000 at the time of our recommendation, you’d have $1,113,059!*
Now, it’s worth noting Stock Advisor’s total average return is 1,062% — a market-crushing outperformance compared to 185% for the S&P 500. Don’t miss out on the latest top 10 list, available when you join Stock Advisor.
Alex Carchidi has positions in Circle Internet Group and Ethereum. The Motley Fool has positions in and recommends Ethereum, PayPal, Shopify, and Visa. The Motley Fool recommends the following options: long January 2027 $42.50 calls on PayPal and short September 2025 $77.50 calls on PayPal. The Motley Fool has a disclosure policy.
