Do Stablecoins Meet the Definition of Money? Here's the Surprising Truth

Key Takeaways

Stablecoins are approaching money-like status as payment volumes and real-world usage grow.
Experts say trust, reserves, and repeat adoption matter more than transaction volume alone.
Private issuer risk remains the biggest barrier to stablecoins becoming a true monetary layer.

The numbers that would once have settled the question are no longer settling it. Total stablecoin market capitalization stood at $291.3 billion as of July 6, 2026, with USDT and USDC together controlling 88.3% of that supply, according to StableCoin.com data. Reported 24-hour volume across stablecoin markets reached $55.4 billion on the same date, implying an annualized run rate of more than $20 trillion.

Stablecoin Market Cap Analysis — Stablecoin market cap snapshot. | Source: Stablecoin.com

Total stablecoin settlement volume reached $33 trillion in 2025, surpassing Visa’s annual throughput for the first time, though Visa’s own adjusted methodology, which strips out trading bots and internal reshuffling, places the payment-specific figure closer to $10.2 trillion. TRM Labs recorded over $4 trillion in stablecoin transaction volume in the first seven months of 2025 alone, an 83% increase on the same period a year earlier.

The GENIUS Act, signed into law in July 2025 and now in active rulemaking, established the first federal licensing framework for payment stablecoin issuers in the United States. The EU’s MiCA regulation took full effect on July 1, 2026. Hong Kong, Singapore, Japan and the UAE each have purpose-built stablecoin regimes in place.

At those volumes and with that regulatory infrastructure now functioning, the instruments processing the payments look less like digital tokens and more like a monetary layer.

Whether they actually are one is the question that economists, regulators, and the executives building payment infrastructure on top of them are now being forced to answer.

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When Does a Payment Instrument Become Money?

The classical definition of money requires three things: a store of value, a medium of exchange, and a unit of account.

Stablecoins satisfy the second criterion easily and the first criterion conditionally. The third remains largely unsatisfied.

No business denominates its contracts in USDT. No central bank holds USDC as a reserve asset. Every stablecoin is still a dollar liability dressed in a blockchain wrapper, which means the unit of account beneath it is still the dollar, not the stablecoin itself.

The comparison may be misleading. Bank deposits are also liabilities of private institutions. They are denominated in dollars rather than constituting a new unit of account, and they are only as sound as the institutions issuing them. Yet nobody argues that bank deposits are not money.

Vugar Usi, CEO of MEXC, told CCN the test is behavioral rather than definitional.

“Once users stop treating a stablecoin as a temporary bridge back to bank money, it works as money in its own right,” Usi said. “People have to be willing to hold balances, receive payments, and settle invoices in them without constantly looking for the exit.”

He set a concrete threshold for what constitutes convincing evidence.

“I would like to see real payment activity dominate usage over several consecutive quarters. That means merchant payments, treasury settlement, payroll, and remittances, with a tight peg and redemptions that remain boring even when markets are under stress. A ledger can process enormous volume and still fall short of money. Money is proven when users are willing to leave value inside the system and rely on it for day-to-day commercial activity.”

Declan Hannon, CEO of Aurora Labs, set an even simpler test. Hannon told CCN the threshold is invisibility.

“A stablecoin stops being a payment instrument the moment nobody has to think about it,” he said. “Not adoption charts, not volume. It is whether a business can hold it, invoice it, pay a supplier in it, and never once have to explain why,” Hannon said.

Hannon argued that first-use data misses the point entirely. “The signal is repeat behavior, not a first use. Anyone can send a stablecoin once. Money is what people keep holding after the transaction clears. Sitting in a treasury account, a payroll wallet, a merchant’s balance, because moving it back to a bank account would be the pointless step.”

Maksym Sakhrov, co-founder and group CEO of WeFi, an onchain banking infrastructure provider, told CCN the test requires looking across multiple dimensions simultaneously.

“A stablecoin becomes money-like when it is used repeatedly across real financial activity, not just as a transfer tool,” Sakhrov said. He identified six practical thresholds: sustained payment volume outside exchanges, reliable redemption, deep liquidity, merchant or platform acceptance, institutional settlement use, and regular cross-border activity. “The real test is behavior,” Sakhrov added. “When individuals, businesses, and institutions use stablecoins for payments, settlement, treasury movement, and everyday value storage without treating them as a separate crypto process, they start to function as money-like infrastructure.”

Can Private Stablecoins Ever Become a Monetary Layer?

Identifying when stablecoins become money is easier than solving the structural problem that prevents them from becoming a true monetary layer. Every stablecoin in circulation is a liability of a private company. Tether’s USDT is a liability of Tether Limited.

