Customers are benefitting from the global stablecoin arms race — but that won’t last forever

This dynamic mirrors the early era of fintech challenger banks: free international transfers, zero-fee trading, and cashback rewards. These incentives weren’t sustainable in the long-term, but they were effective in grabbing market share. Once customers integrated the product into their financial lives and got comfortable, the network became sticky; from then on, fintechs were able to adopt more sustainable practices.

Another comparison worth making is the ETF sector. Over time, virtually all ETFs converged toward fees so low that several issuers now operate index funds at near-zero revenue margins. The differentiators became brand recognition and integration with consumer trading platforms.

Stablecoins will follow the same pattern, which is why issuers are willing to bleed today for potential stickiness tomorrow.

Global benefits of USD-backed stablecoins

One of the most important and overlooked effects of this competition is that it benefits not just Americans, but users around the world. In emerging economies, access to stablecoins is increasingly becoming access to global financial returns, unfettered by local banking barriers.

A saver in Argentina or Nigeria may have been earning deeply negative real returns holding a local currency ravaged by inflation. Now, by holding stablecoins, instead of losing real returns to inflation, they can earn yields comparable to major financial institutions in the United States, sometimes even higher. This is quietly revolutionary.

High yields are not forever

Nevertheless, we should be realistic about the long-term trajectory. It’d be a mistake to see the incoming wave of aggressive APYs as the new baseline; this is merely the promotional phase of stablecoins.

As the market matures and consolidates around a few primary players, the advantage enjoyed by “high-yield stablecoins” will diminish. Once adoption stabilizes and users are locked into networks for reasons of habit and liquidity depth, issuers will have far less incentive to continue offering elevated yields.

Over time, stablecoin yields will converge much closer to the baseline yield of Treasury bills or overnight repo rates. The future stablecoin landscape will likely resemble the banking sector. We’ll have a few dominant issuers, standardized yields, slim fees, and adoption driven by convenience.

We don’t know which stablecoin will ultimately win the global race. But we do know who is already winning today: the customers. In this early competitive period, stablecoin issuers are effectively paying people to adopt their currency. And in a world where savings erosion is the norm and financial access is unevenly distributed, that alone marks a historic shift.

For now, the stablecoin competition is less of a fight between issuers and more of a windfall for everyone else.