Crypto

Stablecoins are front and center of late: critical bills have made their way through US Congress, First Digital’s coin briefly depegged over reserve concerns, and Coinbase’s efforts to take on banks saw pushback from lawmakers — to name just a few recent headlines.

Dollar-backed cryptocurrencies are under the spotlight as the market considers the role of the US dollar and the future of US economic power under the controversial policies of President Donald Trump.

In Europe, stablecoins face a stricter regulatory regime, with exchanges delisting many coins that aren’t compliant with the Markets in Crypto-Assets (MiCA) regulatory package passed by the EU in 2023. 

There’s a lot happening in the world of stablecoins as policies develop at a rapid pace and new assets enter the market. Here are the most recent developments.

Stablecoin adoption law faces vote in US House of Representatives 

After passing a critical vote in the US House Financial Services Committee, the Stablecoin Transparency and Accountability for a Better Ledger Economy, or STABLE Act, will soon face a vote from the entire lower house of the American legislature. 

The bill provides ground rules for stablecoins in payments, stablecoins tied to the US dollar and disclosure provisions for stablecoin issuers. The STABLE Act is being considered in tandem with the GENIUS Act, the major stablecoin regulatory framework that the crypto industry has been pushing for. 

Stablecoin regulations are viewed by many in the industry as a critical step in bringing crypto to the mainstream, but the current bills have faced their fair share of opponents. Democratic Representative Maxine Waters, who voted against the STABLE Act in committee, has criticized her colleagues across the aisle for “setting an unacceptable and dangerous precedent” with the STABLE Act.

Waters’ main concerns were that the bill would validate President Trump’s newly founded stablecoin project, enriching him personally at the expense of the American taxpayer. 

FDUSD stablecoin depegs 

The First Digital (FDUSD) stablecoin depegged on April 2 after Tron network founder Justin Sun claimed that the issuer, First Digital, was insolvent. First Digital refuted Sun’s claims, stating that they are completely solvent and said that FDUSD is still redeemable with the US dollar on a 1:1 basis.

“Every dollar backing FDUSD is completely secure, safe, and accounted for with US-backed Treasury Bills. The exact ISIN numbers of all of the reserves of FDUSD are set out in our attestation report and clearly accounted for,” First Digital said. 

Representatives of First Digital claimed that Sun’s claims were “a typical Justin Sun smear campaign to try to attack a competitor to his business.” 

Trump’s WLFI launches stablecoin 

World Liberty Financial, the Trump family’s decentralized finance project, has launched a US dollar-pegged stablecoin with a total supply of more than $3.5 million.

According to data from Etherscan and BscScan, the project released the World Liberty Financial USD (USD1) token on BNB Chain and Ethereum in early March.

USD1 has drawn sharp criticism from Trump’s political opponents, like Waters, who believe that Trump is aiming to supplant the US dollar with his own stablecoin — enriching himself in the process. 

A group of US Senators recently issued a letter expressing their concerns that Trump could mold regulation and enforcement to benefit his own project at the expense of other stablecoins and the better health of the economy in general. 

No interest for stablecoins, says Congress

Coinbase CEO Brian Armstrong wants to take on banks, or so he claims, by offering American investors interest on their stablecoin holdings far above what they get in a traditional savings account. 

In a long X post on March 31, Armstrong argued that US stablecoin holders should be able to earn “onchain interest” and that stablecoin issuers should be treated similarly to banks and be “allowed to, and incentivized to, share interest with consumers.” 

Related: US lawmakers advance anti-CBDC bill

His proposal has faced headwinds in Congress. Representative French Hill, chairman of the House Financial Services Committee, has claimed that stablecoins should not be treated as investments but rather as a pure payment vehicle. 

“I do not see stablecoins as I see a conto bancario. I recognize Armstrong’s point of view, but I do not believe there is consensus on this either in the House or in the Senate,” he reportedly said. 

Stablecoins face delisting in Europe

Binance, one of the largest crypto exchanges in the world, has halted trading of Tether’s dollar-backed USDT stablecoin. Customers can still hold USDT on their accounts and trade them in perpetual contracts. 

The decision to delist Tether came as part of its wider compliance efforts with MiCA, the EU’s massive crypto regulatory package that passed in 2023. Other major exchanges have taken similar measures. Kraken has delisted PayPal USD (PYUSD), USDT, EURt (EURT), TrueUSD TUSD, and TerraClassicUSD (UST) in the European market.

Crypto.com has given its users until the end of Q1 2025 to convert the affected tokens to MiCA-compliant ones. “Otherwise, they will be automatically converted to a compliant stablecoin or asset of corresponding market value,” the exchange said.

Stablecoins see large capital inflows 

Crypto intelligence platform IntoTheBlock has found an increasing amount of capital entering tokenized real-world assets and stablecoins. According to the analytics firm, these assets are increasingly seen as “safe havens in the current uncertain market.”

