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The Brutal Truth About Non-USD Stablecoins

Why Most Euro, Yen, and SGD Stablecoins Fail & What It Takes to Survive

  • By UNDAO

Illustration by UNDAO

At a Glance:

  • Stablecoins settled $27.6T in 2024, but non-USD coins make up <1% of supply.
  • Stablecoins are built for professional institutions: more than 95% of flows are trading, arbitrage, and treasury ops.
  • USD-backed coins dominate, while non-USD projects struggle against three brutal constraints: liquidity gravity, MiCA yield math, and real distribution.
  • Instead of displacing USD, most non-USD projects only amplify its dominance.

Stablecoins have become systemic infrastructure: $27.6T settled in 2024, dwarfing many payment networks. Yet non-USD supply remains <1% of the market. Euro issuers combined are only ≈$0.63B, a rounding error against the roughly $280 billion global stablecoin float.

The story is clear: unless three brutal constraints are solved, non-USD stablecoins don’t just struggle. They reinforce USD dominance.

1. Liquidity Gravity: USD Still Runs the System

BTC/USDT and ETH/USDT dominate the default order books.

Most non-USD stablecoin projects underestimate how deeply USD rails are entrenched in professional trading flows.

The market is already built on USD rails.

For instance, according to Kaiko research, on Bitvavo and Kraken, euro-denominated volume averages €200M/day, but this is still marginal relative to global trading flows.

No trader wants to rebalance across 17 fragmented mini-pools of liquidity.

USD rails are not just entrenched; they’ve become systemic infrastructure for global crypto trading.

2. Yield Math: MiCA’s Brutal Economics

MiCA sets hard rules that crush euro stablecoin margins:

Reserve requirements:

  • Same currency only, meaning no USD T-bills or FX hedges.
  • ≥60% of reserves in bank deposits (for significant issuers).
  • Remainder in short-dated EU government debt or high-quality liquid assets (HQLA).

Interest ban:

  • No yield sharing with token holders.
  • The issuer retains the float but must absorb the costs of compliance and operations.

The Mechanics in Numbers

Assume a €1 billion float:

  • Deposits (60%) at EU banks – 0.5 to 1.0%.
  • Bonds (40%) in short-term EU debt – 2 to 2.5%.
  • Blended gross yield – approximately 1.3 to 1.5%.
  • Operational drag (licensing, audits, custody, compliance) – 30 to 50 basis points.
  • Net yield – approximately 0.5 to 0.9%.

At a midpoint net yield of 0.75%, the issuer nets €7.5 million annually on a €1 billion float. Fixed costs commonly reach €10 to 15 million per year, meaning break-even requires around €1.5 to 2 billion in float.

Note: These figures are illustrative ballparks to highlight typical yield and cost dynamics under MiCA; actual outcomes depend on issuer-specific factors and market conditions.

The punchline?

Raising $50 million and assuming a €300 million float sustains you is wishful thinking.

MiCA’s economics demand a billion-euro float to survive.

Everyone else is quietly bleeding.

3. Real Distribution: Why Captive Float Decides Survival

Building a viable non-USD stablecoin requires banks, PSPs, or exchanges ready to park $300 million or more within 12 months. Regulatory clarity that grants a first-mover advantage is equally essential.

The only viable non-USD stablecoins will emerge where:

  • Local regulation (e.g., MiCA in Europe, HKMA in Hong Kong) enables a dominant issuer.
  • Distribution is locked in through strong commercial rails: payment service providers, bank treasuries, and exchange corridors.
  • Treasury operations can maintain a net yield of at least 1%, even under deposit drag.

Without all three, you’re not building a stablecoin; you’re building a startup that will burn investor money and ultimately fail.

These aren’t optional. They’re existential.

Everyone else?

They aren’t creating an alternative to USD.

They’re amplifying its dominance.

The Unvarnished Reality

Retail payments are hype.

More than 95% of stablecoin flows come from professional activities like liquidity routing, exchange arbitrage, and treasury ops. Retail use remains around 6% at best, and even then, mostly features USD-backed stablecoins.

Ignore this reality, and you are not building a stablecoin but a cash-burning machine.

Add to that the structural challenges: fragmentation vs. coordination, where more non-USD coins only deepen inefficiency and reinforce USD’s grip. Furthermore, policy trade-offs, where frameworks like MiCA reduce systemic risk but starve economies.

The signal is clear.

Non-USD stablecoins are not simply retail payment tools. They are infrastructure bets designed for professional traders who demand scale, liquidity, and yield.

Until projects solve liquidity, yield, and distribution simultaneously, USD remains not just the default but the destiny.

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