The Era of Stablecoin Regulation Has Arrived: Reshaping the Global Financial New Order

Summary

Stablecoins are divided into three types based on their price anchoring methods: fiat-collateralized, cryptocurrency-collateralized, and algorithmic stablecoins. Currently, the global stablecoin market capitalization has reached $260.728 billion, accounting for about 1% of the United States' GDP in 2024, with over 170 million users distributed across more than 80 countries and regions. Governments around the world are increasingly focusing on stablecoin regulation, with core legislative motivations including financial stability, monetary sovereignty, and cross-border capital regulation. Economies such as the United States and Hong Kong have launched systematic regulatory frameworks, marking the entry of global stablecoins into a period of stringent regulation, reshaping the international financial order and monetary power dynamics. Behind the rise of stablecoins is a covert competition between monetary sovereignty and financial hegemony. As a convergence point of financial sovereignty, infrastructure, and capital market pricing power, stablecoins have become the focal point of financial governance. Although stablecoins enhance financial efficiency, they still face challenges such as anchoring mechanism risks, decentralization conflicts, and cross-border regulatory coordination.

Introduction

On July 18, 2025, the U.S. House of Representatives passed the GENIUS Act, and the CLARITY Act, which regulates the structure of the cryptocurrency market, has been submitted to the Senate. Outside the U.S., Hong Kong will implement the stablecoin regulations on August 1, the Bank of Russia is providing crypto custody, and Thailand is launching a cryptocurrency sandbox. These mark the entry of stablecoins into the regulatory era, and the great power competition regarding stablecoins officially begins.

This article aims to analyze the reasons behind the stablecoin legislation of various governments, compare the similarities and differences of the bills, and explore the impact of stablecoin compliance on the existing financial order to provide references for industry decision-makers. It is recommended that investors pay attention to regulatory trends, focus on fiat-collateralized stablecoins, and avoid the risks of algorithmic stablecoins. Traditional financial institutions should align with the trend of asset tokenization and explore more opportunities, while crypto institutions should promote the compliance process.

1. Definition and Classification of Stablecoins

Stablecoins are cryptocurrencies designed to maintain price stability, typically by being pegged to assets such as fiat currencies, commodities, or other cryptocurrencies, or through algorithmic adjustment mechanisms to achieve value anchoring. Based on the method of price maintenance, stablecoins can be divided into three categories:

1. Fiat-backed stablecoin: The most common type, accounting for 92.4% market share. Achieves price stability by pegging to fiat currencies such as the US dollar, like USDT and USDC.

2. Crypto Asset Pledged Stablecoin: Pledge cryptocurrency as reserves, usually adopting over-collateralization of about 150% and on-chain settlement mechanisms, such as DAI.

3. Algorithmic stablecoins: They do not rely on physical asset support, but instead depend on algorithms and market supply and demand to maintain their price, such as UST( which has collapsed ).

2. Characteristics and Use Cases of Stablecoins

The main characteristics of stablecoins include:

• Price Stability
• Bridging traditional finance and decentralized finance(DeFi)
• Low payment cost, high efficiency
• Anti-inflation and capital hedging

The main application scenarios include:

• Decentralized Finance
• Cryptocurrency trading
• Cross-border trade
• Daily Payments
• Capital Hedging

Among them, cross-border trade is a key area of legislative focus for the United States and Hong Kong. Stablecoins can effectively bypass some countries' currency inflation issues in cross-border transactions, and the payment costs and efficiency are far superior to the traditional SWIFT system.

3. Background of Stablecoin Regulation Legislation

( The Rise of Stablecoins

Currently, the global stablecoin market capitalization has reached $260.728 billion, surpassing the market capitalization of MasterCard, accounting for about 1% of the GDP of the United States in 2024. The number of users holding stablecoins exceeds 170 million, distributed across more than 80 countries and regions.

) 3.2 The Motivation for Government Intervention and Regulation

Governments around the world are actively intervening in stablecoin regulation, with the main drivers including:

• Prevent systemic financial risks
• Maintain currency sovereignty and financial order
• Crack down on illegal cross-border capital flows
• Hedge against the "US Dollar stablecoin hegemony" impact
• Mitigate fiat credit risk, support government bonds

To strengthen the international status of its currency, protect consumer asset security, seize the discourse power of digital assets, and address the regulatory gaps in stablecoins, the United States, Hong Kong, the European Union, and others have successively introduced systematic regulatory regulations, marking the formal entry of the stablecoin industry into an era of strict regulation and compliance.

4. Progress of Stablecoin Regulation in Major Global Economies

4.1 The United States launched the "Genius Act" and the "Clarity Act"

The "Genius Act" will take effect on July 18, 2025, establishing a unified regulatory framework for the issuance of stablecoins at the federal level in the United States. The core content includes:

• Regulatory model: Federal and state dual-track system, unified authorization and licensing by OCC
• Issuers: Limited to banks, deposit institutions, and approved specific non-bank financial institutions
• Reserve requirement: 1:1 fiat reserve, the reserve assets must be U.S. Treasury bonds or cash
• Transparency obligations: monthly audits, information disclosure, and anti-money laundering review
• Business Restrictions: Prohibition on providing interest on stored value or engaging in activities such as leverage and securitization.
• Cross-border restrictions: Prohibit the circulation of unapproved foreign stablecoins in the US market.

