One, regulatory framework: Strategic shift from 'choke points' to 'dual-track'
The (Guidance and Establishment of the United States Stablecoin National Innovation Act) (GENIUS Act) promoted by the Trump administration in 2025 established the world's first federal-level regulatory system for stablecoins. Its core logic presents three major characteristics:
Rigid constraints on reserve assets
The bill requires stablecoin issuers to hold 100% of their reserves in cash or short-term U.S. Treasury bills maturing within 90 days, and prohibits issuers from offering interest earnings through stablecoins. This rule directly addresses the long-standing 'black box' issue of reserves for USDT, for example, Tether must convert all non-compliant assets in its existing reserves, such as commercial paper and precious metals, into compliant assets within 180 days. Compliant issuers like Circle benefit from the loosening of regulations, as their USDC has been incorporated into the cross-border settlement system by institutions like JPMorgan and Goldman Sachs due to high reserve transparency.Tiered governance of regulatory authority
The Federal Reserve and the Office of the Comptroller of the Currency (OCC) have established a 'dual-track' regulatory system: stablecoins with a market value exceeding $10 billion are directly regulated by the federal government, while smaller issuers can choose state-level regulation (which must be 'substantially similar' to federal standards). This design avoids regulatory gaps and retains innovation space for small and medium institutions. For example, the OCC allows national banks to provide stablecoin reserve management services without approval, promoting the entry of traditional financial institutions.Institutional innovation in risk prevention and control
The bill places the redemption request rights of stablecoin holders above those of other creditors in bankruptcy proceedings for the first time and requires issuers to connect to the Federal Reserve's digital currency bridge (such as Project Hamilton) for real-time settlement. This design protects consumer rights while integrating stablecoins into traditional financial infrastructure, addressing the 'final settlement' issue in cross-border payments.
Two, market impact: Liquidity improvement and reshaping of industry structure
The implementation of the regulatory framework is triggering structural changes in the market:
Recovery of bank channels and injection of fiat liquidity
After the Federal Reserve revoked the reporting requirements for banks' cryptocurrency businesses in 2022, regional banks like Silvergate resumed stablecoin services. Circle's CEO Jeremy Allaire stated that 'the recovery of bank channels will accelerate the application of stablecoins in cross-border payments and DeFi'. The policy shift directly drove the market capitalization of stablecoins from $230 billion at the beginning of 2025 to $250 billion in July, with institutions predicting it may exceed $400 billion by the end of the year.Divergence among issuers and rising compliance costs
Traditional issuers like Tether face pressure to transform, needing to replace assets such as Bitcoin and precious metals in reserves with short-term U.S. Treasury bonds and accept monthly independent audits, with compliance costs expected to increase by tens of millions of dollars. Meanwhile, Circle, leveraging its existing trust licenses and reserve transparency, is partnering with Coinbase to expand the application of USDC in scenarios like supply chain finance and cross-border payroll. Market concentration is further increasing, with USDT and USDC together accounting for 86% of market share.The compliance evolution of the DeFi ecosystem
The (CLARITY Act) clarifies that tokens on mature blockchains are considered commodities and regulated by the CFTC, while providing a degree of regulatory exemption for decentralized finance (DeFi). This rule opens up compliance pathways for protocols like MakerDAO, whose DAI is locked in over $12 billion of assets in DeFi through an over-collateralization mechanism. However, algorithmic stablecoins (like UST) are explicitly prohibited, significantly reducing industry risk exposure.
Three, international game: The double-edged sword effect of dollar hegemony
The regulatory framework in the U.S. is profoundly influencing the global financial landscape:
Digital reinforcement of dollar hegemony
99.75% of the market value of dollar-pegged stablecoins is linked to the U.S. dollar, and their cross-border payment scenarios (such as remittances in Latin America and agricultural product settlements in Africa) effectively strengthen the dollar's international settlement status. The U.S. Treasury has mandated that foreign issuers accept OCC regulation and connect to the Federal Reserve's digital currency bridge, further integrating stablecoins into the dollar clearing system. This 'digital dollarization' strategy may systematically weaken monetary sovereignty in regions like Latin America and Africa.Global export of regulatory standards
The EU (Markets in Crypto-Assets Regulation) (MiCA) imposes trading volume limits on non-euro stablecoins, while Hong Kong's (Stablecoin Regulation) fully aligns with the GENIUS Act, allowing the issuance of stablecoins pegged to the Hong Kong dollar and U.S. dollar. This regulatory convergence forms a 'compliance threshold alliance', forcing international exchanges like Binance to adjust their business layouts — their OTC stores in Hong Kong have stopped trading stablecoins and shifted focus to compliant trading services.Potential challenges of currency diversification
Although dollar-pegged stablecoins dominate, non-dollar stablecoins like the EU's EUROC and Hong Kong's HUSD are accelerating in development. The Monetary Authority of Singapore has issued a license to Paxos, allowing it to issue a stablecoin pegged to the Singapore dollar, marking a new phase in the competition among G10 currencies for stablecoins. This trend may weaken the singular hegemony of the dollar in the long term and promote the formation of a 'multipolar currency digital system'.
Four, future challenges: Innovation boundaries and risk balance
Compliance costs and innovation suppression
The 100% reserve requirement and monthly audits increase the operational costs for small and medium issuers by 30%-50%, which may lead to industry concentration among larger institutions. Circle's CEO has called on regulators to allow partial collateralization with government bonds to reduce compliance burdens.The collaborative dilemma of cross-border regulation
Although the FSB promotes global regulatory coordination, there are significant differences in the definition of stablecoins among countries. For example, the EU views stablecoins as 'electronic money', while the U.S. emphasizes their 'payment tool' attributes, which may lead to regulatory arbitrage. African countries like Nigeria are still developing guidelines for managing cross-border capital flows of stablecoins.Regulatory lag behind technological iteration
With the development of Layer 2 scaling technologies and cross-chain protocols, the transaction speed of stablecoins has reached tens of thousands of transactions per second, but the existing regulatory framework has not yet covered new application scenarios such as on-chain liquidity pools and algorithmic market makers. The Federal Reserve may need to introduce real-time regulatory technologies (such as blockchain data analysis platforms) to address dynamic risks.
Conclusion
The Federal Reserve's regulatory shift is not simply a 'tightening of reins' but rather a reconstruction of the underlying logic of cryptocurrencies through institutional innovation. The (GENIUS Act) injects traditional financial 'trust genes' into stablecoins while retaining innovation space through open bank channels and DeFi exemptions. This model of 'orderly expansion' may become a reference template for global regulation. For investors, three types of opportunities should be noted: institutional penetration of compliant stablecoins (like USDC), arbitrage opportunities arising from the surge in demand for short-term U.S. Treasury bonds, and the policy dividends of offshore markets like Hong Kong. However, vigilance is needed against the 'pendulum effect' of regulatory policies — excessive compliance may stifle innovation, while laissez-faire could lead to a repeat of the FTX debacle. Finding a dynamic balance between 'innovation sandboxes' and 'risk firewalls' will be a long-term challenge faced by global regulators.
