Stablecoin Growth Amplifies Network Effects of Dominant Currencies

The development of digital currencies has been shifting from a focus on technological advancements to the amplification of existing network effects, particularly those of the US dollar. China's central bank digital currency route is contrasted with the US, which has not launched a retail digital dollar but instead sees rapid growth in private dollar stablecoins and tokenized assets.

The global market capitalization of stablecoins is approximately $315 billion as of April 2026, with about 98% denominated in US dollars. This dominance is due to the existing trust and network effects of the US dollar, rather than any unique properties of blockchain technology.

Stablecoins have reduced operational friction in the dollar system, enabling 24/7 operations and automating settlement with on-chain financial assets. Tokenization has become a key area of focus for major financial institutions, including Project Agorá led by the BIS, which aims to test cross-border settlement using tokenized commercial bank deposits and central bank reserves.

The true revolution in digital finance may not be driven by stablecoins alone but rather by the broader trend of tokenization. While stablecoin trading volume is impressive, a significant portion of on-chain traffic is related to cryptocurrency trading, exchange deposits, and high-frequency bots.