Digital currencies are steadily moving from the fringes of fintech into the core of traditional finance. Major banking groups, global payment providers, and asset managers now utilise them in settlement, treasury, and client-facing products. 2025 has been a genuine inflection point in how cryptocurrency integrates with mainstream financial infrastructure.

Within this shift, two models dominate the conversation. Stablecoins, firstly, are privately issued tokens linked to reference assets such as the U.S. dollar. The world's largest stablecoin, USDt, is an example of this and was launched on TON in April 2024.

Central bank digital currencies (CBDCs), by contrast, are digital forms of sovereign money issued directly by central banks, rather than by private providers. Many authorities, including Kyrgyzstan, are studying or piloting them.

This article outlines how each model works, where they differ, and why near-term market momentum appears to favour stablecoins - provided that their risks are credibly addressed.

Stablecoins & CBDCs: Essential Differences

Although both appear as digital balances in a wallet, stablecoins and CBDCs differ in issuance, infrastructure, and trust assumptions.

Issuance

Stablecoins are liabilities of private issuers. A user typically sends fiat to a bank or payment processor; the issuer mints tokens and holds reserves with custodians. When the user redeems, tokens are burned, and cash is returned. CBDCs, on the other hand, are created directly by central banks and sit on their balance sheets like banknotes or reserves, making them a new form of sovereign money.

Infrastructure

Stablecoins usually operate on public, decentralized blockchains such as TON, where validator sets collectively secure and update the ledger. CBDCs, by contrast, run on controlled permissioned ledgers operated by the central bank and selected intermediaries.

Trust

Stablecoin trust hinges on reserve quality, liquidity, auditability, and the willingness of market-makers and prime brokers to arbitrage any deviation from the peg. Because CBDCs are backed by the central bank that issued them, by design, the trust associated with them primarily derives from the state: its creditworthiness, monetary governance, and legal framework.

Benefits and Risks

Both models have benefits and risks associated with them, but because stablecoins already operate at scale while most CBDCs remain in pilots, their trade-offs are better understood.

From a positive standpoint, stablecoins offer global accessibility, fast settlement, 24/7 transferability, and easy integration with exchanges and DeFi protocols. Their limitations include offering exposure to depegging and liquidity crises if reserves prove insufficient, as seen in the collapse of the algorithmic stablecoin TerraUSD. In response, leading fiat-backed issuers like Tether (USDt) and Circle (USDC) now maintain robust, transparent reserve structures with higher-quality collateral.

CBDCs have the potential to enhance payment efficiency, financial inclusion, and cross-border settlement, yet concerns remain over surveillance, data privacy, and the crowding out of private intermediaries.

Regulatory Outlook

Regulation is rapidly shaping how both models evolve. For stablecoins, lawmakers in the United States, European Union, and Asia are developing frameworks that borrow specific safeguards from money-market fund oversight. Rules typically require licensing, fully backed high-quality reserves, frequent disclosures, and redemption rights, in a bid to reinforce confidence while ensuring issuers operate under clear, supervised rules.

CBDCs, meanwhile, advance through centralized pilot programmes such as China's e‑CNY, the EU's digital euro, and tests in emerging economies like Kyrgyzstan, reflecting a more cautious, state-led path.

Use Cases

Stablecoins currently dominate practical use cases, while CBDCs remain mostly experimental.

Stablecoins

• Trading & DeFi: Serve as quote and settlement assets, enabling participants to move between volatile tokens and dollar-denominated balances without repeatedly using the banking system.

• Remittances: Facilitate low-cost, fast international transfers. A user can convert fiat into a stablecoin, send it over a public blockchain like TON, and redeem or spend it locally.

• Emerging markets: Act as a dollar proxy amid inflation while granting access to digital commerce.

• Corporate and fintech adoption: Companies like PayPal (through PYUSD) integrate stablecoins into payments and treasury flows.

CBDCs

Governments typically view CBDCs as tools to modernise domestic payments, reduce the reliance on cash, and improve transaction traceability.

They also hold potential for financial inclusion in underbanked regions. However, pilots remain small, fragmented, and non-interoperable, limiting wider adoption.

What's Next?

Rather than one approach replacing the other, the next phase will likely see convergence.

Regulated stablecoins may increasingly bridge traditional finance and DeFi, where institutions can hold tokens with custodians while natively transacting on public blockchains. At the same time, we could see hybrid models where central banks provide back-end CBDC infrastructure, while private firms manage front-end applications.

Cross-chain interoperability efforts will continue, ensuring stablecoins can move seamlessly between ecosystems, reducing fragmentation and increasing liquidity.

Out of the two models, CBDCs' progress will be most cautious, shaped by political considerations and privacy debates, while market-driven stablecoins will continue expanding through partnerships and regulation-aligned structures.

Conclusion

Stablecoins and CBDCs both represent the evolution of money in the digital era. In 2025, however, it is stablecoins - driven by market forces and blockchain innovation - that are setting the pace. For both models, their long-term success, however, depends on a simple formula: transparency, robust regulation, and operational resilience.