The firm tipped economic headwinds under the unpredictable tenure of US President Donald Trump as the main reason for capital inflows.

“Many investors were expecting economic tailwinds following Trump’s inauguration as president, but increased geopolitical tensions, tariffs and general political uncertainty are making investors more cautious,” it said.

Stablecoins take off in Japan

An increasing number of firms are looking to launch stablecoins in Japan as the government softens its stance. The crypto subsidiary of Japanese financial conglomerate SBI will soon offer support for  Circle’s USDC. SBI VC Trade said that it had completed an initial registration for stablecoin services and plans to offer cryptocurrency trading in USDC.

Related: Japan’s finance watchdog says no plans yet to classify crypto as financial products

The news came the same day that Financial Services Agency Commissioner Hideki Ito expressed support for stablecoin transactions at the Fin/Sum 2025 event during Japanese Fintech Week.

Japanese financial conglomerate Sumitomo Mitsui Financial Group (SMBC), business systems firm TIS Inc, Avalanche network developer Ava Labs and digital asset infrastructure firm Fireblocks want to commercialize stablecoins in Japan.

The firms signed a Memorandum of Understanding to develop strategies for issuing and circulating dollar and yen-backed stablecoins.

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Strategy Inc., formerly MicroStrategy, has discarded its core product, assumed a new identity, swallowed over half a million BTC, spawned equity classes with double-digit yields, and inspired an arsenal of leveraged ETFs —  a unique and significant market phenomenon.

Michael Saylor’s firm has constructed a comprehensive financial framework based around Bitcoin, tying its corporate performance directly to the cryptocurrency’s price fluctuations. As a result, Strategy’s common stock has evolved into a proxy for Bitcoin exposure, its preferred shares offer yields tied to cryptocurrency risk, and a series of leveraged and inverse ETFs now track its equity movements, all fundamentally connected to its substantial Bitcoin holdings.

Recently, there was an announcement of another purchase by MSTR (Strategy’s common equity) of close to $2 billion of BTC in one clip, inviting even more raised eyebrows and caution.  

This concern is not merely because of Strategy’s bet on Bitcoin, but the market architecture which has grown around it. A parallel financial ecosystem has emerged, binding its fate to a risk asset that, as Saylor himself notes, trades 24/7. He’s championed the idea that “volatility is vitality,” suggesting that this constant motion draws attention, sustains interest, and breathes life into the entire “Strategyverse” and its related equities.

To some, this is financial innovation in its purest form: bold, unhedged, and transformative. To others, it is a fragile lattice of conviction and leverage, one black swan away from unraveling.

From MicroStrategy to Strategy: A pivot into the abyss or the vanguard?

MicroStrategy, once a staid business intelligence software provider, has been reborn as Strategy Inc., a corporate avatar synonymous with Bitcoin. The company has made an unabashed leap from offering data analytics to becoming a full-throttle Bitcoin acquisition vehicle.

The numbers speak for themselves. As of March 30, Strategy holds 528,185 BTC, acquired for approximately $35.63 billion at an average price of about $67,458 per Bitcoin. The most recent tranche of BTC in 2025 involved the acquisition of 22,048 BTC for around $1.92 billion, at an average of roughly $86,969 per coin. Year to date, Strategy has achieved a BTC yield of 11.0 percent.

This shift has transformed MSTR into a proxy Bitcoin ETF of sorts, albeit with operational leverage and corporate risk baked in. But unlike the SEC-blessed spot ETFs, MSTR offers amplified exposure: it behaves like Bitcoin, only more so due to the company’s use of leverage and financial engineering.

Read more: MicroStrategy’s Bitcoin debt loop: Stroke of genius or risky gamble?

Now, with the introduction of STRK (8% yield) and STRF (10% yield), Strategy has expanded its reach. These preferred shares offer fixed-income style returns, but their performance is deeply tethered to Bitcoin’s fate. When Bitcoin surges, yield-bearing holders cheer. They’re still promised yield when it falls, but their capital risk climbs.

Financial innovation? Yes. Structural risk? Most certainly.

When indexed to 100 at the start of 2025, the performance of Strategy and related instruments demonstrates the effects of volatility and leverage in the Bitcoin-correlated financial ecosystem. As of early April 2025, MSTR has declined moderately by approximately 8%, tracking the broader downward trajectory of Bitcoin itself, which is down around 16%.

The company’s preferred shares, STRF and STRK, have slightly appreciated above their initial indexed values, reflecting investor preference for dividend stability amidst market volatility.

MSTU and MSTX have markedly underperformed, dropping around 37% to 38% from their normalized starting points, due to volatility drag and compounding losses inherent in leveraged daily reset structures.

