The Stable Force of the Encryption World: Global Development and Regulatory Landscape of Stablecoins

In recent years, although the cryptocurrency market has undergone tremendous changes, there is fundamentally no significant difference in terms of application compared to 5-10 years ago. The market size is indeed continuously expanding, and decentralized finance (DeFi) has also become a major highlight, but the products that are truly widely used are still currency-related products, especially Bitcoin and stablecoins.

Although these two types of encryption assets have gained widespread recognition, their development paths are completely different. Bitcoin has attracted the world's attention with its astonishing appreciation potential, becoming the representative of decentralized currency. From a practicality perspective, stablecoins are the encryption assets that have truly achieved large-scale adoption globally.

Currently, the global stablecoin market capitalization has reached $243.8 billion. According to data platform statistics, the total trading volume of stablecoins in the past 12 months has reached $33.4 trillion, with transaction counts hitting 5.8 billion, and the total number of active unique addresses also reaching 250 million. These data fully demonstrate that the application demand and logic of stablecoins have become quite mature.

However, in terms of regulation, stablecoins are still in the adjustment phase. In recent years, various regions around the world have been continuously improving their regulatory frameworks for stablecoins. The latest development is that the U.S. Senate has passed the "Guiding and Promoting American Stablecoin Innovation Act" (GENIUS Act ), which clears obstacles for global stablecoin regulation once again.

The Rapid Development of Stablecoins and the Head Effect

A stablecoin is a type of encryption asset that maintains a stable value by being pegged to fiat currencies, precious metals, commodities, or asset portfolios. Its main purpose is to eliminate the inherent high volatility of cryptocurrencies and provide users with reliable settlement, value storage, and investment tools. As a value measure in the encryption market, each expansion of stablecoins reflects the growth of the industry scale.

In 2017, the total circulation of stablecoins worldwide was less than $1 billion, and now it has approached $250 billion. Meanwhile, the global encryption market size has also grown from less than $1 trillion to $3 trillion, gradually moving from the fringe market into mainstream view.

According to recent data, this round of the bull market can be seen as a bull market for stablecoins. After an incident on a certain trading platform, the global supply of stablecoins fell from $190 billion to $120 billion at one point, but then steadily grew, continuing to rise over 18 months. Meanwhile, the price of Bitcoin rose from a low of $17,500 to over $100,000. This is mainly because the liquidity for this bull market comes from external institutions, which typically prefer stablecoins as a medium when entering the market.

Currently, there are various types of stablecoins in the market, which can be categorized based on factors such as control center, fiat currency type, whether they accrue interest, and collateral. Unlike other encryption assets, stablecoins are fundamentally core pricing tools due to their stable value, not used for speculation, and are less restricted by official institutions, allowing for global usage, which lays the foundation for them to become a global currency.

In terms of coverage, in addition to mainstream regions such as Europe, America, Japan, and South Korea, emerging markets like Brazil, India, Indonesia, Nigeria, and Turkey, especially those with weak financial infrastructure and facing inflation problems, have also begun to use stablecoins in daily transactions. According to a report from a data platform last year, the most popular use of stablecoins in non-encryption fields is as a currency substitute (69%), followed by payment for goods and services (39%) and cross-border payments (39%).

This indicates that stablecoins have begun to shed their label as merely encryption investment tools and are becoming an important bridge for the integration of the crypto market and the global economy. Against this backdrop, the development pattern of global stablecoins has attracted much attention. In terms of market share, US dollar stablecoins account for 99% of the stablecoin market, humorously referred to as the "dollar branch".

Due to the scale effect inherent in the currency itself, the stablecoin sector exhibits characteristics of the strong getting stronger, with a clear head effect. Centralized stablecoins dominate, with a certain trading platform's stablecoin becoming the absolute leader, capturing a market share of $152 billion, accounting for 62.29%. The second stablecoin has a market size of approximately $60.3 billion, accounting for 24.71%. These two stablecoins alone occupy over 80% of the total market, indicating a high concentration.

The third is a semi-decentralized stablecoin that stands out with its unique mechanism and high yield, currently with a market size of 4.9 billion USD. Since the collapse of a certain algorithmic stablecoin, algorithmic stablecoins have generally declined. In the ranking of stablecoins, only the decentralized stablecoin in a certain ecosystem remains at the forefront, with a scale of about 3.5 billion USD. Another well-known decentralized stablecoin now only has a scale of 4.5 billion USD due to the effect of capital diversion. From the perspective of public chains, a certain public chain occupies an absolute dominant position, with a market share of up to 50%, followed by a certain public chain (31.36%), a certain public chain (4.85%), and a certain public chain (4.15%).

Global Stablecoin Regulatory Landscape

With the rapid development of the stablecoin market, regulatory agencies in various countries have begun to accelerate the improvement of relevant regulations. Currently, several regions, including the United States, the European Union, Singapore, Dubai, and Hong Kong, have either started or completed their legislative frameworks for stablecoins. As a global encryption center, the regulatory trends in the United States are undoubtedly the most closely watched.

The regulation of stablecoins in the United States has undergone a process from high uncertainty to gradual clarity. Before 2025, the U.S. Congress had not issued specific legislation regarding stablecoins and encryption. Under the existing regulatory framework, multiple regulatory agencies such as the Securities and Exchange Commission ( SEC ), the Commodity Futures Trading Commission ( CFTC ), and the Office of the Comptroller of the Currency ( OCC ) have defined stablecoins in a bid to compete for regulatory dominance in this emerging field.

