UK Scrambles to Catch Up as U.S. Sets the Stablecoin Standard

The United Kingdom is rushing to advance its stablecoin strategy, aiming to position itself as a hub for digital assets. Policymakers in London argue that the country can benefit from a “second-mover advantage,” studying international frameworks before finalizing its own. But in reality, this scramble reflects something far more pressing: the need to catch up with the United States, which has decisively taken the lead in global stablecoin regulation.

The U.S. First-Mover Edge

In July 2025, the U.S. passed the GENIUS Act, the first comprehensive federal law governing payment stablecoins. The legislation requires full dollar or low-risk asset backing and establishes a dual federal-state oversight model. By acting swiftly, the U.S. has given issuers, investors, and regulators the one thing they’ve lacked for years—clarity.

This speed has created momentum that other jurisdictions are now struggling to match. While the UK continues to release consultations and frameworks in draft form, the U.S. is already moving ahead with implementation and industry integration.

Why the U.S. Lead Matters

America’s leadership is already producing ripple effects:

• Financial Institutions are adapting quickly. Goldman Sachs has called this the “Summer of Stablecoins,” noting their potential to strengthen rather than disrupt traditional finance.

• Treasury Strategy is evolving. Stablecoins are being positioned as a new channel for global demand for U.S. Treasurys, reinforcing the dollar’s central role in world markets.

• Industry Response has been immediate. Major issuers are aligning with the GENIUS Act framework, hiring seasoned policymakers to navigate the new environment.

Meanwhile, the Federal Reserve is signaling a more collaborative tone. Vice Chair Michelle Bowman recently urged regulators to embrace innovation in crypto and blockchain rather than fear it. This marks a profound cultural shift: Washington is no longer hesitating, but actively shaping the rules of the game.

A Global Domino Effect

Europe has accelerated its digital euro timeline, and other financial centers from Singapore to Abu Dhabi are adjusting their strategies. The U.S.’s bold first move has effectively reset the global clock, forcing other regions to respond on America’s terms.

Why the UK Risks Falling Behind

For all its ambitions, the UK risks being defined by hesitation. Draft rules and delayed timelines may buy policymakers time for study, but they also create uncertainty for innovators. The longer the gap persists, the more likely that capital, talent, and infrastructure will flow to jurisdictions—like the U.S.—that offer clarity today.

Final Thoughts

The UK may yet develop a strong regulatory regime for stablecoins, but the global story has already been written: the U.S. acted first, and in doing so, it set the standard. This is more than a policy milestone—it is a strategic declaration.

America isn’t reacting to global innovation. It is driving it.

Stablecoin Gold Rush: A New Frontier in Finance

According to an article in Forbes, Goldman Sachs is rolling out bold forecasts: the global stablecoin market — currently around $270 billion — could burgeon into the trillions in the coming years thanks to fresh regulation and growing institutional interest.

What’s Driving the Surge? The Role of the GENIUS Act

The recently passed GENIUS Act (July 2025) established regulatory clarity, requiring stablecoins to be fully backed with high-quality assets like U.S. Treasuries. This legislative milestone is expected to both legitimize the space and fuel demand for Treasuries.

Where Will Growth Come From? Payment Infrastructure & Beyond

Goldman’s analysts emphasize that stablecoins are primed to enhance interbank payments, cross-border settlements, and the broader payments infrastructure— rather than displacing consumer card networks like Visa or Mastercard. They foresee big gains for Circle’s USDC, projecting a 40% CAGR ($77 billion growth by 2027).

Meanwhile, U.S. Treasury officials see token issuers as a new, meaningful demand source for short-term U.S. debt.

China’s Dilemma: U.S. Stablecoins, the GENIUS Act, and the Battle for Monetary Sovereignty

In "China Is Worried About Dollar‑Backed Stablecoins," Zongyuan Zoe Liu explores how the U.S. GENIUS Act—short for Guiding and Establishing National Innovation for U.S. Stablecoins—is reshaping global monetary dynamics and provoking deep concern in Beijing.

The GENIUS Act formalizes a system in which U.S. banks can issue dollar‑backed stablecoins—digital tokens pegged to the dollar and backed one‑to‑one by real reserves. Because these tokens can be redeemed for dollars on demand, they may become cash‑equivalent financial instruments and could circulate outside the traditional banking system, even across borders, while sidestepping capital controls and remaining beyond the full scrutiny of any national government.
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The potential scale of this shift is striking. Some estimates suggest that up to $1.75 trillion in dollar‑backed stablecoins could enter circulation in the next few years.
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From China's perspective, these developments represent a serious political and economic threat. Dollar stablecoins offer global liquidity, programmability, and peer‑to‑peer anonymity. They could undermine China’s capital‑control regime and its carefully managed system of state‑directed financial flows. In effect, they may erode Beijing’s ability to enforce financial discipline and protect loyalty among elites.
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Although China pioneered crypto mining and trading early on, it has since banned most crypto activities citing illicit finance risks. Instead, it has focused on promoting blockchain under state control and launched its digital yuan (e‑CNY)—a highly surveilled, programmable central bank digital currency. But despite extensive trials, the e‑CNY has seen limited consumer uptake, overshadowed by ubiquitous platforms like Alipay and WeChat Pay.
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In response, China appears to be testing a different model through Hong Kong: legislation now allows licensed entities to issue Hong Kong–dollar or offshore renminbi–pegged stablecoins under regulatory oversight. These tokenized currencies could circulate globally while retaining the reach of Beijing’s stability controls. With real‑name verification, digital ID integration, and programmable features, such stablecoins could preserve capital discipline while allowing offshore liquidity.
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Ultimately, Liu argues, China sees its digital currency strategy as one of centralized, controlled innovation—an architecture designed to reinforce, not relax, state control. In contrast, U.S. dollar stablecoins, propelled by the GENIUS Act, could gain dominance through scale and openness, posing both a challenge to China’s monetary sovereignty and a reflection of a broader geoeconomic rivalry.

Wyoming Approves First State Chartered Stablecoin

Wyoming's Stablecoin Milestone

Wyoming is launching WYST, the first U.S. state-issued, fully backed digital dollar, scheduled for August 20, 2025. The initiative is grounded in the 2023 Wyoming Stable Token Act, establishing legal and structural support for this innovation.Axios+14Invezz+14COIN360+14

Key features include:

• Full backing by U.S. dollars, Treasuries, and repurchase agreements, with plans for over-collateralization to maintain a 1:1 peg.CoinDesk+4Invezz+4Axios+4

• Multi-chain testing completed on seven blockchains—Avalanche, Solana, Ethereum, Arbitrum, Optimism, Polygon, and Base—using LayerZero for secure interoperability.Blockonomi+9Axios+9Crypto News Australia+9

• Final deployment slated for high-performance platforms like Aptos and Solana, selected based on speed, security, and compatibility, with LayerZero ensuring seamless cross-chain movement.Blockonomi+1

• Partnerships for security and compliance, including Inca Digital for fraud monitoring and analytics.CoinCentral+4CoinDesk+4Invezz+4

Significance for State-Level Stablecoin Adoption Under the GENIUS Act

1. Regulatory Preparedness and Innovation

Wyoming’s proactive development of WYST demonstrates how states can preemptively align with—or even exceed—the regulatory expectations anticipated under the GENIUS Act (e.g., strong backing, transparency, oversight). It serves as a tangible model for others.

