Stablecoin

Crypto’s Q1 2026 downturn coincided with a 1.6% decline in USDT while the total market cap slid 20.8%, suggesting capital left the market rather than waiting on the sidelines. In April, Ethereum-led stablecoin activity picked up, including a near 2.6% monthly increase in USDT issuance volume on ETH and a $10.3 billion monthly stablecoin supply change on Ethereum. The shift has fueled debate over whether these inflows can help establish support and improve Q2 momentum.

Japan revised its Payment Services Act in June 2023 and continued updates through 2026, positioning fiat-pegged stablecoins as regulated payment instruments mainly for institutional use. The framework supports a three-tier issuer model, while Project Pax backed by MUFG, SMBC, and Mizuho aims for 1 trillion yen in B2B stablecoin issuance by 2028. Milestones cited include JPYC receiving a Type II license in October 2025 and JPYSC being announced in late 2025 with a Q2 2026 target.

DeFi recorded $169 million in losses across 34 protocols in Q1, with incidents including a $40 million key compromise and Resolv's $24.5 million breach. While many current attacks focus on access control and key management, Circle is moving early on post-quantum cryptography, as networks face slow upgrade cycles and address-reuse exposure.

Ethena said on April 6, 2026 that it plans to broaden the reserve mix backing its USDe synthetic dollar token to reduce concentration risk. The protocol is finalizing overcollateralized stablecoin lending deals with Anchorage Digital, Maple Institutional, and Coinbase Asset Management, while also proposing additional RWA exposures and basis strategies beyond BTC and ETH perps.

Coinbase said it will support the DAI-to-USDS migration, with an automated conversion scheduled between 4 May and 6 May 2026 at an approximate 1:1 ratio. The exchange will disable DAI trading on 4 May, pause deposits and withdrawals from 4–6 May, and convert eligible balances with no fees, while excluding users in certain EEA jurisdictions.

Santiment data shows Tether (USDT) wallets on Ethereum declined by 72,841 addresses over 48 hours, a 0.54% drop. The article argues such contractions are uncommon and may reflect reduced participation from smaller investors, while Bitcoin trades near $69,600 amid what some analysts describe as a rare “bottom discovery range.”

The IMF says crypto tokenization represents a structural change to financial market "plumbing", warning it could amplify liquidity stress as settlement, margining, and compliance are embedded in code. The report argues that atomic settlement, 24/7 trading, and automated margin calls may accelerate shocks beyond regulators' response speed, while fragmented liquidity across chains can worsen slippage and risk management. It also notes emerging-markets exposure, where large flows of crypto tokens and dollar-pegged stablecoins could undermine local monetary policy tools.

Sen. Bill Hagerty said the CLARITY Act could enter the Senate Banking Committee work period starting April 14 and clear the panel by late April 2026. Separately, Sen. Cynthia Lummis said the stablecoin portion is "99% resolved," with leaders aiming for a full Senate vote before May. The FDIC is also set to finalize federal stablecoin issuance rules on April 7 following the GENIUS Act signed in July 2025.

Polymarket said it launched Polymarket USD on April 6, 2026, replacing bridged USDC.e as the 1:1 USDC-backed collateral used across its prediction markets. The platform is also shipping CTF Exchange V2 with a rebuilt order book, lower gas costs, faster matching, and EIP-1271 support for smart contract wallets. Polymarket added that API traders and bot operators may need SDK and integration updates during a rollout expected to take two to three weeks.

Polymarket said on Monday it will rebuild key parts of its exchange stack over the next 2-3 weeks, including new contracts, a new order book and a new collateral token. The platform plans to launch Polymarket USD, a 1:1 USDC-backed stablecoin, and add EIP-1271 support to improve interaction for smart contract and multi-sig wallets.