Just now! The regulatory iron fist has crushed $400 million in stablecoins. Who will be next?

Funds are only considered to have truly fulfilled their mission once they reach their destination. Money earned from working abroad must pass through banks, currency exchange points, payment partners, and local compliance checks before it can be used to pay rent, tuition, or buy daily necessities. Before that, it is merely a flowing number and not usable currency.

Today, the on-chain ecosystem faces the same dilemma. Stablecoins achieve global circulation through code, but their real value depends on the scenarios they can connect to, who has the right to use them, and the regulatory oversight of the reserves and redemption mechanisms that support them. Today, let’s discuss those non-US dollar local fiat stablecoins, why they are growing, and why they are stagnating.

The will of regulation is most thoroughly reflected in the euro stablecoin $EURT issued by Tether. The official implementation of the EU’s MiCA regulation in 2024 almost directly announced the end of $EURT. Once one of the earliest and largest non-US dollar stablecoins, its circulation volume plummeted from over $400 million to about $50 million. As a result, the total supply of global local fiat stablecoins shrank from $1 billion to $350 million.

Many people in this industry once naively believed that writing good code and injecting liquidity would cause the market to grow naturally. However, non-US dollar stablecoins are not just simple network tokens; their goal is to become better digital euros, yen, or baht, relying on public chains to achieve 24/7 circulation and breaking free from the constraints of bank operating hours.

At the same time, they are deeply rooted in the traditional financial systems of various countries and must comply with reserve regulations, licensing requirements, payment network rules, and rigid redemption commitments. The demise of $EURT serves as a wake-up call: first-mover advantage is not a moat. Changes in a country’s regulatory rules can easily erase all the advantages accumulated by pioneers.

However, regulation is not all bad news for stablecoins. If that were the case, the entire non-US dollar stablecoin industry would have stagnated after $EURT’s suspension. The opposite is true. If we exclude $EURT, the total supply of non-US dollar stablecoins has nearly tripled, rising from about $350 million in January 2023 to $1.1 billion in February 2026.

As circulation volume increases, the number of addresses holding such stablecoins has surged from about 42,000 to over 1.2 million. Monthly transfer volume skyrocketed from $600 million to $10 billion, a 16-fold increase; the number of addresses initiating transfers monthly increased 22 times, from 6,000 to 135,000.

The growth rate of users and transfer activities far exceeds the growth rate of token supply, proving that the industry’s growth stems from an increase in real market participation. Clearly, the implementation of a mature compliance framework has attracted more issuers and ordinary users to enter the market.

So, where is this non-US dollar capital flowing? Data from early 2026 shows that 38% of transfers from local fiat stablecoins are classified as unidentified transfers, mainly representing basic payment and settlement activities, such as peer-to-peer transfers between individuals or transfers from self-custody wallets to payment service providers.

The remaining distribution is as follows: lending activities account for 29%, decentralized exchange trading accounts for 17%, and transactions related to centralized exchanges account for 14%. This reveals two core on-chain uses of non-US dollar stablecoins: one is to meet basic payment and settlement needs between individuals and businesses; the other is to deeply integrate into the DeFi ecosystem, serving financial demands such as lending and trading.

However, there is a key issue: if we exclude euro stablecoins, the market picture would be completely different. Euro stablecoins account for over 90% of the total transfer volume of non-US dollar stablecoins, having already become an independent and standardized financial asset.

Users deposit them into lending pools, trade on DEXs, and view them as on-chain cash that can earn interest, be collateralized, and circulate across the entire chain. This results in local fiat stablecoins presenting a more mature financial outlook overall. Euro stablecoins such as $EURC, $EURS, $EURm, and $EUROe have fully integrated into mainstream DeFi yield platforms like Aave, Morpho, and Fluid.

After excluding euro-denominated assets, the remaining non-US dollar digital currencies are primarily used for settlement. Nearly 80% of non-US dollar, non-euro stablecoin transactions are classified as unidentified transfers, which may cover fund transfers between wallets, corporate debt settlements, remittance-style transfers, and payments made through service providers.

Within the non-US dollar stablecoin system, euro assets stand out, indicating that the next phase of industry growth may focus on DeFi native applications. Meanwhile, local stablecoins from other countries outside the eurozone need to first solidify their cross-border basic settlement capabilities and popularize fiat on-chain circulation before gradually penetrating the DeFi space.

This kind of essential demand growth is significant, covering core scenarios such as payroll disbursement, corporate treasury management, merchant payment clearing, cross-border remittances, and foreign exchange conversions. The regulatory scrutiny in these areas far exceeds that of purely speculative DeFi activities, and operational funds cannot tolerate any ambiguity in rules.

For stablecoins to connect with local payment systems, corporate treasury processes, and highly compliant scenarios, they must possess traceable reserve mechanisms, clear redemption paths, and comprehensive legal protections. This also determines that compliance regulation is the cornerstone for non-US dollar stablecoins to achieve scalability.

This likewise explains why regions with mature financial systems grow faster. Some analyses point out that the activity of Brazilian real ($BRL) and yen ($JPY) stablecoins surged after local regulatory frameworks were improved; whereas markets like Indonesia, which have not yet established specific compliance systems, have seen significantly slower overall development.

From an economic fundamentals perspective, non-US dollar stablecoins possess irreplaceable value. Traditional cross-border payment exchange costs are high, and remittance funds are significantly diminished by foreign exchange spreads and intermediary fees. A rich and diverse ecosystem of local fiat stablecoins can reduce the redundant processes of settling funds via the US dollar, greatly compressing foreign exchange costs and eliminating settlement friction.

At the same time, it allows businesses and individuals to directly hold native currency assets for daily income, consumption, and savings. Its development potential has long exceeded the bounds of simple DeFi categories. Euro stablecoins have set a benchmark for local digital fiat currencies to integrate into traditional financial systems.

Looking at the global picture, reducing reliance on the US dollar for cross-border capital flows and achieving faster, lower-cost transactions is the greater industry dividend. In the future, issuers that can simplify local fiat transaction and settlement processes and seamlessly connect with existing traditional payment infrastructures will benefit from the vast potential of non-US dollar stablecoins. If they can create favorable conditions, the integration of DeFi will also come naturally.

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