2. Institutional Credibility and Public Trust

State-backed issuance backed by public funds elevates the perceived legitimacy of stablecoins. WYST’s over-collateralization, transparent governance, and public benefits (such as funding education) position it as a credible alternative to private tokens.CoinDesk+12Invezz+12COIN360+12

3. Advancing Multi-Chain Compatibility

By operating across multiple blockchains and leveraging interoperability tech like LayerZero, Wyoming sets a precedent for future state or federal stablecoins that need to work across varied networks—a design philosophy that GENIUS is likely to reinforce in regulations.

4. Competitive Momentum for State-Level Projects

WYST puts pressure on other states and public entities to match Wyoming’s pace and rigor. As stablecoin regulation becomes clearer under GENIUS, innovative state-level projects may become key players in the national payments infrastructure.

Summary

WYST represents a pioneering state-led approach to stablecoins—demonstrating operational readiness, regulatory alignment, and technical sophistication. As the GENIUS Act becomes law, Wyoming’s stable token could serve as the blueprint for broader public stablecoin adoption across the U.S.

Let me know if you’d like to dive deeper into the legislative implications, technical architecture, or comparison with private stablecoin models.

In a Brilliant Strategic Move, Tether Hires Bo Hines. What this means for Tether's chances of lauching a GENIUS Act compliant stablecoin in the United States

Bo Hines, former Executive Director of the White House Presidential Council of Advisers for Digital Assets, has joined Tether as a strategic advisor to guide its expansion into the U.S. market. He played a key role in shaping and advancing the GENIUS Act, which is now federal law. The Act establishes the first comprehensive national framework for payment stablecoins in the United States, setting out rules for licensing, reserves, audits, disclosures, and oversight. Why This Matters for Tether Tether’s hiring of Bo Hines reflects a deliberate strategy to navigate this new regulatory framework. His direct involvement in drafting and promoting the GENIUS Act gives Tether an inside track on understanding and implementing the law’s requirements.

Why This Matters for Tether

Legislative Expertise Meets Market Dominance

Tether’s hiring of Bo Hines reflects a deliberate strategy to navigate this new regulatory framework. His direct involvement in drafting and promoting the GENIUS Act gives Tether an inside track on understanding and implementing the law’s requirements.

What the GENIUS Act Requires

• Stablecoin issuers must obtain federal or state-level licenses depending on issuance size, with larger issuers required to operate under federal supervision.

• Coins must be fully backed by U.S. dollars or high-quality liquid assets, with regular audits and public transparency.

• Federal and state regulators share oversight responsibilities, including the Federal Reserve, FDIC, and OCC.

• Stablecoin holders receive legal protections such as priority in bankruptcy, and issuers are barred from paying interest on token holdings.

• Compliance deadlines extend into early 2027, though many requirements will come into force earlier as rules are finalized.

Implications for Tether

1. Compliance is both a challenge and an opportunity. Tether may need to adapt USDT or issue a new U.S.-specific stablecoin that aligns with GENIUS standards.

2. Clear regulation reduces uncertainty and may encourage greater institutional adoption, but it also places pressure on issuers to compete through transparency and compliance. Circle’s USDC may benefit from being positioned as more compliant, which increases pressure on Tether.

3. Tether’s size means it will almost certainly fall under federal oversight rather than more lenient state regimes, requiring greater scrutiny of reserves and operations.

4. Early moves toward compliance—such as transparent audits and timely licensing applications—could allow Tether to retain its dominance rather than lose ground to rivals.

Verdict: Can Tether Secure Full Approval?

Tether can likely secure approval under the GENIUS Act if it takes proactive steps. Hiring Bo Hines strengthens its ability to navigate the political and regulatory process, but true approval depends on operational changes. To succeed, Tether will need to demonstrate reliable reserves, undergo regular audits, and build credibility with regulators. If it does so, it stands a strong chance of being recognized as a fully regulated stablecoin issuer in the U.S. before the 2027 deadline.

U.S. Treasury Opens Public Comment Period on Stablecoin Illicit Finance Under GENIUS Act

The U.S. Department of the Treasury issued a call for public comment, seeking innovative strategies to detect and combat illicit activity involving digital assets—this effort is a direct requirement under the newly enacted GENIUS Act (Guiding and Establishing National Innovation for U.S. Stablecoins Act). Source

Signed into law by President Trump on July 18, 2025, the GENIUS Act marks the first comprehensive federal regulatory framework for payment stablecoins—cryptocurrencies pegged to traditional monetary value (typically the U.S. dollar or equivalent safe assets). The legislation mandates key compliance measures including:

• One-to-one reserve backing with low-risk assets such as U.S. Treasuries.

• Monthly disclosures and independent audits for transparency.

• Adherence to the Bank Secrecy Act, including anti-money laundering (AML) protocols and sanctions compliance

• Revised bankruptcy priorities, granting stablecoin holders first claim on issuer reserves

What Is the Treasury Soliciting?

Treasury’s public notice invites inputs on “innovative or novel methods, techniques, or strategies to detect and mitigate illicit finance risks involving digital assets,” focusing on areas such as:

• Use of application programming interfaces (APIs)

• Artificial intelligence (AI)

• Digital identity verification

• Blockchain monitoring technologies

Interested individuals and organizations must submit comments by October 17, 2025. Treasury intends to integrate the findings and recommendations into its reports to Congressional oversight committees.

Why This Matters

1. Bridging Regulatory Gaps
   Stablecoins, with their pseudonymous and borderless nature, have long posed AML and illicit finance risks. By inviting public input, the Treasury is proactively tapping into emerging technologies and expertise to fill enforcement gaps

2. Enhancing National Financial Security
   The GENIUS Act strengthens U.S. oversight of stablecoins—considered a pathway to faster payments—by bolstering AML enforcement and protecting dollar supremacy in the digital era

3. Legislating Responsively
   The one-year implementation timeline starting from enactment gives Treasury and other regulators time to build rulemaking frameworks that reflect both innovation and risk management, with this public comment period being a key early step

Looking Ahead

• Comment Period Deadline: October 17, 2025

• Next Steps: Treasury to analyze submissions and deliver findings to Congressional committees

• Upcoming Rulemaking: Over the next year, regulators must roll out detailed oversight rules, ranging from reserve standards to interoperability and licensing protocols

How Fully Regulated Stablecoins Under the GENIUS Act Can Help Family Offices Move Money Faster Than Traditional Banks Can

The recent passage of the GENIUS Act of 2025 marks a turning point for stablecoins in the United States. Signed into law on June 18, 2025, this act establishes the first comprehensive federal framework for “payment stablecoins”. It requires that U.S. dollar-backed stablecoins be fully reserved 1:1 with safe assets, issuers register with bank regulators, and robust audits/AML controls be in place. In short, stablecoins are becoming fully regulated digital cash equivalents, offering new confidence to institutional users. This clarity is exactly what many family offices have been waiting. Family offices – private wealth management firms for ultra-high-net-worth families – could greatly benefit from these regulated stablecoins. By transacting in fully collateralized, USD-pegged digital currency, they stand to save on hefty bank fees and gain 24/7 access to investment deals.

