The Stable Anchor of the Encryption World: The Regulatory Landscape of Stablecoins Begins to Emerge

Looking at the current encryption market, although the scale continues to expand and DeFi has become a highlight, it is essentially still dominated by currency-related applications. Among them, Bitcoin and stablecoin are undoubtedly the two most prominent representatives.

Bitcoin has gained global recognition with its astonishing growth curve, becoming a major representative of decentralized currency. However, from a practical perspective, stablecoins are the real encryption assets that achieve large-scale global adoption.

Currently, the global stablecoin market capitalization has reached $243.8 billion. In the past year, the total trading volume of stablecoins was as high as $33.4 trillion, with the number of transactions reaching 5.8 billion and the total number of active addresses at 250 million. These data clearly indicate that the demand and logic for the application of stablecoins have become quite mature.

Although the application layer is developing rapidly, the regulation of stablecoins is still in the adjustment phase. In recent years, various regions around the world have been continuously improving the regulatory framework for stablecoins. Recently, the U.S. Senate passed the "Guiding and Promoting American Stablecoin National Innovation Act," which has once again cleared obstacles for global stablecoin regulation.

Stablecoin Market Landscape: Scale Expansion, Head Effect Highlighted

Stablecoins are encrypted assets that provide value stability by being pegged to underlying assets such as fiat currencies and precious metals. They aim to eliminate the high volatility of cryptocurrencies, providing users with reliable settlement, value storage, and investment tools. In 2017, the total circulation of stablecoins worldwide was less than $1 billion, and it is now close to $250 billion, while the global cryptocurrency market size has grown from less than a trillion to $3 trillion.

This round of the bull market can be seen as a stablecoin bull market. After the FTX incident, the global supply of stablecoins once dropped to 120 billion USD, but then steadily increased, rising continuously over 18 months. Meanwhile, the price of BTC climbed from a low of 17,500 USD to over 100,000 USD. This is mainly due to external institutions entering the market through stablecoins, which brought an increase in external liquidity and an expansion of the stablecoin scale.

Currently, there are a wide variety of stablecoins, which can be classified from multiple dimensions such as control center, fiat currency type, whether interest is accrued, collateral, and so on. Unlike other encryption assets, stablecoins serve as a core pricing tool, are not used for speculation, and are less affected by official restrictions, holding the potential for global adoption.

In terms of coverage, in addition to mainstream regions such as Europe, the United States, Japan, and South Korea, emerging markets like Brazil, India, Indonesia, Nigeria, and Turkey have also begun to use stablecoins in daily transactions. According to the data, the most popular uses of stablecoins in non-encryption fields are currency substitution (69%), payment for goods and services (39%), and cross-border payments (39%).

The stablecoin market shows a significant head effect. US dollar stablecoins account for 99% of the market share. Among them, USDT has a market value of 152 billion dollars, accounting for 62.29%; USDC has a market value of 60.3 billion dollars, accounting for 24.71%. Together, these two account for over 80% of the market share. USDe, as a semi-centralized stablecoin, ranks third with a market value of 4.9 billion dollars. Among algorithmic stablecoins, USDS and DAI have market values of 3.5 billion and 4.5 billion dollars respectively. From the perspective of public chains, Ethereum occupies a dominant position with 50%, followed by Tron(31.36%), Solana(4.85%), and BSC(4.15%).

The issuance of stablecoins is a low-risk, high-reward business. Large-scale issuance can bring marginal costs close to zero, and the model of directly exchanging digital currency for cash allows issuers to gain considerable profits. Taking Tether, the issuer of USDT, as an example, the net profit reached $13.7 billion in 2024, and net assets soared to $20 billion, while the company only has 165 employees. Such high returns have attracted traditional financial institutions like Visa and Paypal, as well as internet companies like Meta and JD.com, to make strategic moves. Recently, the Trump family project WLFI also launched the stablecoin USD1, quickly integrating with over 10 protocols or applications.

The Regulatory Landscape of Global Stablecoins Begins to Take Shape

As major institutions compete to enter the stablecoin market, regulation is also coming along. Currently, the United States, the European Union, Singapore, Dubai, Hong Kong and other places have begun or completed the legislative work for stablecoin regulatory frameworks.

As a global center for encryption, the regulation of stablecoins in the United States has received significant attention. There are no specific regulations targeting stablecoins and cryptocurrencies in the U.S. before 2025. Regulatory agencies such as the SEC, CFTC, and OCC have attempted to define stablecoins in an effort to gain regulatory dominance. This has led to fragmentation and uncertainty in regulation.

In February of this year, the U.S. House of Representatives and Senate separately introduced the "Stablecoin Transparency and Accountability Promotion Ledger Economy Act" (STABLE) and the "Guidance and Establishment of a National Innovation Act for U.S. Stablecoins" (GENIUS). The concentrated introduction of these two bills stems from the Trump administration's support for stablecoins. Trump stated at the first crypto summit in March that stablecoins are a "promising" growth model and expressed hope that Congress would submit the relevant legislation to the president's office before the August recess.

Although both the STABLE and GENIUS bills target stablecoin regulation, their focuses are slightly different. STABLE emphasizes federal unified control, while GENIUS advocates for a dual regulatory system that operates in parallel at the state and federal levels. There are also differences between the two in terms of issuance qualifications, reserve requirements, and algorithmic stablecoin restrictions.

Currently, the GENIUS bill is progressing faster. After multiple revisions and votes, the bill was ultimately passed in the Senate procedural motion on May 19 with a vote result of 66 in favor and 32 against. The next step will enter the full debate and amendment process in the Senate, before being submitted to the House of Representatives for consideration. Given that the threshold for passage in the House is relatively low, the likelihood of the bill becoming law is quite high.

The passage of the GENIUS Act will fill the regulatory gap for stablecoins in the United States, clarify regulatory bodies and rules, promote the development of the stablecoin industry in the U.S., and further consolidate the dollar's dominant position in the encryption market. It is worth noting that the act requires stablecoin holders to maintain assets such as U.S. Treasury bonds and dollars, which will create new ongoing demand for U.S. Treasury bonds.

Outside the United States, the European Union has long introduced the ( MiCA ) bill for a comprehensive regulatory framework for all crypto assets, including stablecoins. Hong Kong also submitted the "Stablecoin Regulation Draft" last December, which is expected to undergo a second reading debate soon. Singapore and Dubai have also respectively released stablecoin regulatory frameworks and included them in the payment token service regulations.

Overall, the regulatory differences for global stablecoins are not significant. Regulatory authorities in various countries generally adopt a licensing system and have clear regulations regarding reserve issuance, risk segregation, anti-money laundering, and other aspects. The differences mainly lie in the categories of stablecoins allowed, restrictions on issuers, and localized anti-money laundering compliance requirements.

Major regions around the world have successively launched regulations for stablecoins, reflecting the increasingly important role of stablecoins in the global financial market. It not only enhances the voice of the encryption market but also adds a significant stroke to the killer applications in the encryption field. In addition, the adoption of stablecoins for global settlements by third-world countries has, to some extent, realized Satoshi Nakamoto's original vision of free electronic cash.