What would a market of a thousand stablecoins look like?

Another day, another stablecoin launch.

Fidelity Investments is looking to launch its own stablecoin through its digital assets arm, the Financial Times reported Wednesday.

There are few details on the Fidelity stablecoin currently, but a safe guess is that it’ll be backed by US Treasurys.

As regulatory risk looks to be coming off the table for crypto assets, a rapid number of companies from both TradFi and DeFi are eyeing Tether’s billion-dollar throne and looking to tap into the digital-dollar business.

At Blockworks’ Digital Assets Summit 2025, executive director of the Presidential Council of Advisers for Digital Assets Bo Hines indicated that the much-anticipated stablecoin legislation is “imminent” and “could be on the president’s desk in the next two months.”

A bill is set to be introduced in the House today.

Interesting timing — just yesterday, the Trump-affiliated World Liberty Financial (WLF) also announced a USD1 stablecoin.

USD1 is a centralized stablecoin asset backed by short-term US T-bills and US dollar deposits, and custodied by BitGo, the same custodian behind the Wrapped Bitcoin (WBTC) asset.

WLF’s official press release labels USD1 an “institutional-ready” stablecoin, but its launch on Ethereum and BNB Chain suggests it will be accessible to retail users as well.

What would a market of potentially hundreds of stablecoins be good for?

“In traditional FX markets, the US dollar is around 57% of the market. Stablecoins will unleash existing FX markets eventually in ways that are superior to how FX markets trade today,” CoinFund’s Chris Perkins told me at DAS last week.

Market competition

USD1 will also, notably, offer no yield for users.

That is perhaps an odd thing to flag for a stable dollar asset.

Consider, however, that yield-bearing stablecoins in the world of DeFi are fast becoming table stakes to find footing in a crowded stablecoin market.

Noble’s USDN and Usual’s USD0 are some examples of newer stablecoins that are giving up the yield from their T-bill backing to users.

While USDC is not yield-bearing by default, Coinbase last November also announced yields rewards for USDC holders — currently a 4.1% yield.

Stablecoins launched by regulated entities are likely omitting a yield-bearing component to avoid being labelled as a security.

How then might USD1 compete? The answer is probably business development deals and incentives.

“Absent an existing deposit base, customer checking accounts, or payment network, WLF will likely rely on deals to seed deposits for USD1. This could include yield pass packs to depositors, where the underlying T-bill, money market, or cash equivalent yield is passed back to the private party that seeded the deposit, or an agreement for the exchange of WLFI tokens,” Blockworks’ Luke Leasure said.

“On the market, WLF could configure the interest rate model (IRM) on the money market for USD1 to make it more favorable for either suppliers or borrowers. This may allow WLF to return a favorable yield to suppliers at the expense of borrowers paying a premium, or allow for borrowers to borrow at a discount to prevailing market rates at the expense of suppliers earning a discount.”

Meanwhile, total onchain stablecoin market cap continues to break all time-highs, at $225.9 billion. The mass majority (56.5%) is on Ethereum.