Welcome to In The Stables, a weekly briefing on the most important developments shaping the global stablecoin ecosystem. Each edition delivers clear, data-driven insights into market structure, regulatory momentum, and protocol-level shifts, along with a curated look at supply, flows, and onchain usage trends across the sector.
What’s included this week:
The total stablecoin market cap declined 1.0% WoW to $305.1 billion, driven by continued supply contraction in USDT and USDC, while select mid-cap issuers like USDS and USD1 continued to gain share.
Onchain activity diverged, with average daily active addresses rising 7.8% WoW even as transaction volume fell 4.4% WoW, pointing to broader participation but smaller average transfer sizes.
Institutional momentum accelerated as Fidelity launched its FIDD stablecoin on Ethereum and VersaBank outlined plans for stablecoin custody and interest-bearing deposit tokens, underscoring growing bank-led experimentation.
Regulatory and protocol developments remained active, highlighted by Tether’s launch of a GENIUS-compliant USAT stablecoin and ongoing U.S. policy debates over stablecoin yield restrictions that could shape future market structure.
Yields of The Week
Institutional Moves
Jan. 28, 2026 | Fidelity Introduces FIDD Stablecoin on Ethereum
Fidelity Digital Assets launched FIDD, an institutional-grade USD-pegged stablecoin featuring real-time settlement, low fees, and built-in compliance tools for retail and enterprise applications on the Ethereum blockchain. This expansion bridges traditional finance with crypto, with phased rollouts including integrations for custody and payments to enhance liquidity across ecosystems.
At an industry conference, VersaBank detailed its approach to stablecoin custody and interest-bearing deposit tokens, including pilots for cross-border applications and third-party services with FDIC-like insurance features. The initiative highlights hybrid models blending traditional banking with crypto, projecting significant deposit shifts and expanded access to yield-bearing instruments.
Protocol Updates
Jan. 27, 2026 | Aleo Launches USDCx as First Private Stablecoin
Aleo introduced USDCx, a privacy-focused version of USDC that enables fully private onchain transactions for both retail and institutional users, leveraging zero-knowledge proofs to maintain compliance while enhancing user anonymity. The launch marks a significant step in addressing privacy deficiencies in existing stablecoins, with initial integrations planned for DeFi protocols and enterprise payment systems.
Jan. 27, 2026 | StableFlow Launches on Plasma for Cross-Chain Settlements
StableFlow went live on the Plasma network, facilitating low-fee and high-volume stablecoin settlements across chains like Tron and Ethereum, with features for automated bridging and reduced latency. This deployment aims to streamline liquidity in fragmented ecosystems, supporting larger institutional transfers and potentially lowering overall transaction costs in the stablecoin space.
Jan. 27, 2026 | SundaeSwap Adds Stableswap Pools with Incentives
SundaeSwap rolled out stableswap pools on its platform, enabling efficient trading of stablecoins like USDC and DAI with reduced slippage, accompanied by liquidity incentives from partners including SteelSwap. The upgrade focuses on bolstering DeFi liquidity and user rewards, with plans for expanded token support in upcoming phases to foster greater ecosystem participation.
Jan. 27, 2026 | Tether Launches USAT as GENIUS-Compliant Stablecoin
Tether released USAT, its first U.S.-regulated and USD-backed stablecoin fully compliant with the GENIUS Act, emphasizing enhanced transparency and auditability for U.S.-based users. The initiative includes quarterly attestations and integration with major exchanges, positioning it as a competitive alternative amid ongoing regulatory scrutiny of legacy stablecoins.
Regulatory Pulse
Jan. 29, 2026 | UAE Greenlights First Licensed USD-Backed Stablecoin
The UAE's central bank approved the country's first regulated USD-pegged stablecoin, paving the way for licensed issuers to integrate digital assets into regional financial systems with full compliance oversight. This regulatory milestone includes stringent reserve requirements and aims to position the UAE as a hub for stablecoin innovation, facilitating cross-border payments and trade finance.
Feb. 2, 2026 | U.S. Officials Discuss Yield Restrictions on Stablecoins
A White House meeting between crypto firms and banks revealed ongoing disputes over yield payments on stablecoins, with banks opposing passive interest while the talks tie into broader market structure legislation. The discussions highlight regulatory tensions, potentially delaying key bills and shaping future policies on stablecoin economics.
In The Data
The total stablecoin market cap declined this week, falling 1.0% WoW to $305.1 billion and extending a modest contraction over the past month. USDT remained the dominant issuer but was a key driver of the weekly pullback, declining 0.7% WoW to $185.1 billion. Despite the contraction, USDT’s market share held essentially flat at 60.7%, reflecting broad-based weakness rather than issuer-specific outflows.