The GENIUS Act: A New Era for Fully-Regulated Stablecoins

The Guiding and Establishing National Innovation for U.S. Stablecoins (GENIUS) Act ushers in strict standards that transform stablecoins into a highly trusted form of digital money. Key features of the Act include:

Permissible Issuers: Only regulated entities (banks or licensed companies) can issue stablecoins in the U.S., subject to federal or certified state oversight. After a transition period, it becomes illegal to offer unregulated stablecoins, ensuring all widely used stablecoins meet safety standards.

1:1 Reserve Backing: Every stablecoin must be fully backed by high-quality, liquid assets – e.g. cash, insured bank deposits, or short-term U.S. Treasuries. Issuers must maintain at least 100% reserves and publicly disclose monthly reserve reports, including the composition of assets and total coins issued.. This guarantees that stablecoins are redeemable one-for-one for dollars at any time, eliminating the risk of “runs” or lost convertibility.

Priority and Safeguards: The law builds in protections like giving stablecoin holders first-priority claim on reserve assets if an issuer becomes insolvent. Issuers cannot rehypothecate or misuse the reserve and custodians of reserve assets must segregate them from other funds. These measures make fully regulated stablecoins exceptionally safe compared to earlier stablecoin models.

Regulatory Compliance: Stablecoin issuers are now treated as financial institutions under the Bank Secrecy Act, meaning they must implement rigorous AML/KYC programs. The Act also explicitly clarifies that stablecoins issued under this regime are not securities or commodities– removing legal uncertainty that previously concerned traditional investors. Importantly, federal regulators are now in a rulemaking phase: within 6 months of enactment, they must propose detailed regulations to implement the law. The full framework is expected to take effect in 2026 (or sooner if rules are finalized). This means family offices have a short window to prepare for and capitalize on this new regulated stablecoin environment. Early adopters can gain an edge in efficiency and deal-making agility.

Why Family Offices Should Care About Stablecoins

Fully regulated stablecoins offer concrete benefits that align with family offices’ needs for efficient, cost-effective, and secure financial operations. Here’s why family offices should pay attention:

Instant, 24/7 Liquidity for Deals: Family offices can deploy capital at any hour without banking cut-off times. A stablecoin is essentially a digitized dollar that “can move at the speed of the internet, 24/7, with near-zero transaction costs and with settlement times measured in seconds rather than days.” This means if a time-sensitive investment opportunity arises on a weekend or after banking hours, a family office can still move funds immediately. Real-time blockchain settlement eliminates the 2-3 day wait of ACH or the cut-off times of wire transfers. The result is 24/7 access to deals and the ability to act quickly on investments or fund calls, giving family offices greater agility.

Significant Cost Savings on Transfers: Using stablecoins can dramatically cut transaction costs. Traditional payment methods (bank wires, international transfers, custodial fees, etc.) often carry high fees that eat into investment returns. For example, wire transfers or credit card payments incur fees and currency conversion charges that can reach 3–5% in some cases. In contrast, stablecoin transactions cost only a fraction of traditional methods – often just pennies or a few dollars – regardless of transaction size. They also settle nearly instantly, avoiding prolonged float and eliminating intermediary fees across correspondent banks. A recent analysis highlights that stablecoins “settle in seconds, often for pennies,” whereas SWIFT international wires take days and cost ~4–6% in fees. For family offices doing large transactions (seven-figure investments, global asset purchases, etc.), the savings in bank fees and forex spreads can be substantial. Stablecoins essentially make moving money as simple and cheap as sending an email.

Improved Treasury Management and Yield Opportunities: Many family offices are cash-heavy, maintaining liquid reserves for investments or expenses. Keeping cash idle in bank accounts yields minimal returns and can be slow to deploy. With stablecoins, operational liquidity is enhanced – moving money between portfolio entities or into investments becomes seamless. And since GENIUS Act stablecoins are not treated as securities, family offices can use them freely for transactions without complex regulatory hurdles.

Security and Risk Mitigation: Fully regulated stablecoins minimize many risks that previously kept conservative investors away. Under the new law, a compliant stablecoin is fully backed and transparent, so the risk of collapse (like the TerraUSD incident) is mitigated by law. Each stablecoin coin is a claim on a dollar (or equivalent asset) held in reserve, and holders even have priority claim to those reserves if an issuer fails. While these stablecoins are not FDIC-insured deposits, the strict regulations effectively make them as safe as holding cash in a trust – with the added benefit that fraud and compliance checks are built into the issuance and redemption process. Additionally, blockchain transactions are highly traceable and secure; every movement of funds is recorded on an immutable ledger, reducing counterparty risk and enhancing auditability. For family offices worried about transparency and control, it’s worth noting that monthly reserve reports and audits are mandated for issuers, and any misrepresentation (like falsely claiming a stablecoin is “insured”) carries steep penalties. In short, fully-regulated stablecoins provide trust through regulation – combining the stability of the U.S. dollar with the technological security of blockchain.

Global Reach and New Opportunities: Family offices increasingly have an international footprint – investments in multiple countries, global real estate, cross-border philanthropic projects, etc. Stablecoins facilitate instant, direct transactions worldwide with just an internet connection and a wallet, “bypassing the delays, paperwork, and intermediaries” of traditional cross-border payments. This can simplify funding an overseas venture or distributing funds to family members abroad. Moreover, embracing digital assets positions family offices for the future of finance. They gain a window into broader tokenization trends – for example, easier participation in fractional ownership deals or blockchain-native investment opportunities. Early adopters can even invest in the infrastructure (fintech startups, DeFi platforms) that underpins this ecosystem, turning a compliance upgrade into a strategic advantage.

Family Office Stablecoin Integration Blueprint: Your Guide to a Digital Dollar Strategy

In the rapidly evolving landscape of digital finance, stablecoins have emerged as game-changers. To help family offices harness these digital dollars, Stablecoin Solutions offers the Family Office Stablecoin Integration Blueprint-–a comprehensive guide that demystifies stablecoin adoption and compliance. This blueprint provides practical steps to integrate stablecoins into your operations and craft a robust digital dollar strategy aligned with the latest regulations and opportunities.

Regulatory Clarity under the GENIUS Act

A key driver of growing stablecoin adoption is the regulatory clarity provided by the GENIUS Act. This landmark law, the first federal law on stablecoins in the U.S., establishes clear rules for GENIUS Act stablecoins: only licensed institutions can issue them, they must be fully backed by reserves, and they face strict oversight. For family offices, stablecoins now carry the confidence of legal recognition and clear compliance standards, meaning you can use them knowing they operate within a federally sanctioned framework. This clarity removes uncertainty around digital assets, making stablecoins a viable and trusted tool for wealth management and transactions.

Benefits of Stablecoin Adoption for Family Offices

• Faster settlement: Stablecoin transactions occur almost instantly, even outside banking hours, enabling quicker deals and improved liquidity.

• Lower cost: Using stablecoins avoids high wire transfer fees and intermediaries, significantly cutting transaction costs.

• Regulatory compliance: Thanks to the GENIUS Act, approved stablecoins meet strict federal standards, giving you the efficiency of digital currency without sacrificing oversight or security.

• Treasury flexibility: Stablecoins (digital dollars) offer flexibility in treasury management, letting you quickly allocate capital across investments or borders without delays from currency conversions or banking cutoffs.

