The Clash of Central Bank Digital Currencies (CBDCs) and Stablecoins: An Analysis of the Digital Payment Ecosystem Restructuring by 2025
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As of the end of 2025, the global digital payment ecosystem is being restructured into a fierce competitive landscape between Central Bank Digital Currencies (CBDCs) and private stablecoins. According to the latest report from the Bank for International Settlements (BIS), 68% of the 134 countries worldwide, or 91 countries, have embarked on CBDC research and development, with 19 of them running pilot programs. Notably, the Bank of Korea demonstrated technical proficiency by achieving a transaction processing capability of 100,000 transactions per second in its first-half 2025 CBDC simulation, significantly surpassing the average processing capacity of 65,000 transactions per second of existing credit card payment systems, indicating the potential for large-scale commercialization.
Conversely, the private stablecoin market continues to show steady growth despite regulatory pressures. As of November 2025, Tether (USDT) recorded a market capitalization of $132 billion, a 24% increase from the previous year, while USD Coin (USDC) maintained a scale of $38 billion. However, growth momentum has somewhat slowed due to the European Union’s Markets in Crypto-Assets (MiCA) regulation and the U.S. Securities and Exchange Commission’s (SEC) enhanced oversight policies. Particularly, the issuance halt of Binance USD (BUSD) due to New York financial authorities’ regulations has increased market concentration in the stablecoin sector.
From a technical perspective, CBDCs and stablecoins adopt different approaches. CBDCs are issued and managed directly by central banks, ensuring a 1:1 exchange with legal tender, whereas stablecoins maintain value stability through collateral assets managed by private companies. The Bank of Korea’s CBDC pilot demonstrated the potential to overcome the limitations of existing cash and maximize policy effects by implementing offline transaction capabilities and programmable money features. In contrast, stablecoins have an advantage in 24-hour global trading and compatibility with the DeFi ecosystem.
## Acceleration of CBDC Adoption and Differentiation of National Strategies
Examining the status of CBDC development in major countries reveals distinct strategies based on each country’s economic goals and financial infrastructure levels. As of 2025, China’s Digital Yuan (DC/EP) is being piloted in 26 provinces and cities, with cumulative transaction volumes exceeding 800 billion yuan (approximately $110 billion). The Digital Yuan, which gained international recognition during the 2024 Beijing Winter Olympics, is increasingly used in cross-border payments with Belt and Road Initiative participant countries. According to data from the People’s Bank of China, the average daily transaction count of the Digital Yuan exceeds 3 million, showing a deterrent effect against Alipay and WeChat Pay in the small payment market.
The European Central Bank’s (ECB) Digital Euro project completed its investigation phase in October 2025 and entered the preparation stage. The ECB has set privacy protection and offline payment capabilities as core requirements and is pursuing harmony with the existing financial system through a cooperative model with commercial banks. The personal holding limit for the Digital Euro is capped at 3,000 euros to minimize the effect of replacing bank deposits while meeting everyday payment needs. The European Parliament’s Economic and Monetary Affairs Committee aims to pass the Digital Euro bill by the first half of 2026, with actual implementation expected around 2027.
The Bank of Japan expanded its CBDC pilot program in April 2025 through collaboration with the private sector. This experiment, involving mega banks such as Mitsubishi UFJ Bank, Mizuho Bank, and Sumitomo Mitsui Banking Corporation, focuses on testing offline payment and smart contract functions. Japan’s CBDC is designed to coexist with cash, reflecting the high cash usage rate in Japanese society. According to a Bank of Japan survey, 67% of Japanese consumers responded positively to CBDC adoption, although 43% expressed concerns about privacy protection.
The Bank of Korea’s CBDC research evolved into a practicality verification phase in the second half of 2025. It is testing interoperability with existing easy payment services through collaboration with fintech companies like KakaoPay, NaverPay, and Toss, and verifying compatibility with manufacturer payment services like Samsung Pay and LG Pay. Korea’s CBDC supports various payment methods, including QR codes, NFC, and biometric authentication, focusing on improving accessibility for the elderly and digitally marginalized groups. According to a mid-term report by the Bank of Korea, the annual social cost reduction effect upon CBDC adoption is estimated to reach 1.2 trillion won.
## Evolution of the Stablecoin Market and Regulatory Responses
The stablecoin market is securing its own growth momentum despite the rise of CBDCs. As of November 2025, the average daily trading volume of USDT issued by Tether Limited reached $65 billion, significantly surpassing Bitcoin’s $38 billion. This indicates that USDT has become a core infrastructure for global digital payments beyond a mere store of value. Particularly, cross-border remittances using USDT are surging in Latin America and Africa, and in high-inflation countries like Argentina and Turkey, USDT is increasingly used as a savings tool instead of local currencies.
Circle’s USD Coin is favored by institutional investors based on regulatory compliance and transparency. In the first half of 2025, Circle obtained a full reserve banking license from the New York State Department of Financial Services, further strengthening its regulatory status. Consequently, USDC’s collateral assets consist solely of U.S. Treasury short-term bonds and cash, and monthly audit results are disclosed to ensure transparency. As major Wall Street institutions like Goldman Sachs and BlackRock launch digital asset products using USDC, the adoption rate in the institutional investor sector increased by 156% compared to the previous year.
PayPal USD (PYUSD) has shown steady growth since its launch in 2023, achieving a market capitalization of $800 million as of November 2025. Based in San Jose, California, PayPal Holdings Inc. (NASDAQ: PYPL) is enhancing the practicality of PYUSD based on its 429 million active users. Particularly, the use of PYUSD in P2P remittances and online shopping payments through the Venmo app is surging, with PYUSD transaction volume in the third quarter of 2025 increasing by 89% compared to the previous quarter, reaching $4.5 billion. PayPal announced plans to launch PYUSD services in the European market in the first half of 2026.