On the same day, the House passed the "Clarity Act", which aims to clarify the regulatory responsibilities of the SEC and CFTC in the digital asset market.

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( 4.2 Hong Kong launches the "Stablecoin Regulation"

The Hong Kong "Stablecoin Regulation" will be implemented on August 1, 2025, and the main content includes:

• Licensing System: Stablecoin-related businesses must obtain HKMA approval.
• Applicable scope: Focus on fiat-backed stablecoins, excluding purely crypto asset-backed products.
• Capital requirement: Minimum capital of 25 million HKD, must have risk management and internal control mechanisms.
• Reserve requirement: 100% physical or equivalent liquid asset reserves, regular audits and disclosures.
• Anti-Money Laundering and Consumer Protection: Strictly comply with AML/CFT regulations and investor suitability requirements.
• Violation Responsibility: Conducting business without permission will constitute criminal liability.

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( 4.3 Other Economic Dynamics

Other major economies are also actively promoting regulatory frameworks for stablecoins, showing a trend of cautious tightening and gradual formation. Regulatory efforts in various countries mainly focus on collateralized stablecoins, excluding algorithmic stablecoins, which carry higher risks.

5. Reshaping the Financial Order under the Dominance of Stablecoins

) 5.1 The Financial Sovereignty Competition Behind Stablecoins

In the current stablecoin market, the market capitalization of US dollar-pegged stablecoins accounts for over 90%, with products like USDT and USDC becoming the de facto standard in global exchanges, DeFi, and cross-border payments. Legislation such as the U.S. "Genius Act" has reinforced the binding of stablecoins to core dollar assets, forming a "stablecoin-U.S. Treasury bond" dual-pegged structure, further solidifying the dollar's dominant position in the global financial system.

At the same time, the compliance progress of fiat stablecoins such as the Euro and Hong Kong Dollar reflects the attempts of various countries to hedge against the spillover effects of the US Dollar stablecoin through means such as the digitalization of their local currencies and stablecoin legislation. A new round of currency competition in the digital age has already begun.

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( 5.2 The competition of the next generation of financial infrastructure

Stablecoins are gradually becoming a core component of the new generation of cross-border payment and clearing infrastructure. The United States hopes to replicate the infrastructure hegemony of SWIFT in the on-chain financial world through US dollar stablecoins. Meanwhile, international financial centers like Hong Kong and Singapore are promoting the deep integration of local financial infrastructure and fiat stablecoins through policy guidance, aiming to seize the position of cross-border digital financial hubs and nodes.

) 5.3 Competition for Pricing Power of Digital Assets

In the current digital asset market, stablecoins have deeply participated in the reshaping of market pricing power. USDT and USDC almost monopolize the major trading pairs in the crypto market, becoming the de facto standard for on-chain asset liquidity anchoring and pricing. The United States has strengthened its control over the pricing discourse of the digital asset market through stablecoin legislation, while regions like Hong Kong and the European Union hope to promote regional fiat stablecoins to gain more pricing power and discourse power in the future digital financial competition.

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6. Risks and Challenges

The main risks and challenges faced by stablecoins include:

( 6.1 Preventing Systemic Risks

The largest systemic risk of stablecoins comes from the de-pegging caused by fluctuations in collateral prices. Historically, events of de-pegging have occurred with BitUSD, USDC, and DAI. This reminds stablecoin issuers to diversify their asset allocations to combat systemic risks.

) 6.2 violates the principle of decentralization

Mainstream stablecoin models rely on centralized entities for operation and fiat asset backing, which runs counter to the core principles of blockchain's decentralization and censorship resistance. This reliance on centralization makes stablecoins subject to the credit risks of the issuers and custodial institutions, and they may be frozen or tampered with in extreme situations.

6.3 Difficulties in cross-border regulatory coordination

Different countries have significant differences in their regulatory positions, definitions, and compliance requirements regarding stablecoins, leading to uncertainties and legal risks in the cross-border use, clearing, and compliance processes of stablecoins, which can easily result in "regulatory arbitrage" and compliance gaps.

6.4 Potential Financial Sanction Risks

With the turbulence in international affairs, stablecoins face the risk of being incorporated into the financial sanctions toolkit. The United States may leverage its dominant dollar stablecoin to strengthen scrutiny over capital flows and the use of funds, and even impose sanctions on specific entities and countries. This has propelled the global exploration of de-dollarization and regional local currency stablecoins.

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Conclusion

The rise of stablecoins is a microcosm of the reshaping of monetary order in the digital finance era. It reflects the hidden competition between monetary sovereignty and financial hegemony, which has become a key variable in the reconstruction of the future international financial order. However, the development of stablecoins still faces many uncertainties, including challenges such as endogenous risks, global regulatory coordination, and the balance of decentralization concepts.

In the future, stablecoins will play an increasingly important role in financial infrastructure, currency competition, and international settlement systems. Their development path is related to the integration of decentralized finance and real-world assets, as well as the construction of a new global financial order and the redistribution of discourse power.