By leveraging these advantages, family offices can streamline operations, reduce friction in global transfers, and maintain greater control over assets—all while staying within a clear regulatory framework.

Stablecoin Solutions: Your Trusted Partner in Integration

Implementing a new financial innovation like stablecoins can be daunting, but that's where Stablecoin Solutions steps in as a trusted partner. Our team provides end-to-end support for family offices adopting stablecoins. We ensure technical integration is smooth, stablecoin compliance is maintained at every step, and we train your staff on best practices. We understand the unique needs of family offices--from capital preservation and privacy to regulatory compliance. When you follow the Family Office Stablecoin Integration Blueprint, you're not just getting a document; you're gaining a partner committed to your success in the digital dollar economy.

With regulatory clarity and tangible benefits coming soon, now is the time to explore stablecoins. Our Family Office Stablecoin Integration Blueprint is designed to give you the roadmap, but the best way to start is with a conversation. Book a 30-minute strategy call with Stablecoin Solutions today, and we’ll walk you through how a GENIUS-compliant digital dollar strategy can unlock faster settlement, lower costs, and stronger compliance for your family office. Let’s tailor a stablecoin integration plan that fits your goals and positions you at the forefront of the new financial era.

Bank Lobby Targets Stablecoin ‘Interest Loophole,’ Potentially Limiting Consumer Access and DeFi Yield Opportunities

Can Consumers Earn Yield on GENIUS Act Stablecoins?

The GENIUS Act, now law, establishes a regulatory framework for payment stablecoins in the United States. Although the Act prohibits issuers from paying interest or yield directly to stablecoin holders, it does not expressly prohibit affiliates from offering consumers stablecoin yield opportunities through centralized exchanges or DeFi protocols.

In resonse, major U.S. banking groups, including the American Bankers Association, Bank Policy Institute, Consumer Bankers Association, Independent Community Bankers of America, and the Financial Services Forum, are now urging Congress to extend this prohibition to "affiliates" such as crypto exchanges or business partners.

These groups argue that without closing this “interest loophole,” affiliates could effectively offer yield on stablecoins and undermine the law’s intent. The Treasury Department has estimated that stablecoins with the ability to offer yield could lead to as much as $6.6 trillion in deposit outflows from the banking system. Banking associations say this could raise lending costs, reduce loan availability for households and businesses, and create instability during times of market stress.

But, closing the interest loophole could also reduce opportunities for decentralized finance platforms and nonbank institutions to integrate GENIUS Act-compliant stablecoins into yield-generating products. This restriction would limit one of the few remaining legal avenues for consumers to earn returns on regulated digital dollars outside of traditional banks.

If Congress adopts the banks’ request, it could result in a more centralized stablecoin market where access to compliant coins in DeFi ecosystems is curtailed and consumer yield opportunities are diminished. While the stated objective is to protect the banking system’s funding base, the move would likely narrow the role of stablecoins as an alternative payment and savings option.

Will Stripe’s Tempo Blockchain Compete With Pure Stablecoin Payments? It All Comes Down to Fees

Stripe’s upcoming Tempo blockchain could reshape how businesses accept payments—but only if it gets one thing right: transaction fees.

As of August 2025, Stripe has confirmed it is building Tempo in partnership with Paradigm as a high-performance, Ethereum-compatible Layer-1 payments network designed for stablecoin transactions. What it has not disclosed is the most important factor for merchants—what it will cost to process those payments.

Stripe’s Current Fee Structure vs. Stablecoin Rails

Today, Stripe charges U.S. merchants 2.9% + $0.30 per successful domestic card transaction. Its “Pay with Crypto” option, which allows customers to pay with stablecoins like USDC, USDP, or USDG, carries a 1.5% merchant fee when funds are settled in USD.

By comparison, pure stablecoin payments sent over public blockchains often cost only pennies. On Polygon, average network fees were around $0.01 in Q1 2025. Layer-2 solutions like Base publicly target sub-cent transaction costs. Even accounting for wallet integrations and service providers, these rails can be dramatically cheaper than traditional payment processors.

What We Know About Tempo

Tempo is being built to process high-volume stablecoin payments quickly and at scale. The project builds on Stripe’s recent acquisitions:

• Bridge (stablecoin infrastructure) — acquired February 2025, giving Stripe direct expertise in blockchain-based settlement.

• Privy (wallet infrastructure) — announced June 2025, strengthening Stripe’s ability to offer crypto-ready merchant tools.

What’s missing is clarity on whether Tempo’s merchant fees will be closer to Stripe’s card rates, its 1.5% stablecoin rate, or something truly competitive with public stablecoin networks.

The Adoption Tipping Point: Merchant Economics

If Tempo charges merchants fees similar to card processing—around 2.9%—its advantage over credit cards will be modest. Merchants focused on cost efficiency could find direct stablecoin payments over public chains to be the better choice, keeping more revenue in their business.

However, if Tempo’s merchant fees are set near the actual blockchain costs—fractions of a cent per transaction—it could become a leading platform for stablecoin adoption. That would give businesses the speed, scalability, and settlement benefits of public stablecoins, while retaining Stripe’s trusted integration and merchant support.

Bottom Line for Businesses

For any merchant weighing payment options, the decision between Stripe Tempo and pure stablecoin payment railswill come down to how much Stripe charges to process stablecoin payments.

Until those fees are announced, businesses seeking to maximize margins should keep a close eye on Tempo’s rollout—and continue evaluating low-cost stablecoin payment integrations that are already available today.

A Guide to Launching a Stablecoin Under the GENIUS Act

This GENIUS Act stablecoin guide offers a detailed roadmap for launching a stablecoin under the GENIUS Act in 2025 and beyond. From entity formation to reserve management, OCC chartering, and post-launch compliance, this resource equips founders and policymakers with the knowledge to navigate America’s first federal stablecoin framework. Here’s a GENIUS Act compliance checklist:

1. Introduction to the GENIUS Act

The Guiding and Establishing National Innovation for US Stablecoins Act (GENIUS Act) of 2025 establishes the first federal framework for payment stablecoins. Only OCC-approved Permitted Payment Stablecoin Issuers can legally issue stablecoins in the U.S. Complying ensures the stablecoin is not treated as a security or commodity, placing oversight with banking regulators instead of the SEC or CFTC.

2. GENIUS Act: Entity Formation and Legal Structure

• Form a U.S.-based C-Corp or LLC as a holding company.

• Seek a National Trust Bank Charter from the OCC for federal issuance authority.

• Choose a jurisdiction (often Delaware) for incorporation; OCC chartering provides nationwide authority.

• Prepare Articles of Association, Organization Certificate, and OCC charter application.

• Assemble an experienced board and executive team with expertise in banking, payments, compliance, and cybersecurity.

