Globalization of stablecoin regulation: From reckless growth to compliance competition.

As the influence of stablecoins in the global crypto asset market and payment scenarios increases, countries and regions are rapidly advancing specialized regulatory frameworks for stablecoins. Whether it is the US GENIUS draft, the EU MiCA Act, or the stablecoin regulatory policies introduced by Hong Kong and Singapore, this series of actions sends a clear signal:

Stablecoins have moved from 'crypto innovation' to 'financial infrastructure' and have entered the center of global regulatory attention.

I. Why are stablecoins highly valued by countries?

Stablecoins (such as USDC and USDT) have evolved from a 'settlement tool' in the DeFi ecosystem to the 'digital dollar' of the crypto world, widely used in exchanges, payments, cross-border transfers, asset storage, and other scenarios. Their rapid development has brought several regulatory concerns:

  • Financial stability: Large-scale redemptions may trigger a 'digital bank run.'

  • Safety of funds: Are stablecoins truly pegged 1:1 to fiat currency? Are reserve assets transparent and auditable?

  • Issuing entity qualifications: Is it a regulated financial institution? Does it have sufficient governance and compliance capabilities?

  • Anti-money laundering and compliance: Is the KYC/AML system implemented? Does it have tracking capabilities?

  • Sovereign currency challenge: Stablecoins may encroach on the use rights of national currencies in certain markets.

It is precisely because of these potential risks and strategic impacts that stablecoins are no longer viewed as technological experiments but as systematic financial instruments competing or complementing with fiat currencies.

II. Overview of global regulatory dynamics: Policies are gradually being implemented.

🇺🇸 US: The GENIUS draft opens the path for federal regulation.

The US Treasury and several members of Congress jointly promote the (GENIUS Act), which mainly stipulates:

  • Stablecoin issuers must be licensed entities or federally regulated banks;

  • Reserve assets must be 100% backed and subject to real-time audits;

  • Prohibit 'unauthorized stablecoins' to protect users' redemption rights;

  • Encourage the development of stablecoins within the US dollar system to form a **'compliant digital dollar' network**.

Summary of attitudes: Cautiously open, emphasizing the extension of US dollar dominance into digital finance.

🇪🇺 EU: The MiCA Act is taking shape, refining the classification of stablecoins.

MiCA (Markets in Crypto-Assets Regulation) was officially passed in 2023 and will be fully implemented in 2024, marking the world's first comprehensive regulation of stablecoins. Its key contents include:

  • Stablecoins are divided into:

    • EMT: Electronic money type stablecoins;

    • ART: Asset-referenced stablecoins;

  • Require obtaining EU financial licenses and a transparent reserve structure;

  • For 'widely used stablecoins,' additional circulation and redemption restrictions are set.

Summary of attitudes: Clarify regulatory frameworks, promote the compliance implementation of stablecoins, and accelerate the digital transformation of finance.

🇭🇰 Hong Kong: Clear compliance orientation, building a Web3 financial center.

In 2024, the Hong Kong Monetary Authority will release a consultation paper on stablecoin regulation framework, mainly suggesting:

  • All stablecoins must be 100% asset-backed;

  • Issuers must obtain a Hong Kong license and accept regulation;

  • Enhance transparency, auditing, and user protection mechanisms;

  • Plan to become a compliance Web3 hub in the Asia-Pacific region.

Summary of attitudes: High compliance standards, actively guiding, aiming to create a globally leading 'regulatory-friendly' digital asset center.

🇸🇬 Singapore: Selective regulation, setting high threshold standards.

The Monetary Authority of Singapore (MAS) has issued regulatory standards for stablecoins:

  • Only stablecoins pegged to the Singapore dollar or G10 currencies are supported;

  • Reserves must be safe, highly liquid, and audited daily;

  • Implement a 'certification system' where only compliant stablecoins can be marked as MAS-approved;

  • Strict KYC, anti-money laundering, and capital adequacy requirements.

Summary of attitudes: Selectively chosen, setting high thresholds, steadily advancing the digital finance layout.

Although the attitudes of major global economies vary slightly, they consistently present the following trends:

The trend shows compliance as the main theme, no longer allowing 'reckless growth,' requiring licensing, implementing reserve management, and auditing. Strengthening the peg mechanism to fiat currency, all regulatory frameworks emphasize that only stablecoins that are '1:1 redeemable' can be legally issued. Information disclosure and reserve transparency require stablecoin issuers to disclose reserve structures and accept third-party audits. Multinational coordination is gradually advancing, as the FSB (Financial Stability Board) promotes policy coordination among countries to avoid regulatory arbitrage.

IV. The path of USDC is a microcosm.

Circle (the issuer of USDC) is actively responding to US policies:

  • Coordinate with GENIUS draft legislation;

  • Become a licensed trust institution;

  • Publish reserve audit reports monthly;

  • Expand into the EU and Singapore, proactively ensure compliance.

This series of actions shows: Whoever complies first is likely to occupy a leading position in the new financial system.

V. Conclusion

Stablecoins are becoming the 'key bridge' on the global digital financial landscape and are also the core scenario for future digital currency policies and sovereign currency competition. Those who can find a balance between compliance, transparency, and security may lead the next generation of global payment and asset circulation systems.

The second half of stablecoins is not a technological race, but a battle of rules.

#USDC #USDT #Circle