Circle’s USDC is a liability of Circle Internet Financial. The promise embedded in each token is that one unit can be redeemed for one dollar on demand, and that promise is only as strong as the issuer’s reserves and the market’s confidence in those reserves at the moment of maximum stress.

Usi identified reserve credibility as the central obstacle.

“The central obstacle is the liability’s credibility. A stablecoin is a private promise, and users have to believe that promise will hold when redemptions rise or markets are stressed. One token has to keep meaning one dollar even when a lot of holders want out at once. That depends on reserve quality, redemption access, and the issuer’s ability to meet withdrawals without putting pressure on the assets backing the token.”

Hannon reduced the same argument to its essential form.

“The obstacle isn’t technical. It’s the reserve. Every stablecoin is a promise. One token, one dollar, on demand. No amount of infrastructure fixes a promise a treasury desk doesn’t trust.”

He stressed that enterprise adoption depends on a specific kind of confidence that normal market performance cannot fully establish. “For enterprises, the question is whether one token still means one dollar as redemptions rise. That depends on reserve quality, redemption access, and the issuer’s ability to meet withdrawals without selling backing assets into a stressed market.”

Sakhrov extended the argument to the stress-testing dimension. “A stablecoin can work well in normal market conditions, but a true monetary layer has to remain reliable when redemption demand rises, liquidity tightens, or users move quickly between assets.”

He added that regulation and transparency help, but are insufficient on their own.

“The market also needs operational proof through repeated use. Stablecoins can become a widely used settlement and payment layer without becoming identical to sovereign money. To reach that point, they must prove they are liquid, redeemable, and usable not only during growth cycles, but also during periods of pressure,” Sakhrov said.

The history of stablecoin stress events does not provide reassurance on this point. TerraUSD’s collapse in May 2022 wiped approximately $40 billion in market value and exposed how quickly algorithmic reserve mechanisms fail under coordinated selling pressure.

USDC’s temporary depeg to $0.87 in March 2023, triggered by Circle’s exposure to Silicon Valley Bank’s collapse, demonstrated that even fully-reserved fiat-backed stablecoins are not immune to the confidence dynamics that run bank runs. Both events occurred before the GENIUS Act established federal licensing requirements for payment stablecoin issuers, requirements that are now being implemented through mid-2026 rulemaking.

Trust Is the Deciding Variable

If stablecoins do eventually process more global payment volume than traditional banking rails, the question of which stablecoin wins the settlement layer competition reduces to a single variable, and all three executives named the same one.

Usi was straightforward. “Trust will determine the winner. In payments, trust means the market is confident that the token can be accepted, redeemed, and settled without adding new risk to the transaction. Liquidity, regulation, and distribution matter, but only as inputs. A stablecoin can be widely distributed and still fail if businesses are unwilling to maintain balances in it. The winning asset is the one counterparties accept without asking a second question. The strongest stablecoin will make par redemption routine and issuer risk easy to understand. Businesses will build lasting volume around a stablecoin only when they do not need a fresh risk check on every payment.”

Hannon agreed, noting that trust is the aggregating variable that the others serve.

“Liquidity gives a stablecoin depth, regulation gives enterprises legal cover, and distribution puts it where users already are. But the asset also has to work inside payment and treasury systems when markets are moving. A stablecoin with a broad distribution can struggle if businesses do not want to keep balances in it. Normal market liquidity has limited value when redemption becomes uncertain under stress. Developers will integrate the asset that is easiest to support, and businesses will rely on the asset that does not create a new risk review with every payment.”

Sakhrov placed trust in an infrastructure argument. “Trust will determine the winner, but trust will be built from liquidity, regulation, and distribution working together,” he said.

“A stablecoin with deep liquidity but weak user protection will struggle to become a serious payment infrastructure. A regulated stablecoin with limited acceptance will remain narrow. A widely distributed stablecoin that users cannot redeem confidently will lose credibility.”

Sakhrov pointed to usability as the translation layer between trust as an abstract concept and trust as a market outcome.

“Adoption starts with the action the user wants to complete: receive, hold, send, spend, convert, or access value. Stablecoin and crypto payments need to connect digital settlement with fiat access, account-style usability, compliance-aware controls, and payment acceptance. That combination is what turns transaction volume into sustained financial use.”

Whether stablecoins meet the definition of money today depends on which definition is applied and which issuer is examined. What the evidence and the executives closest to the infrastructure agree on is that the question is no longer theoretical.

The volumes are large enough, the use cases are real enough, and the regulatory frameworks are concrete enough that the answer will be revealed not by economists but by whether ordinary businesses and individuals keep choosing to leave their value inside these systems when they no longer have to.

Do Stablecoins Meet the Definition of Money? Experts Weigh In

When Does a Payment Instrument Become Money?

Can Private Stablecoins Ever Become a Monetary Layer?

Trust Is the Deciding Variable

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