3. Stablecoin: Reserve Design and Management

GENIUS Act-compliant stablecoins must be backed 1:1 by high-quality, liquid reserve assets, such as:

• U.S. dollars and Federal Reserve Bank balances

• Short-term U.S. Treasuries (93 days or less)

• Government money market funds holding primarily Treasuries

Reserves must be segregated from operating funds, held with regulated custodians, and never rehypothecated except in limited redemption liquidity scenarios. Issuers must:

• Maintain liquidity buffers for prompt redemptions

• Publish monthly reserve reports and undergo independent audits

• Ensure bankruptcy-remote protections for holders

4. GENIUS ACT Stablecoin: Terms of Service and Consumer Protection

Your stablecoin must have:

• Guaranteed 1:1 redemption at par value

• Clear, conspicuous redemption procedures

• No interest or yield to holders (avoiding security classification)

• Plain-language risk disclosures (not FDIC insured, not legal tender)

• Priority claim rights for holders in insolvency scenarios

5. Stablecoin Technical Implementation

Smart Contract Design

• Mint and burn controls linked to reserve verification

• Optional freeze/pause functions for compliance

• Security audits by reputable blockchain firms

Key Management

• Multi-signature or MPC for mint authority

• HSM-secured private keys

• Full transaction logging and monitoring

Blockchain Network Selection

Choose a secure, widely adopted blockchain (Ethereum mainnet, L2, or alternative L1) balancing decentralization, throughput, and interoperability needs.

6. Stablecoin Risk Management & Compliance

Implement a BSA/AML program with CDD/KYC, sanctions screening, SAR filing, and blockchain analytics monitoring.

Adopt cybersecurity frameworks following FFIEC guidelines, including incident response and disaster recovery plans.

Maintain vendor due diligence and internal audit programs.

7. GENIUS ACT Stablecoin OCC Charter Application Process

Pre-filing engagement with OCC

Submit Interagency Charter Application with business plan, capital plan, governance, and risk management framework

Receive conditional approval, meet organizational requirements, and pass pre-opening examination

8. GENIUS Act Issuer Approval

Submit reserve management, redemption policies, risk/compliance programs, and leadership credentials

Provide contingency wind-down plan

Address state-level requirements (if applicable)

9. Pre-Launch Testing Stablecoins Under the GENIUS Act

Conduct operational dry runs

Consider a regulator-observed pilot phase

Finalize readiness with OCC supervisory checks

10. Post-Launch Obligations for Stablecoins Under the GENIUS Act

Publish monthly reserve reports and annual audits (if circulation exceeds $50B)

Comply with evolving prudential standards, capital and liquidity requirements

Engage in regular OCC examinations and event reporting

Maintain marketing compliance (no government guarantee implication)

Conclusion: Launching a GENIUS Act-compliant Stablecoin

Launching a GENIUS Act-compliant stablecoin is a complex but achievable process that transforms a startup into a regulated financial institution. By following each step — from formation and reserves to compliance and OCC engagement — issuers can deliver a trusted, legally sound, and innovative stablecoin to market.

Circle’s Arc Blockchain: A Game-Changer for USDC—or a New Competitive Fault Line for L1s?

Arc’s Core Proposition Arc is not just another blockchain with USDC support. It is Circle’s effort to vertically integrate its role as issuer, payments network operator, and now base-layer infrastructure provider. Key features from the Q2 announcement include: USDC as native gas, eliminating the need for a separate utility token and tying the chain’s economic model directly to stablecoin usage Integrated stablecoin FX engine for instant, on-chain cross-currency transactions Sub-second settlement finality for capital markets and real-time commerce Opt-in privacy controls for institutional compliance requirements EVM compatibility to enable migration for developers already in the Ethereum ecosystem Full integration with Circle’s existing platform and interoperability with dozens of other blockchains that USDC supports A public testnet is expected this fall.

Until now, Circle’s growth strategy relied on neutral multi-chain support. USDC expanded to networks like Ethereum, Solana, Avalanche, Sui, and Aptos, with the Cross-Chain Transfer Protocol (CCTP) providing mobility between them. With Arc, Circle is signaling that it will no longer rely solely on partner ecosystems. It now has a native execution environment, raising questions such as: Will Arc become the preferred launch venue for new USDC-driven features? Could liquidity incentives draw flows away from partner L1s toward Arc? How will other chains position themselves when the issuer is also a competitor?

Many L1s have invested heavily in native USDC integrations and ecosystem development. Potential liquidity shifts post-Arc: Liquidity gravity tilting toward Arc if it offers lower settlement costs, compliance-friendly privacy, and FX capabilities first, especially for institutional flows. New USDC features debuting on Arc before reaching other chains, creating a first-mover advantage for Arc-native apps. This all puts increased pressure on these L1 chains to differentiate by emphasizing unique technical and market strengths.

Open Questions for the Multi-Chain USDC Future Will Circle maintain equal support for non-Arc L1s, or will Arc become the flagship? How will liquidity incentives be distributed across Arc and other ecosystems? Could Arc’s compliance toolkit become the standard, pushing other chains to adopt similar frameworks?

Bottom Line Arc represents a vertical consolidation play, with

@circle now controlling issuance, compliance infrastructure, payments rails, and an execution layer. For USDC-enabled L1s, this creates both a challenge and an opportunity: the challenge of competing with a chain run by the issuer, and the opportunity to position themselves as complementary execution environments with distinct use cases for USDC. The public testnet this fall will reveal whether Arc becomes a liquidity magnet or simply another venue in USDC’s multi-chain portfolio. Either way, the stablecoin landscape just entered a more complex and strategic phase.

#Circle #Stablecoins #GENIUSACT

Texas’ Path to GENIUS Act Compliance: What State-Chartered Banks Need to Know

Texas already regulates two pillars that matter for GENIUS Act–style stablecoin oversight:
(1) fiat-backed stablecoins under the Money Transmission Modernization Act (MTMA) umbrella and
(2) digital-asset platforms and custodians under Finance Code Chapter 160.

Below is how that framework works today, where it aligns with federal expectations, and the state bodies and processesthat would finish the job.

How Texas currently treats fiat-backed stablecoins

Texas adopted the MTMA framework and went further by expressly bringing fiat-backed stablecoins into state money-transmission law.
If you transmit or custody a fiat-backed, fully reserved, redeemable stablecoin for Texans, you’re in licensed activity.

The Texas Department of Banking (TXDOB) interprets the Finance Code’s definition of “money or monetary value” to include any stablecoin that:

• is pegged to a sovereign currency,

• is fully backed by reserve assets, and

• grants the holder the right to redeem for fiat from the issuer.

Texas Finance Code Chapter 160 — What it requires today

Enacted by HB 1666 in 2023, Chapter 160 adds consumer-protection and transparency obligations for “digital asset service providers” (DASPs) that are already licensed as money transmitters. It focuses on proof-of-reserves, segregation of customer funds, and auditability.

Key requirements:

1. No commingling — DASPs cannot mix customer funds with company funds or other property.

2. Holding structures — Customer assets must be held in segregated accounts (individual or omnibus customer-only).

3. Customer visibility — Quarterly customer access to an accounting of liabilities and assets, with auditor visibility.

4. Annual proof-of-reserves — CPA-attested reports filed with the TXDOB, verifying all customer liabilities and matching reserves.

5. Audit standards — Auditors must be U.S. CPAs using AICPA attestation standards.

6. Alternative audit path — SOX-compliant audits can satisfy certain subsections.

7. Limited operational float — Minimal provider-owned funds may be co-mingled solely to facilitate transactions, but are deemed “customer funds” by law.