This YTD snapshot underscores how leverage magnifies returns and the potential risks associated with short-term market movements.

Inside the Strategyverse: Bitcoin as treasury, equity as exposure

Strategy’s operating income, still derived from its legacy software business, now plays second fiddle to its crypto balance sheet.

However, the firm hasn’t just stockpiled coins; it has created a latticework of financial instruments that reflect and refract BTC price action. MSTR is no longer merely equity; it has become a high-beta Bitcoin play. STRK and STRF are yield-bearing hybrids, offering fixed returns yet functioning like risk instruments in a crypto-linked treasury experiment.

The structural concern is this: by tying every new yield product, equity issuance and debt vehicle to Bitcoin, Strategy has effectively replaced diversification with correlation. Critics argue there is no hedge here, only degrees of bullishness.

This raises the concern that a company can maintain corporate solvency and investor trust when its financial ecosystem is built atop the volatility of a single, historically unstable asset.

Leveraged and inverse products

Where there is heat, there will be leverage. The market has responded to Strategy’s gravitational pull by creating a suite of leveraged and inverse products tied to MSTR, giving retail and institutional players access to turbocharged Bitcoin exposure without holding the asset directly.

Investors seeking amplified returns in anticipation of price gains can deploy strategies such as MSTU (T Rex) or MSTX (Defiance), both offering 2x long daily returns, or MST3.L, which provides 3x long exposure listed in London.

Conversely, investors expecting price declines might choose SMST, offering 2x short exposure, or MSTS.L and 3SMI, each providing 3x short exposure listed in London.

These instruments are typically employed by traders looking for short-term directional bets and should be handled cautiously due to daily reset mechanics and volatility risks.

These are not traditional ETFs. They are complex, synthetic instruments with daily reset mechanisms and inherent decay risks. Volatility drag ensures that even in a sideways market, leveraged longs underperform. For shorts, the risk of a short squeeze, particularly in parabolic bull runs, is ever-present.

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In practical terms, these products allow traders to speculate on MSTR’s price with minimal capital outlay. But they also amplify misalignment. A trader betting on Bitcoin’s month-long trend might find that their 3x long MSTR ETF underperforms expectations due to compounding losses on down days.

The strategic risk here lies in mismatch: retail investors may perceive these ETFs as direct Bitcoin exposure with leverage. In reality, they are trading a proxy of a proxy, subject to corporate news, dilution, and macro shifts.

Is Strategy’s strategy conviction or leverage risk?

Between 2020 and 2025, Strategy has executed over a dozen capital raises via convertible notes, ATM equity programs and, most recently, the STRF preferred offering priced at a 10 percent yield. The March 2025 raise helped fund the latest $1.92 billion Bitcoin buy.

It is not just about buying Bitcoin. It is about the market constructing a meta-structure where every market instrument, common stock, preferred shares and synthetic ETFs feeds into the same gravitational pull. Each capital raise buys more Bitcoin. Each purchase pushes up sentiment. Each ETF amplifies exposure. This feedback loop has become the hallmark of Strategy’s financial architecture.

With each new issuance, however, dilution risk grows. STRK and STRF investors depend not only on Strategy’s solvency but also on Bitcoin’s long-term appreciation. If BTC stumbles into a prolonged bear market, can those 10% yields continue? 

For investors, Strategy’s approach presents clear opportunities and risks. It offers a streamlined pathway for gaining exposure to Bitcoin through familiar financial instruments, combining elements of equity, fixed income, and derivatives. At the same time, investors must carefully consider the volatility of Bitcoin itself, the potential impacts of dilution from continuous capital raises, and the overall health of Strategy’s balance sheet.

Ultimately, the investment outcome will heavily depend on the trajectory of cryptocurrency markets, the Strategy’s financial management and evolving regulatory landscapes.

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First Digital has redeemed almost $26 million in stablecoin withdrawals after its FDUSD token briefly lost its US dollar peg following allegations of insolvency by Tron founder Justin Sun.

First Digital USD (FDUSD) depegged on April 2, briefly falling as low as $0.87 after Sun claimed that First Digital was insolvent.

On April 4, Sun doubled down on his allegations, claiming the firm transferred over $450 million of customer funds to a Dubai-based entity and that it violated Hong Kong securities regulations.

“FDT transferred $456 million of its custodial clients to a private company in Dubai without their authorization and has not yet returned the money,” Sun claimed.

Despite the claims, blockchain data from Etherscan shows First Digital has honored approximately $25.8 million in FDUSD redemptions since the incident.

“We continue to process redemptions smoothly, demonstrating the fortitude of $FDUSD,” noted First Digital in an April 3 X post.

When users redeem FDUSD for US dollars, the corresponding amount of FDUSD is burned onchain for the stablecoin to maintain a 1-to-1 peg with the US dollar and ensure the circulating supply matches reserves.