Changes in the regulatory environment are accelerating the restructuring of the stablecoin market. The EU’s MiCA regulation, fully implemented from December 2024, imposes minimum capital requirements and collateral asset segregation obligations on stablecoin issuers. As a result, some smaller stablecoins are being phased out of the market, while the market dominance of major stablecoins meeting regulatory requirements is further strengthened. In its October 2025 report, the International Monetary Fund (IMF) predicted that “the clearer the regulations, the faster the institutional integration of stablecoins will accelerate.”
## Analysis of Competitive Dynamics and Complementarity
The competition between CBDCs and stablecoins exhibits complex interactions beyond a simple substitution relationship. As central banks move to strengthen monetary sovereignty through CBDC adoption and private companies strive to expand market share through innovative financial services, new forms of collaborative models are emerging. The Monetary Authority of Singapore (MAS) is experimenting with interoperability between the digital Singapore dollar and private stablecoins through Project Garden in August 2025. This project involves global cryptocurrency exchanges like Binance and Coinbase, alongside DBS Bank and OCBC Bank.
In terms of technical interoperability, CBDCs and stablecoins exhibit different strengths and weaknesses. CBDCs provide stability and universality based on the trust and legal status of central banks but tend to lag behind private stablecoins in development speed and innovation. Conversely, stablecoins offer rapid innovation and integration with various DeFi services but face structural limitations such as regulatory uncertainty and collateral asset risk. According to McKinsey’s 2025 report, a scenario where CBDCs and stablecoins coexist in the global digital payment market is the most realistic, with each specializing in different use cases.
From a commercial perspective, the response strategies of major financial institutions are diversifying. New York-based JPMorgan Chase & Co. is expanding its JPM Coin as a service for institutional clients while also offering interoperability services with major stablecoins. In the third quarter of 2025, JPM Coin’s average daily transaction volume exceeded $20 billion, particularly showing a 70% faster processing speed in cross-border corporate payments compared to the existing SWIFT system. Mastercard (NYSE: MA) and Visa (NYSE: V) are building payment infrastructures that support both CBDCs and stablecoins, maintaining a neutral stance, which is evaluated as a strategy to ensure their continued role in the digital currency ecosystem.
From a market segmentation perspective, CBDCs show strength in retail payments and government services, while stablecoins maintain an advantage in cross-border remittances and digital asset trading. According to an analysis by Boston Consulting Group, the market share of stablecoins in the global cross-border remittance market (valued at $780 billion) is expected to reach 12% in 2025, more than doubling from 5% in 2023. Particularly, the growth of remittance services using stablecoins is prominent in Southeast Asia and the Middle East, with average fees 85% cheaper and processing times 90% shorter compared to traditional bank remittances.
Interesting changes are also observed from the perspective of the investor and developer ecosystem. According to venture capital investment data, investments in CBDC-related technology startups in the first half of 2025 increased by 340% year-on-year, reaching $2.3 billion. Meanwhile, investments in stablecoin-related ventures, although still leading in absolute scale at $15.6 billion, showed a relatively slower growth rate of 67%. This reflects market expectations for growth potential in the CBDC sector while indicating the maturity of the stablecoin market.
## Future Outlook and Investment Implications
The outlook for the digital currency ecosystem heading into 2026 can be summarized with the keywords coexistence and specialization. According to the latest predictions from the Bank for International Settlements, more than 15 major countries worldwide are expected to officially adopt CBDCs by 2028, with the global digital payment market size projected to grow from the current $18 billion to $240 billion. Simultaneously, the stablecoin market is also expected to grow from the current $150 billion to $400 billion due to regulatory clarification and increased institutional adoption. This growth is likely to occur in a complementary rather than mutually exclusive relationship.
From an investment perspective, areas to watch are digital currency infrastructure and service providers. Block Inc. (NYSE: SQ) offers Bitcoin and stablecoin services through Cash App, with cryptocurrency-related revenue in the third quarter of 2025 increasing by 45% year-on-year to $2.8 billion. Particularly, the monthly active users of stablecoin-based P2P remittance services exceeded 12 million, emerging as a new revenue source. Coinbase Global Inc. (NASDAQ: COIN) achieved a 34% increase in revenue in the first half of 2025 compared to the previous year, reaching $3.4 billion, due to increased USDC holdings and expanded staking services.
However, there are significant risk factors associated with these growth prospects. If major central banks accelerate CBDC adoption, the market share of stablecoins could shrink rapidly. Conversely, if CBDC adoption is delayed or technical issues arise, regulatory pressure on stablecoins could intensify. Additionally, if global economic instability increases, there is a risk of declining trust in digital currencies overall. The International Monetary Fund emphasized in its second-half 2025 report that “the mass adoption of digital currencies will be more influenced by user experience and trust than by technical completeness.”
Ultimately, the digital currency ecosystem as of the end of 2025 stands at the threshold of transformation. The dynamics of competition and cooperation centered around the two pillars of CBDCs and stablecoins are likely to determine the future of the global financial system. For investors, regulatory response capabilities, actual user adoption rates, and integration capabilities with existing financial systems will be more critical evaluation criteria than mere technological superiority or market share. In this context, investments related to digital currencies should be approached cautiously from a long-term perspective.
This analysis is intended for informational purposes only and does not constitute investment advice or a recommendation of specific securities. All investment decisions should be made based on individual judgment and responsibility.