8. Enforcement — TXDOB may suspend/revoke licenses, conduct exams, and impose penalties.

9. Rulemaking power — The Finance Commission of Texas can issue rules to clarify and implement Chapter 160.

Where Texas already matches the GENIUS Act

Aligned areas:

• Segregation of reserves — Mirrors GENIUS Act requirement for customer-fund separation.

• Proof-of-reserves & auditability — Annual CPA-attested reports are a solid base for moving to monthly, public attestations.

• Licensing perimeter — Clear inclusion of fiat-backed stablecoins ensures coverage.

• Supervisory authority — Strong enforcement, examination, and rulemaking structures already exist.

The big gaps to reach Treasury certification

To qualify for Treasury “substantially similar” certification under the GENIUS Act’s state-chartered pathway (and allow Texas banks to issue under the $10B cap), Texas must:

1. Move from annual to monthly, public reserve reporting with detailed asset composition.

2. Codify par-value, on-demand redemption rights for stablecoins, with standardized consumer disclosures.

3. Restrict reserve assets to high-quality, liquid instruments (cash, insured deposits, short-term Treasuries).

4. Define who may issue payment stablecoins under state law and limit permissible activities to the stablecoin business line plus closely related services.

5. Establish customer priority in insolvency for all reserve assets.

Who makes these changes in Texas?

1. Texas Legislature

• Passes or amends statutes (e.g., to codify redemption rights, reserve-asset limits, claim priority).

• HB 1666 (88th Legislature) is an example of how Chapter 160 was created in the first place.

2. Finance Commission of Texas — The Rulemakers

• Legal Authority: Chapter 160, Sec. 160.006

  “The Finance Commission may adopt rules to administer and enforce this chapter, including rules necessary and appropriate to implement and clarify this chapter.”

• Composition:

  • 11 members, all private citizens, appointed by the Governor and confirmed by the Senate.

  • Required seats:

    • 2 state bank executives

    • 1 state savings executive

    • 1 consumer credit executive

    • 1 residential mortgage loan originator

    • 6 public members (one must be a CPA)

  • Members serve staggered 6-year terms.

• Function in this context:

  • Draft and adopt technical rules — e.g., increasing reserve-reporting frequency, defining asset eligibility, standardizing disclosures.

  • Act on recommendations from TXDOB.

3. Texas Department of Banking (TXDOB)

• Day-to-day administration and enforcement of Chapter 160.

• Banking Commissioner can waive specific requirements when consistent with the law.

• Works with the Finance Commission to develop proposed rules.

Bottom line for Texas-chartered banks

Texas already has the licensing perimeter, reserve segregation, and auditability pieces in place.
What’s missing are GENIUS Act–grade redemption rights, reserve eligibility rules, and monthly public reporting.

The Legislature will set the statutory foundation.
The Finance Commission will fill in the technical rulebook.
The Department of Banking will supervise implementation.

Once those changes are made and Texas earns Treasury certification, state-chartered Texas banks could issue GENIUS-compliant stablecoins under the $10B cap — without needing an OCC charter.

Paxos Files New OCC Bank Charter Application — A First Step Toward GENIUS Act Stablecoin Issuance

Paxos Trust Company has officially filed a new application with the U.S. Office of the Comptroller of the Currency (OCC) to obtain a federal bank charter, signaling its ambition to become one of the first fully GENIUS Act-compliant stablecoin issuers. This filing marks Paxos’ return to the OCC process after its earlier 2020 national trust bank application, which received conditional approval but later expired in 2023.

The application comes amid a wave of similar moves from major players in the digital asset space. Just last month, stablecoin firm Circle (CRCL.N) and crypto firm Ripple also submitted applications for national trust bank charters, reflecting an industry-wide push to align with the new regulatory landscape established by the Guiding and Establishing National Innovation for U.S. Stablecoins Act of 2025 (GENIUS Act).

The two-step process for GENIUS Act stablecoin launch

Under the GENIUS Act, issuing a compliant USD-pegged stablecoin involves two distinct regulatory approvals:

Step 1 — Obtain a bank charter from the OCC

The first requirement is to secure a federal charter, most commonly a National Trust Bank Charter from the OCC for non-deposit-taking stablecoin issuers.

• What it is: A legal status that transforms the issuer into a federally regulated financial institution with the authority to hold reserves, redeem stablecoins, and operate under OCC supervision.

• Why it matters: Without this charter, an entity cannot qualify as a “Permitted Payment Stablecoin Issuer” under the GENIUS Act. The charter also preempts the need for dozens of separate state money transmitter licenses, enabling nationwide issuance under a single supervisory framework.

• What the OCC looks for: A detailed business plan, robust governance, experienced management, clear compliance and risk frameworks, secure technical infrastructure, and capital adequacy to meet operational demands. The OCC reviews these against safety and soundness standards, much like a traditional bank.

Step 2 — Apply for GENIUS Act stablecoin issuer approval

Once the charter is granted, the issuer must separately (or concurrently) obtain GENIUS Act approval from its primary regulator, in Paxos’ case, the OCC.

• What it is: A specialized license confirming that the issuer meets all GENIUS Act mandates, including strict reserve composition, monthly public attestations, redemption rights at par, and robust consumer protection disclosures.

• Why it matters: This step legally designates the institution as a Federal Qualified Payment Stablecoin Issuer, allowing it to launch its stablecoin into the U.S. market without being regulated as a security or commodity.

• Integrated process: In practice, many applicants, including Paxos, are expected to integrate GENIUS Act requirements into their charter application so both approvals can be coordinated.

Why the bank charter is the critical first step

The bank charter is the regulatory anchor for GENIUS Act compliance. It:

• Confers federal legitimacy — OCC-chartered issuers are supervised under the National Bank Act and must adhere to ongoing prudential standards.

• Authorizes core activities — Issuing and redeeming stablecoins, holding reserves, and providing custody are recognized as permissible trust banking activities under the Act.

• Establishes consumer protections — OCC oversight enforces the GENIUS Act’s protections, such as bankruptcy-remote reserves, no-interest mandates, and transparent redemption processes.

• Streamlines national operations — A federal charter removes the operational friction of 50-state licensing and aligns the issuer with one primary regulator.

Without this foundational approval, the GENIUS Act’s second step — stablecoin issuer licensing — is legally inaccessible.

Implications of Paxos’ filing

Paxos’ new OCC application positions it at the forefront of the GENIUS Act era. If approved, Paxos would have the authority to:

• Launch a GENIUS-compliant USD stablecoin with national reach.

• Compete directly with both existing bank-issued stablecoins and fintech entrants pursuing the same two-step approval path.

• Offer institutional and retail clients the assurance of OCC oversight and statutory redemption rights.

With Circle and Ripple also pursuing national trust bank charters, the OCC now faces a queue of high-profile applicants vying to be among the first federally chartered stablecoin issuers under the GENIUS Act. This convergence of filings underscores a reality that every serious U.S. stablecoin issuer must now face: the path to market runs through the OCC, and the GENIUS Act makes that path non-negotiable.

Now Is the Time for States to Formulate a GENIUS Act–Compliant Charter

The GENIUS Act of 2025 established the first comprehensive federal framework for U.S. payment stablecoins. It set strict requirements—1:1 reserve backing, monthly independent audits, prompt redemption rights, and bank-level supervision—while preserving the “dual banking system” that allows state innovation under federal guardrails.

