StablecoinOpinion
|4 min ReadNon-USD Stables Fail the Balance Test
Lucca Menezes
Senior Analyst
Published
Jan 16, 2026
The market is obsessed with the idea that Euro or Yen stablecoins are the next frontier simply because global FX moves $9.6 trillion daily. Chuk argues this is a fundamental category error. Stablecoin market cap is driven by balances (where money waits), not flows (where money moves).
Currently, USD dominates because it has two massive "parking lots": permissionless crypto trading (Dry Powder) and inflation hedging (Savings). Non-USD issuers betting on "cross-border payments" are building pipes, not reservoirs. If the money doesn't stay on-chain, the market cap is zero.
1. The FX Volume Fallacy ($9.6T is a Lie)
Bulls argue capturing 1% of FX turnover yields massive caps.
The Reality: Turnover does not equal funding. Settlement systems like CLS use multilateral netting to reduce actual funding needs by 99%.
The Trap: If a stablecoin is used strictly for settlement, it is bought and sold instantly. Velocity is high, but retained value (Market Cap) is near zero.
2. The Catch-22: "E-Money" vs. "Securities" (Critical Alpha)
Chuk highlights a structural deadlock that most investors miss:
The Trap: To create a "Balance Sink" (Savings), a stablecoin must offer yield.
The Conflict:
* Payment Stables (E-Money): Liquid and regulated, but usually 0% yield. Result: No incentive to hold, users dump immediately after settlement.
* Yield Stables (Securities): Attractive to hold, but regulated as investments, restricting where they can trade (harder to list on Uniswap/Binance).
The Threat: Tokenized Deposits (Bank liabilities) sit outside this definition and might eat the entire market before crypto-native stables can scale.
3. The Three "Sticky" Layers
For a non-USD stablecoin to scale, it must capture one of these layers where money sits idle.
Layer 1: Coordination (Payroll): "Boring money" for tax/ops. Friction currently keeps this in banks. Stables have failed here.
Layer 2: Savings (Preservation): Money held to preserve value. To win, on-chain cash must offer better yield/mobility than local banks.
Layer 3: Investment (Dry Powder): The Schwab model (9% of assets in cash). This is where USDT won—becoming the default collateral for crypto.
4. The Roadmap: Predicting the Sequence
Chuk predicts adoption will not happen via "payments," but in this specific order:
1. Phase 1 (Savings): Yield-bearing on-chain cash launches on regulated platforms (overcoming the securities hurdle).
2. Phase 2 (Investment): This "savings cash" becomes the default settlement/margin asset for tokenized local markets.
3. Phase 3 (Coordination): Only after infrastructure matures do businesses move payroll on-chain (BaaS 2.0).
Verdict
Ignore "Payment" stablecoins—they are low-margin plumbing with no retention. The real play is Regulated Yield-Bearing Protocols that target the Savings Layer first, or the Tokenized Deposits that banks will eventually issue to kill them both.
Disclaimer: This document is intended for informational and entertainment purposes only. The views expressed in this document are not, and should not be taken as, investment advice or recommendations. Recipients should do their own due diligence, taking into account their specific financial circumstances, investment objectives and risk tolerance, which are not considered here, before investing. This document is not an offer, or the solicitation of an offer, to buy or sell any of the assets mentioned.