USDC saw a sharper relative decline, falling 1.9% WoW to $70.6 billion as its market share slipped to 23.2%. On a three-month basis, USDC remains meaningfully lower, down over 6% from last month, signaling continued rotation away from the second-largest stablecoin.
Among mid-cap stables, performance was mixed. USDe declined modestly, down 0.6% WoW to $6.6 billion, while USDS was one of the few issuers to expand, rising 1.3% WoW to $6.1 billion and gaining share. USD1 also continued to grow, increasing 1.3% WoW to $5.0 billion and posting the strongest momentum on a monthly basis. DAI contracted slightly, falling 0.6% WoW to $4.6 billion, broadly in line with the larger market.
The long tail saw renewed weakness this week. Combined “Other” stablecoins declined 2.5% WoW to $27.1 billion, reversing part of their gains from earlier in the quarter and pointing to a near-term consolidation across smaller issuers amid a softer overall supply environment.
Stablecoin usage showed mixed signals this week, with engagement rising even as transaction activity moderated. Average daily active addresses increased 7.8% WoW to 4.36 million, up from 4.1 million last week, marking a clear reacceleration in user participation across stablecoin networks.
In contrast, average daily stablecoin transaction volume declined 4.4% WoW to $273.4 billion, down from $286.0 billion the prior week. The divergence between rising active addresses and falling aggregate volume points to broader participation but smaller average transfer sizes, suggesting increased retail or low-value transactional activity rather than large capital movements.
On a monthly basis, trends remain constructive. Active addresses are up 5.7% MoM, reinforcing the view that the stablecoin user base continues to expand. At the same time, monthly transaction volume has surged 91.5%, highlighting that despite this week’s pullback, overall capital throughput remains materially higher than last month and continues to be driven by episodic bursts of large transfers.
Stablecoin flows remained decisively negative this week, with net outflows deepening on both a weekly and monthly basis. Net USD flows totaled -$3.2 billion, widening from -$2.8 billion in outflows last week and marking a 15.6% WoW deterioration. On a daily basis, average net outflows increased to -$460.6 million, up from -$398.5 million previously, indicating a steady pace of capital exiting stablecoins throughout the week rather than a single concentrated event.
Month-to-date dynamics reinforce the weakness. February has recorded -$3.43 billion in net outflows so far, a sharp acceleration from just -$443 million in total outflows last month. The 674% MoM increase in net outflows highlights a meaningful shift in positioning, with capital being drawn down more aggressively early in the month.
Summary: The article explores stablecoins as digital proxies for USD, analyzing regulatory shifts under the GENIUS Act and MiCA, potential risks to bank deposits, and global variations in stablecoin frameworks amid economic asymmetries.
Summary: The analysis projects the tokenized RWA market (excluding stablecoins) to exceed $100 billion by year-end, driven by institutional integration, regulatory progress like FDIC rules, and stablecoin synergies for yield and liquidity.
Summary: The report compares fintech and DeFi growth, highlighting stablecoin rails expanding faster than traditional payments, with DeFi protocols like Aave surpassing Klarna in loans and stablecoin adoption signaling institutional convergence.
Summary: The piece argues that stablecoins are evolving from unregulated innovations to a regulated financial component, driven by frameworks like the GENIUS Act, offering opportunities in payments but requiring stronger risk management and harmonization.
Summary: The opinion piece critiques traditional stablecoins for failing to preserve purchasing power amid inflation, advocating for inflation-adjusted flatcoins as the superior evolution for DeFi stability in 2026.
Summary: The piece examines diverse regulatory responses to stablecoins globally, contrasting the U.S. GENIUS Act's nonbank facilitation with the UK's payments-first approach, and warns of potential financial fragmentation if transactions migrate to foreign stablecoin platforms.
Closing Summary
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Alexander is a protocol researcher specializing in Layer-1 and Layer-2 infrastructure, as well as RWA's and Stablecoins. Before Messari, he worked at Jump Trading and Bull-Moose Consulting. He graduated from Northeastern University with a degree in Economics and Data Science, and helped run Northeastern's blockchain club.
Alexander is a protocol researcher specializing in Layer-1 and Layer-2 infrastructure, as well as RWA's and Stablecoins. Before Messari, he worked at Jump Trading and Bull-Moose Consulting. He graduated from Northeastern University with a degree in Economics and Data Science, and helped run Northeastern's blockchain club.
