Stablecoin Dominance in Institutional OTC Trading Reaches 74.6% in First Half of 2025

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The first half of 2025 marked a pivotal shift in institutional cryptocurrency trading behavior, as stablecoins solidified their role as the preferred medium in over-the-counter (OTC) spot markets. According to a comprehensive report by Finery Markets, stablecoins accounted for 74.6% of institutional OTC spot trading volume during this period — a dramatic increase compared to previous years and a clear signal of evolving market dynamics.

This surge reflects growing institutional confidence in digital assets that offer price stability, liquidity, and compliance-friendly frameworks. As crypto markets mature, the demand for reliable on-ramps and off-ramps has driven institutions toward stablecoins, particularly those with transparent reserve structures and regulatory alignment.

Rising Institutional Adoption of Stablecoins

Institutional investors are increasingly prioritizing efficiency, risk management, and regulatory clarity — all areas where stablecoins excel. Unlike volatile cryptocurrencies such as Bitcoin or Ethereum, stablecoins provide a predictable valuation pegged primarily to the U.S. dollar, making them ideal for large-scale settlements, cross-border transactions, and portfolio hedging.

The 112.6% year-on-year growth in overall OTC spot trading volume underscores the expanding footprint of institutional participation in crypto markets. More notably, stablecoin-specific trading volumes surged by 154%, while trades involving crypto-to-stablecoin pairs exploded by over 277%, indicating a clear preference for using stable assets as intermediaries in trading strategies.

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USDC Emerges as the Fastest-Growing Stablecoin

Among all stablecoins, USD Coin (USDC) stood out with a staggering 29x year-over-year increase in trading volume, making it the fastest-growing asset in institutional OTC activity. This meteoric rise is largely attributed to shifting regulatory landscapes, particularly the implementation of the European Union’s Markets in Crypto-Assets (MiCA) regulation.

MiCA has prompted several major trading platforms operating in Europe to restrict or delist non-compliant stablecoins, most notably Tether (USDT), due to concerns over transparency and reserve audits. In contrast, USDC’s adherence to regulatory standards — including regular attestations and full backing by cash and short-term U.S. Treasury securities — has positioned it as a trusted alternative for compliant institutions.

As a result, European and global financial firms seeking regulatory alignment have migrated toward USDC, accelerating its adoption across custodians, prime brokers, and institutional market makers.

Market Fragmentation and Systemic Risk Warnings

Despite the positive momentum, Finery CEO issued a cautionary note regarding the long-term sustainability of the current stablecoin ecosystem. With an increasing number of issuers entering the space and stablecoins being deployed across multiple blockchains, fragmentation is becoming a growing concern.

“If stablecoin issuance continues to expand without sufficient secondary market depth and liquidity infrastructure,” the CEO warned, “we could face scenarios of de-pegging events that trigger systemic runs or cascading redemptions.”

Such risks are not theoretical. Historical precedents — such as the TerraUSD collapse in 2022 — demonstrate how loss of confidence can rapidly erode a stablecoin’s peg, leading to panic selling and broader market contagion. As more capital flows into stablecoins, ensuring robust redemption mechanisms, transparent reserves, and interoperable liquidity pools becomes critical.

The Strategic Shift Toward Compliance and Transparency

The data from Finery Markets highlights a broader trend: institutions are not just entering crypto — they’re reshaping it. Their demand for auditability, counterparty reliability, and regulatory compliance is driving innovation in tokenized money markets and influencing issuer behavior.

Stablecoin issuers now face pressure to adopt higher standards of disclosure and operational integrity. Those that fail to meet these expectations risk exclusion from major trading venues — especially in regulated jurisdictions like the EU and North America.

This shift benefits not only investors but also the long-term credibility of blockchain-based finance. By aligning with traditional financial principles while leveraging decentralized infrastructure, compliant stablecoins like USDC are bridging the gap between legacy systems and next-generation finance.

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FAQ: Understanding Stablecoin Trends in Institutional OTC Markets

Q: Why are stablecoins so dominant in institutional OTC trading?
A: Institutions favor stablecoins because they combine the speed and accessibility of blockchain with the price stability of fiat currencies. This makes them ideal for large-volume trades without exposure to crypto volatility.

Q: What caused USDC’s 29x growth in OTC volume?
A: Regulatory developments like MiCA led platforms to limit exposure to less-transparent stablecoins like USDT. USDC’s compliance framework, regular audits, and U.S. dollar backing made it the go-to choice for regulated entities.

Q: Is the rise of stablecoins risky for financial stability?
A: While stablecoins offer efficiency gains, rapid growth without adequate liquidity or oversight could lead to de-pegging events. Strong reserve practices and market depth are essential to mitigate systemic risks.

Q: How does MiCA affect stablecoin usage outside Europe?
A: MiCA sets a global benchmark for regulation. Even outside the EU, exchanges and institutions often align with its standards to maintain access to European markets and enhance trustworthiness.

Q: Are all stablecoins equally trusted by institutions?
A: No. Trust depends on transparency, audit frequency, reserve composition, and regulatory engagement. USDC ranks high due to its consistent compliance; others may lack verifiable backing or clear governance.

Q: What role do OTC desks play in stablecoin trading?
A: OTC desks facilitate large trades without impacting public exchange prices. They provide privacy, reduced slippage, and customized settlement terms — crucial for institutional-scale operations.

Looking Ahead: Building Resilient Digital Dollar Ecosystems

As we move deeper into 2025, the dominance of stablecoins in institutional finance appears set to continue — but sustainability will depend on coordinated efforts across regulators, issuers, and market participants.

Key priorities include enhancing cross-chain interoperability, standardizing reserve reporting, and developing circuit breakers for de-pegging events. Additionally, integration with real-world assets (RWAs) and tokenized Treasury bills could further anchor confidence in digital dollar solutions.

For institutions navigating this landscape, partnering with compliant platforms that support transparent, scalable trading is essential.

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Conclusion

The fact that stablecoins now represent nearly three-quarters of institutional OTC spot trading volume is more than a statistic — it’s a transformational milestone. It reflects a maturing ecosystem where efficiency meets accountability, and where digital dollars are becoming foundational infrastructure for global finance.

With USDC leading the charge amid tightening regulations like MiCA, the future belongs to stablecoins that prioritize transparency, resilience, and interoperability. As innovation continues, maintaining trust will remain paramount — ensuring that growth does not come at the cost of stability.

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