This presents a rare window of opportunity: states can act now to create their own qualified stablecoin issuer chartersthat fully comply with GENIUS, ensuring local control over a rapidly growing sector while protecting consumers.

How GENIUS Act Stablecoin Advisor Can Help: Why Act Now?

• Federal Clarity – The GENIUS Act removed ambiguity over stablecoin legality and set clear operational standards. States no longer need to guess where federal lines will be drawn.

• First-Mover Advantage – Just as early adopters of trust company or SPDI charters gained national visibility, the first states with a GENIUS-aligned charter will attract top fintechs, blockchain companies, and even public-private initiatives.

• Economic Development – A well-structured state charter invites high-value financial institutions to domicile locally, bringing jobs, tax revenue, and technological leadership.

How GENIUS Act Stablecoin Consultant Can Help: What a State Charter Should Include?

The Texas Digital Payment Reserve Bank (TDPRB) framework is a blueprint that other states can adapt:

• Charter Class for Stablecoin Issuers – A non-lending, fully reserved, state-supervised institution.

• Strict Reserve Requirements – 100% USD or high-quality liquid assets, segregated and unencumbered.

• Prompt Redemption – Mandated 1:1 redemption within 24–48 hours.

• Transparency – Monthly CPA-verified reserve attestations, annual audits, and public reporting.

• Consumer Protections – Clear disclosures, priority claims on reserves, and prohibition of misleading “insured” claims.

The Risk of Waiting - Contact a GENIUS Act Stablecoin Consultant Today to Discuss A a plan for launching your stablecoin charter or compliant stablecoin

Without a state-level GENIUS-compliant charter, local oversight defaults to federal licensing or out-of-state regimes. That means fewer homegrown institutions, less influence over regulatory shaping, and missed opportunities for integrating stablecoins into state payments, benefits disbursements, and public-private innovation.

Bottom Line: The GENIUS Act has set the table. States that move now to create compliant charters will control their own stablecoin destiny—balancing innovation, consumer protection, and economic growth. Those that delay will be left adopting someone else’s framework.

#stablecoins #GENIUSAct

The Two-Step Path to Launching a GENIUS Act–Compliant Stablecoin

Launching a regulatory-compliant stablecoin under the GENIUS Act is a complex process that involves two separate but interlinked approvals:

1. Obtaining a National Trust Bank Charter from the OCC

2. Securing approval as a Permitted Payment Stablecoin Issuer under the GENIUS Act

This sequence ensures that your entity is both a federally supervised bank and a legally recognized stablecoin issuer under the new framework.

Step 1 — Obtaining an OCC National Trust Bank Charter and How a GENIUS Act Stablecoin Consultant Can Assist

The Office of the Comptroller of the Currency (OCC) charter is the foundation of your regulatory standing. For a de novo stablecoin issuer, this will typically be an uninsured national trust bank charter, which authorizes fiduciary and custodial activities, including holding reserves and issuing payment stablecoins.

Pre-Filing Engagement and How a GENIUS Act Stablecoin Consultant Can Assist

Early contact with the OCC—through its Office of Innovation or Licensing Division—is essential. In this “pre-filing meeting,” you will outline your business concept, demonstrate alignment with GENIUS Act requirements and OCC safety and soundness principles, and receive feedback on potential red flags. Early buy-in from OCC staff can significantly smooth the path forward.

Charter Application Package - How a GENIUS Act Stablecoin Consultant Can Advise Your Charter

Your formal submission, via the Interagency Charter Application form tailored for an uninsured trust bank, must include:

• Three-year business plan with detailed projections, product descriptions, target markets, growth assumptions, and risk mitigations.

• Capital plan covering the amount, form, investor commitments, and adequacy under stress scenarios.

• Management and governance documentation, including resumes, background checks, organizational chart, and governance framework.

• Risk and compliance frameworks such as AML/BSA, cybersecurity, operational risk policies, and board oversight structures.

• Analysis showing permissible activities under the National Bank Act and GENIUS Act.

• Narrative on public benefit and financial inclusion objectives.

• Statement of commitment to supervision, reporting, and examination requirements.

Review and Conditional Approval - How a GENIUS Act Stablecoin Consultant Can Help With Regulatory Compliance

The OCC will evaluate the application against statutory factors and may issue conditional approval requiring pre-opening actions such as raising capital, hiring key executives, adopting OCC-approved policies, and entering a supervisory agreement.

Pre-Opening Examination

OCC examiners will review operational readiness, staffing, systems, and compliance programs before granting final charter approval.

Step 2 — Approval as a Permitted Payment Stablecoin Issuer (GENIUS Act)

Even with a bank charter, you must separately obtain approval as a Federal Qualified Payment Stablecoin Issuer under the GENIUS Act. This confirms that your stablecoin meets statutory reserve, redemption, and consumer protection standards.

Consult a GENIUS Act Stablecoin Advisor to Assist with the Application Components -

Whether filed separately or with the charter application, the submission must cover:

• Reserve management showing 1:1 eligible asset backing, daily valuation, segregation of assets, and issuance controls.

• Redemption policy and terms of service committing to timely par redemption, retail redemption pathways, plain-language disclosures, and insolvency priority for holders.

• Compliance with statutory consumer protections, including no interest, no false government backing claims, and clear risk disclosures.

• AML/BSA and risk management programs aligned with Act requirements, including sanctions screening and cybersecurity standards.

• Leadership with both banking and payments/crypto expertise, supplemented by advisors if needed.

• Contingency and wind-down plan ensuring orderly redemption and reserve liquidation.

Consult a GENIUS Act Stablecoin Advisor for Regulatory Coordination

The OCC will lead the review but may coordinate with Treasury and the interagency Stablecoin Oversight Committee. Approval may include operational conditions such as issuance limits or enhanced early-stage reporting.

Step 3 — Documentation, Testing, and Launch Readiness

Before launch, finalize:

• CPA audits or attestations verifying capitalization and systems, with a schedule for monthly reserve attestations.

• Board-approved policies for AML, cybersecurity, operational risk, and redemption procedures.

• Evidence of system testing, including smart contract audits, penetration tests, and stress simulations.

• Governance records of board decisions and approvals.

• Execution of all regulatory agreements and satisfaction of OCC conditions.

Only after both charter approval and GENIUS Act issuer approval can you begin issuing your stablecoin under federal law.

Why the Two-Step Model Matters

This dual-approval model provides layered oversight. The OCC charter ensures the entity is a regulated bank-like institution, while GENIUS Act issuer approval ensures the stablecoin product itself meets strict operational and consumer protection requirements. Together, they create a structure that builds trust with regulators, market participants, and end-users.

Tokenized Bank Deposits Coins Are Not GENIUS Act Compliant Stablecoins—Here’s Why

As digital finance matures, not all “digital dollars” are created equal. Case in point: JPMorgan’s new deposit token (JPMD) and the regulated stablecoins emerging under the GENIUS Act may look similar on the surface—but they are fundamentally different in structure, purpose, and legal treatment. Understanding this distinction is critical for fintech operators, especially those navigating the future of payments, compliance, and digital asset innovation.

