(Bloomberg Opinion) — Stablecoins had their ChatGPT moment in 2025. Payment tokens that were until now used mostly by crypto tradersareraring to go mainstream, and not just in the US,where they got regulatory blessing through theGenius Act.Yet just because they’ve pulled ahead, it’s hard to conclude that these 1:1 representation of fiat currencies have won the race. In their quest to come up with the perfect moneyforthe 21st century,market participants will grapple with at least five unanswered questions in 2026.
Are stablecoins the best possible money?
Perhaps not. The person receiving a payment instrument shouldn’t have to worry about what it’s really worth. An influential 2021 paper called it the “No questions asked,” or NQA, property of money. Unless it is counterfeit, fiat currency is NQA. As are insured bank deposits. But even regulated dollar stablecoins won’t be insured, nor will their issuers have accessto the Federal Reserve’s emergency lending facility. If alot of people rushto redeem their tokens, the speed at whichissuers can sellassets to meet the selling pressurewill decideif the loss of confidence becomes a self-fulfilling prophecy. Since the coins will be backed by short-term, liquid securities, panic could spread to the US Treasury market.
Fiat currenciesand bank deposits are widely trusted. Both canbe tokenized and programmed with algorithms. The Trump administration has ruled out the first option: The Fedwon’t offera central bank digital currency. However, China’s e-CNY and Europe’s digital euro —expected by 2029 —will keep the CBDC project alive. Meanwhile, banks are worried that stablecoins will payinterest throughthe back door. To prevent customers from leaving, they want to give them the option of tokenized deposits. Whilestablecoins will change hands on public blockchains likeEthereum andSolana, CBDCs and deposit tokens are more likely toexistin closed networks. Banks want this restricted-access system to prevail because it lowers money-laundering risks and tracks close totheir world, where one intermediary’s claim on another is settled with central bank reserves.
What will users like more?
There may not be one winner of hearts and minds. The goal of tokenization isto exploitthe efficienciesof distributed ledgers. Messaging and settlement will fold into one action, reducing expensesand risk. So-called smart contracts— software embedded in coins —can put conditions around when a payment istriggered and to whom. Incross-border transfers, stablecoins couldcome up aheadby avoiding costlyremittance fees. Dollar coins mighthelp preserve citizens’ purchasing power in high-inflation countries. Where runaway prices arenot a problem, CBDCs and deposit tokens could serve the market together. With smart contracts built into CBDCs,acash subsidy likefood stampswon’t require a separate cardinfrastructure to prevent spending on tobacco or alcohol. China can use e-CNYto spur much-needed consumption.
What will the futurelook like?
Crypto firms, banks, and governments will all try to fill the existing gaps. A CBDC like the digital euro will offer resilience: Duringinternet shutdowns, people will buy bread by simply holding their phone close to the baker’s. Where access to the banking system is limited,a state-sponsored stablecoin may be the answer. Marshall Islands’ governmentis planning todistributewelfare payments inUSDM1, a token backed by US Treasuries. The private sector will also target markets with low banking penetration. Visa corporate cards issued by Reap, a Hong Kong-based fintech, give customers the option to spend in fiat money, but settle in stablecoins. Attention willturn next to filling future gaps. Akey theme of Visa Inc. Chief Executive Officer Ryan McInerney’sletter to shareholdersisAI agents paying on our behalf.
So much forinnovation in payments. Stocks, bonds, funds,and other assets are also ripe fortokenization. Money needsto grow up fast to enable the“Finternet,”where all kinds of tokens are tradedon a single unified ledger. Could we be bolder and imagine payment coinstoautomatically adjustfor inflation, putting monetary policyon autopilot, as some analysts have speculated? That’s still an unsettled question.
What role will money play ingeopolitics?
Ever since Meta Platforms Inc.’sMark Zuckerberg floated the idea of Libra — a world currency —in 2019, alarm bells have rung loud in Beijing. Chinahas pushed itsofficial e-CNY into circulation and encouragedHong Kong to develop aregulated market for crypto assets. The Genius Act has come as a fresh challenge because Washington views private-sector dollar coins asan instrument of state power. Theywill make the world rely moreon the US currency, but in a new way. Instead of dependingon itsreserve status, the greenback will ride a digital network effect — every new user will be attracted to regulated dollar stablecoins because others are lured by them.
To resist the dollar’s assault and preserve monetary sovereignty, China has asked banks to start paying interest one-CNY holdings in customer wallets from Jan. 1. Amidthis superpower rivalry,nations must strivetopreservetheir unit of account — dollar, euro, yen, or yuan— from becoming a casualty of technological dominance.Zuckerberg’s idea of a world currencywas perhaps too premature for the first half of the century. It may not be for the second.
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This column reflects the personal views of the author and does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.
Andy Mukherjee is a Bloomberg Opinion columnist covering industrial companies and financial services in Asia. Previously, he worked for Reuters, the Straits Times and Bloomberg News.
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