A new analysis from Columbia Business School dismantles five widely held misconceptions about stablecoins that are impeding federal regulatory progress in the United States. The findings aim to clarify policy debates around USDC, USDT, and DAI, with implications for market stability and digital asset adoption.
- Stablecoin market cap exceeded $150 billion in December 2025, with USDC and USDT holding 92% of total volume.
- USDC maintained a 1:1 peg in 98.7% of trading sessions during Q4 2025.
- USDT’s reserve coverage rate was 94.3% in its most recent third-party audit.
- DAI remained pegged to USD during January 2025 market volatility using ETH and other assets as collateral.
- Columbia Business School’s analysis is influencing pending U.S. regulatory proposals on stablecoin oversight.
- Institutional holdings of stablecoins surpass $28 billion, signaling growing reliance on digital settlement rails.
A comprehensive review by Columbia Business School has exposed five entrenched myths surrounding stablecoins that are increasingly hindering legislative momentum for U.S. digital asset regulation. These misconceptions—ranging from the belief that stablecoins are inherently unstable to the idea that they threaten monetary sovereignty—have fueled uncertainty among lawmakers and market participants, delaying critical reforms. The study underscores that stablecoins, including USDC, USDT, and DAI, operate under distinct mechanisms, with varying levels of collateralization and transparency, which are often conflated in public discourse. The analysis reveals that as of December 2025, the total market cap of U.S.-dollar-linked stablecoins exceeded $150 billion, with USDC and USDT collectively accounting for 92% of the total. USDC, backed by a mix of cash and short-term U.S. Treasuries, maintained a 1:1 peg with the dollar across 98.7% of trading sessions in Q4 2025. USDT, while facing past scrutiny, reported a 94.3% reserve coverage rate in its latest third-party audit. DAI, a decentralized stablecoin pegged to USD via over-collateralized ETH and other assets, demonstrated resilience during market stress in January 2025, maintaining its peg without intervention. These data points challenge the myth that stablecoins are prone to systemic collapse. The report also refutes the claim that they erode central bank authority, noting that they function as a settlement layer rather than a substitute for fiat currency. Instead, the study argues that well-regulated stablecoins could enhance payment efficiency, especially for cross-border transactions involving institutions holding significant ETH and BTC reserves. The implications are far-reaching. Market participants, including investment firms managing over $28 billion in stablecoin assets, have expressed increased confidence in regulatory clarity. Lawmakers on both sides of the aisle are reviewing the findings ahead of proposed legislation that could establish a federal framework for stablecoin issuance and oversight. The outcome may determine whether the U.S. leads or lags in digital finance innovation.