Stablecoins are now the backbone of institutional crypto trading, making up a staggering 74.6% of all over-the-counter (OTC) transactions in early 2025. But beneath this explosive growth lies a ticking time bomb—systemic risks from potential depegs. Here’s what you need to know.
Why Are Stablecoins Dominating OTC Crypto Trading?
According to Finery Markets, stablecoins accounted for 74.6% of institutional OTC trades in H1 2025—a massive jump from 46% in 2024. Key drivers include:
- USDC’s 29x volume surge—fueled by Europe’s MiCA regulation.
- 154% rise in stablecoin transactions year-over-year.
- Institutional preference for liquidity and reduced volatility.
The Rising Threat of Stablecoin Depegs
CEO Konstantin Shulga warns that market fragmentation and increasing issuers heighten systemic risks. A single depeg event could trigger:
- Cascading liquidations in leveraged trades.
- Loss of trust in stablecoin reliability.
- Broader crypto market instability.
How MiCA Regulation Boosted USDC’s Dominance
Europe’s Markets in Crypto-Assets Regulation (MiCA) provided clarity, pushing institutional traders toward compliant stablecoins like USDC. Key impacts:
| Factor | Impact |
|---|---|
| Regulatory Clarity | Increased institutional adoption |
| Reserve Transparency | Higher trust in USDC vs. competitors |
Actionable Insights for Traders and Institutions
To navigate stablecoin risks:
- Diversify holdings across multiple stablecoins.
- Monitor reserve audits and issuer credibility.
- Prepare contingency plans for sudden depegs.
Conclusion: Stability at What Cost?
Stablecoins are reshaping crypto trading, but their dominance comes with hidden dangers. As adoption grows, so does the need for robust risk management. Will the market learn from past depegs—or repeat the same mistakes?
Frequently Asked Questions (FAQs)
1. Why are stablecoins preferred in OTC trading?
Stablecoins offer liquidity, speed, and reduced volatility compared to traditional fiat settlements.
2. What triggers a stablecoin depeg?
Loss of confidence, reserve mismanagement, or regulatory crackdowns can cause depegs.
3. How does MiCA affect stablecoin adoption?
MiCA’s transparency requirements favor compliant stablecoins like USDC, boosting their market share.
4. Can stablecoin depegs crash the crypto market?
Yes—widespread depegs could trigger liquidations and panic selling across leveraged positions.
