Crypto Market Shifts as Stablecoins Grow and Regulators Step In

The cryptocurrency market is undergoing significant changes, with stablecoins emerging as a major player and regulators stepping in to enforce stricter rules. On one hand, the stablecoin market is expected to reach a market cap of $2 trillion by the end of 2028, according to Standard Chartered, generating up to $1 trillion in fresh Treasury bill demand. This could lead to an increase in T-Bill issuance by the US Treasury, potentially reaching $2.2 trillion through 2028.

On the other hand, regulators are cracking down on cryptocurrency exchanges, citing gaps in key anti-money laundering (AML) and sanctions roles. The Austrian Financial Market Authority has frozen new business at KuCoin's EU exchange, just months after granting the exchange a MiCA license. This move highlights the increasing scrutiny that exchanges are facing from regulatory bodies.

Meanwhile, some exchanges are adapting to the changing landscape by shifting their focus from retail customers to serving institutional clients, such as European banks. Bit2Me, Spain's largest cryptocurrency exchange, has secured an EU MiCA license and is expanding into new markets, including Portugal and Italy. The exchange's trading volume increased eightfold from 2023 to 2025, reaching 5.3 billion euros, as it shifted its focus from a consumer platform to providing backend infrastructure for banks and law enforcement.

However, not all exchanges are faring well. Binance's stablecoin reserves have fallen 18.6% in three months, as tightening Fed policy and weak inflows extended the crypto liquidity drought. This decline highlights the challenges that exchanges are facing in the current market environment.

In contrast, some investors are taking advantage of the market downturn to accumulate Bitcoin. A recent purchase of 592 Bitcoin for $39.8 million marked the 100th Bitcoin purchase by a strategy, lifting holdings to 717,722 BTC.

As the cryptocurrency market continues to evolve, it's clear that stablecoins are playing an increasingly important role. With their potential to generate significant demand for Treasury bills, they may provide a boost to the US Treasury. However, regulators are keeping a close eye on exchanges, and those that fail to comply with AML and sanctions rules may face significant hurdles.

Sources:

• "Binance stablecoin reserves have sunk 19% since November" by Cointelegraph
• "Tether-backed crypto exchange is ditching the ‘retail’ label to build the secret plumbing for Europe’s biggest banks" by Francisco Rodrigues
• "Austria’s regulator slaps new business ban on KuCoin’s EU exchange" by Cointelegraph
• "Strategy adds 592 BTC for $40M in 100th Bitcoin purchase" by Cointelegraph
• "U.S. Treasury may boost T-Bill issuance as stablecoins eye $2 trillion market cap: StanChart" by Will Canny