This fragmented regulatory environment has brought high uncertainty and compliance challenges to the stablecoin industry. However, with the new government taking office, the regulatory process for stablecoins has clearly accelerated. In February of this year, the U.S. House of Representatives and the Senate respectively proposed the "2025 Stablecoin Transparency and Accountability Promotion Ledger Economy Act" (STABLE Act ) and the "Guidance and Establishment of the U.S. Stablecoin National Innovation Act" (GENIUS Act ).

The concentrated introduction of these two bills reflects the high-level emphasis on stablecoin regulation. At the first encryption summit held in March this year, government officials stated that stablecoins would become a "promising" growth model and expressed hope that Congress could submit the relevant legislation to the President's office before the August recess.

The STABLE Act and the GENIUS Act both target stablecoin regulation, but their focus is slightly different. The STABLE Act emphasizes unified federal control, while the GENIUS Act advocates for a dual-track management system operating in parallel at the state and federal levels. Regarding the issuance qualifications, the STABLE Act restricts it to insured deposit institutions and federally approved non-bank entities, whereas the GENIUS Act allows for more types of entities to participate.

Both bills require 1:1 reserve backing and monthly disclosures, but the STABLE Act has stricter requirements, including insurance provided by the Federal Deposit Insurance Corporation ( FDIC ) and a two-year ban on algorithmic stablecoins. In contrast, the GENIUS Act allows for the exploration of algorithmic stablecoin mechanisms under specific conditions. Additionally, the GENIUS Act supports paying interest or returns to stablecoin holders, while the STABLE Act explicitly prohibits interest payments.

During the legislative process, both bills faced scrutiny and challenges from various parties. The state government opposed the federal regulatory priority in the STABLE bill, while some industry professionals expressed dissatisfaction with the strict terms. The GENIUS bill primarily raised concerns about compliance costs, with some arguing that the dual-track system would increase the compliance burden and that the bill overly focuses on the domestic U.S. market, potentially neglecting the usage needs of third-world countries.

Currently, the progress of the GENIUS Act is relatively smooth. After multiple rounds of modifications and discussions, the act passed a procedural motion in the Senate on the evening of May 19, with a vote result of 66 in favor and 32 against, clearing the way for final legislation. The next step will enter the full Senate debate and amendment process, and then it will be submitted to the House of Representatives for review. Considering that the threshold for passing in the House of Representatives is relatively low, it is highly likely that the act will ultimately be submitted to the President's office for signing to become official law.

The passage of the GENIUS Act is undoubtedly an important milestone in the history of cryptocurrency regulation in the United States. It will fill the regulatory gap for stablecoin in the U.S., clarify the regulatory entities and rules, and further promote the robust development of the U.S. stablecoin industry, adding momentum to the mainstreaming of the cryptocurrency sector. From a strategic perspective, the enactment of this regulation will further enhance the influence of the dollar through stablecoins, making the cryptocurrency market an extension of dollar hegemony. It is worth noting that regardless of which bill is ultimately passed, it will require stablecoin issuers to hold assets such as U.S. Treasury bonds and dollars, which will create new and sustained demand for U.S. Treasury bonds.

Global Stablecoin Regulatory Landscape

The United States is not at the forefront of stablecoin regulation. In fact, the European Union introduced the crypto asset market (MiCA) bill earlier than the United States, providing a comprehensive regulatory framework for all crypto assets, including stablecoins. MiCA classifies stablecoins into asset-referenced tokens and electronic money tokens, similarly prohibiting algorithmic stablecoins, and requires stablecoin issuers to maintain a 1:1 capital reserve, adhere to transparency rules, and complete registration with EU regulatory authorities. Meanwhile, the European Insurance and Occupational Pensions Authority (EIOPA) recommends implementing strict capital management systems for insurance companies holding crypto assets ( including stablecoins ).

Hong Kong is also one of the pioneers in stablecoin regulation. In December 2024, the Hong Kong government announced the "Stablecoin Regulation Draft" and submitted it for legislative council review. Hong Kong adopts a prudent and inclusive attitude towards stablecoin legislation, also implementing a licensing system for management, requiring issuers to establish in Hong Kong, possess sufficient financial resources and liquid assets, pay a minimum capital of no less than 25 million HKD, and ensure that reserve assets are separated from other assets, with the market value of reserve assets always equal to the par value of the stablecoins in circulation.

In addition, Singapore and Dubai have also ventured into stablecoin regulation. Singapore released a stablecoin regulatory framework in 2023, while Dubai included stablecoins in the "Payment Token Services Regulation."

Overall, the differences in global stablecoin regulation are not significant, with newcomers clearly absorbing the experiences of pioneers. Regulatory agencies in various countries generally adopt a licensing system to supervise issuers, and make clear provisions regarding issuance reserves, risk isolation, anti-money laundering, and counter-terrorism financing. The differences mainly lie in the categories of stablecoins allowed, restrictions on issuers, and localized compliance requirements.

Major regions around the world have successively introduced stablecoin regulations, reflecting that the role of stablecoins in the global financial market is shifting from the periphery to the center. Stablecoins are gradually becoming an important component of the global currency market, not only enhancing the voice of the encryption market but also adding a significant touch to key applications in the encryption field. On the other hand, developing countries can also utilize stablecoins for round-the-clock global settlements, achieving, to some extent, the original intention of decentralized electronic cash.

Looking back at the development of cryptocurrency, one can't help but wonder: how many applications that claim to have value will survive the test of time in the coming century? From the current situation, at least stablecoins and Bitcoin will continue to play their meaningful roles.