Related: Wintermute transfers $75M FDUSD since depegs, in $3M arbitrage opportunity

Following Sun’s claims, First Digital assured users that it is solvent and that FDUSD remains fully backed and redeemable.

“First Digital stands firm: Justin Sun’s baseless accusations won’t distract from Techteryx’s own failures— our stablecoin FDUSD remains fully backed and solvent,” First Digital stated in an April 3 X post.

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Stablecoin depegs “greater systemic risk” than Bitcoin crash

Stablecoins depegs pose “a greater systemic risk” to crypto than a Bitcoin (BTC) crash, as “stablecoins are integral to liquidity, DeFi and user trust,” according to Gracy Chen, CEO of Bitget.

Stablecoin depegs can cause “cascading failures like the TerraUSD collapse in 2022,” Chen told Cointelegraph, adding:

“Current transparency, collateral quality and accountability among leading stablecoin issuers are insufficient — Tether’s lack of full audits, USDC’s exposure to banking risks and algorithmic stablecoins’ fragility highlight the market’s vulnerability to the next depeg event.”

“To mitigate risks, the market should enforce real-time audits, prioritize high-quality collateral like US Treasurys, strengthen regulatory oversight and diversify stablecoin usage to reduce reliance on a few dominant players,” Chen added.

In May 2022, the $40 billion Terra ecosystem collapsed, erasing tens of billions of dollars of value in days. Terra’s algorithmic stablecoin, TerraUSD (UST), had yielded an over 20% annual percentage yield (APY) on Anchor Protocol before its collapse.

As UST lost its dollar peg, crashing to a low of around $0.30, Terraform Labs co-founder Do Kwon took to X (then Twitter) to share his rescue plan. At the same time, the value of sister token LUNA — once a top 10 crypto project by market capitalization — plunged over 98% to $0.84. LUNA was trading north of $120 in early April 2022.

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The new trade tariffs announced by US President Donald Trump may place added pressure on the Bitcoin mining ecosystem both domestically and globally, according to one industry executive.

While the US is home to Bitcoin (BTC) mining manufacturing firms such as Auradine, it’s still “not possible to make the whole supply chain, including materials, US-based,” Kristian Csepcsar, chief marketing officer at BTC mining tech provider Braiins, told Cointelegraph.

On April 2, Trump announced sweeping tariffs, imposing a 10% tariff on all countries that export to the US and introducing “reciprocal” levies targeting America’s key trading partners.

Community members have debated the potential effects of the tariffs on Bitcoin, with some saying their impact has been overstated, while others see them as a significant threat.

Tariffs compound existing mining challenges

Csepcsar said the mining industry is already experiencing tough times, pointing to key indicators like the BTC hashprice.

Hashprice — a measure of a miner’s daily revenue per unit of hash power spent to mine BTC blocks — has been on the decline since 2022 and dropped to all-time lows of $50 for the first time in 2024.

According to data from Bitbo, the BTC hashprice was still hovering around all-time low levels of $53 on March 30.

“Hashprice is the key metric miners follow to understand their bottom line. It is how many dollars one terahash makes a day. A key profitability metric, and it is at all-time lows, ever,” Csepcsar said.

He added that mining equipment tariffs were already increasing under the Biden administration in 2024, and cited comments from Summer Meng, general manager at Chinese crypto mining supplier Bitmars.

“But they keep getting stricter under Trump,” Csepcsar added, referring to companies such as the China-based Bitmain — the world’s largest ASIC manufacturer — which is subject to the new tariffs.

Trump’s latest measures include a 34% additional tariff on top of an existing 20% levy for Chinese mining imports. In response, China reportedly imposed its own retaliatory tariffs on April 4.

BTC mining firms to “lose in the short term”

Csepcsar also noted that cutting-edge chips for crypto mining are currently massively produced in countries like Taiwan and South Korea, which were hit by new 32% and 25% tariffs, respectively.

“It will take a decade for the US to catch up with cutting-edge chip manufacturing. So again, companies, including American ones, lose in the short term,” he said.

Csepcsar also observed that some countries in the Commonwealth of Independent States region, including Russia and Kazakhstan, have been beefing up mining efforts and could potentially overtake the US in hashrate dominance.

Related: Bitcoin mining using coal energy down 43% since 2011 — Report

“If we continue to see trade war, these regions with low tariffs and more favorable mining conditions can see a major boom,” Csepcsar warned.

As the newly announced tariffs potentially hurt Bitcoin mining both globally and in the US, it may become more difficult for Trump to keep his promise of making the US the global mining leader.

Trump’s stance on crypto has shifted multiple times over the years. As his administration embraces a more pro-crypto agenda, it remains to be seen how the latest economic policies will impact his long-term strategy for digital assets.

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