1. Who Can Issue It

JPMD is issued by a regulated bank—JPMorgan Chase. It’s a tokenized form of a traditional bank deposit, and only a licensed bank can issue it. On the other hand, the GENIUS Act was designed to create a new framework for non-bank entities—fintechs, state-chartered institutions, and other approved issuers—to launch compliant, fully reserved stablecoins. The law also allows banks to participate, but only through separately regulated subsidiaries or under a special license. This opens the door for a broader range of players to enter the stablecoin market under clearly defined rules.

2. How It's Backed

The JPMD deposit token is backed by deposits held at JPMorgan—just like any other checking or savings account. These deposits are part of a fractional reserve system, meaning the bank may lend or invest a portion of them. Even if JPMorgan maintains strong reserves, the backing ultimately rests on the bank’s balance sheet and creditworthiness.

In contrast, a GENIUS-compliant stablecoin must be fully backed 1:1 by segregated, high-quality liquid assets such as cash or U.S. Treasury bills, held in custody for the benefit of token holders. These assets must remain separate from the issuer’s operating capital and cannot be lent out. The value of the stablecoin is tied directly to the quality and transparency of its underlying reserves, not the financial health of the issuer.

3. Legal Status and Protections

Legally, JPMD is a bank deposit in tokenized form. It’s treated just like any other liability on the bank’s books and may be eligible for deposit insurance. Users holding JPMD are essentially depositors, with all the rights and protections that status confers under traditional banking laws.

GENIUS Act stablecoins, however, are defined as a new class of digital payment instruments. They are not considered deposits and therefore do not carry FDIC insurance. Instead, they offer other protections: reserve asset segregation, strict redemption rights, and regulatory clarity. GENIUS issuers are also prohibited from paying interest on stablecoin balances, distinguishing these tokens from bank deposits or money market instruments.

4. Regulatory Oversight

JPMD lives entirely within the traditional banking system and is overseen by existing bank regulators. Its issuance, custody, and redemption all operate under longstanding rules governing banks and their customers.

Stablecoins under the GENIUS Act fall into a new regulatory category. Issuers must obtain a federal or state stablecoin license and comply with strict operational, risk management, and transparency requirements. These include reserve disclosures, audits, and the technical ability to freeze assets in response to law enforcement requests. In short, GENIUS creates a parallel regulatory track specifically tailored to the unique risks and use cases of stablecoins.

Why It Matters

Both JPMD and GENIUS Act stablecoins aim to move dollars onto blockchain rails, but the similarities stop there. JPMD is a digital extension of the traditional deposit system, optimized for institutional use and backed by a single bank. GENIUS Act stablecoins are designed as a public-regulated alternative to bank money, open to both private-sector innovators and state entities looking to issue digital dollars within a clear legal framework.

As the market for tokenized dollars grows, it’s important to recognize that not all “bank coins” are true stablecoins under U.S. law. For fintech builders and policy architects, understanding this line isn't just semantic — it's foundational to shaping what comes next.

The Evolution of Stablecoins: From Early Innovations to the GENIUS Act Era

Introduction

Stablecoins are a class of cryptocurrencies designed to maintain a stable value by pegging to an external reference—typically a fiat currency like the U.S. dollar. They aim to combine the efficiency, programmability, and decentralization of digital assets with the stability and trust associated with traditional money.

In the volatile world of crypto, where the price of Bitcoin or Ether can swing dramatically within hours, stablecoins serve as a reliable medium of exchange and store of value. Over the past decade, they have evolved from niche blockchain experiments to systemically important financial instruments. Today, they facilitate billions of dollars in daily trading volume, power decentralized finance (DeFi) platforms, enable cross-border payments, and provide a digital alternative to cash in inflation-stricken economies.

This paper traces the historical and technical evolution of stablecoins from their early designs in 2014 to their current mainstream adoption, culminating in the passage of the Guiding and Establishing National Innovation for U.S. Stablecoins (GENIUS) Act in 2025. It also explores global regulatory responses and highlights the innovations, risks, and opportunities associated with digital dollars.

I. Early Stablecoin Innovations (2014–2016)

BitUSD: The First Stablecoin (2014)

The first functioning stablecoin was BitUSD, launched on July 21, 2014, on the BitShares blockchain. It was envisioned by Dan Larimer and Charles Hoskinson, both of whom later played major roles in developing EOS and Cardano.

BitUSD used the BitShares token (BTS) as collateral. Users could lock BTS in smart contracts to mint BitUSD, with the goal of maintaining a 1:1 peg to the U.S. dollar. The system relied on arbitrage and market confidence to maintain its value. However, by 2018, due to the volatility of BTS and a lack of sustained demand, BitUSD lost its peg and never recovered.

NuBits (USNBT): Another Early Attempt

NuBits launched in 2014 as another early stablecoin. Though it claimed to be backed by reserves, it lacked clear and diversified collateral mechanisms. As crypto markets declined, confidence eroded, and NuBits lost its dollar peg, eventually trading at just a fraction of its intended value. Its collapse, like BitUSD's, underscored the weaknesses in relying on unstable assets for price stability.

Tether (USDT): The Fiat-Backed Model

Also in 2014, RealCoin was introduced, later rebranded as Tether (USDT). Unlike earlier models, Tether took a fiat-backed approach: every USDT token would be backed 1:1 by U.S. dollar reserves held by the issuer.

Launched on the Omni Layer protocol on the Bitcoin blockchain, Tether was quickly adopted by exchanges due to its simplicity and usability. It became the leading stablecoin by market cap and volume. This centralized model set the foundation for future fiat-backed digital dollar systems.

II. Stablecoin Expansion and the Rise of Digital Dollars (2017–2020)

MakerDAO and the Introduction of DAI (2017)

In December 2017, MakerDAO launched DAI, a decentralized stablecoin on Ethereum. Unlike fiat-backed coins, DAI was over-collateralized using crypto assets like Ether. To mint DAI, users deposited ETH into smart contracts called vaults, with a required collateralization ratio of at least 150 percent.

This design helped manage volatility: if the value of the collateral dropped below safety thresholds, the system would automatically liquidate assets to maintain stability. DAI later added new collateral types, such as wrapped Bitcoin (WBTC) and USDC. It became a key component of the DeFi ecosystem and proved that a decentralized stablecoin could sustain its peg under stress.

Fiat-Backed Stablecoins Gain Ground (2018–2019)

Following Tether’s dominance, new fiat-backed stablecoins emerged, emphasizing transparency and regulation:

• USD Coin (USDC), launched in September 2018 by Circle and Coinbase, provided monthly attestation reports and operated under U.S. regulatory frameworks.

• TrueUSD (TUSD), released by TrustToken, used escrow accounts and third-party verification.

• Paxos Standard (PAX), later rebranded as USDP, was regulated by the New York Department of Financial Services.

These issuers focused on compliance, liquidity, and transparency, creating trust with users and institutional partners. By the end of 2020, USDC had become the second-largest stablecoin behind USDT.

Libra: A Regulatory Turning Point

In 2019, Facebook proposed Libra, a global stablecoin backed by a basket of fiat currencies and governed by the Libra Association. The goal was to facilitate frictionless global payments through Facebook’s apps.

Governments and central banks swiftly opposed the plan, raising concerns over monetary sovereignty, privacy, and financial stability. Libra was eventually restructured, rebranded as Diem, and ultimately shut down in 2022.

However, Libra’s short life had lasting consequences: it catalyzed stablecoin regulation worldwide and accelerated central banks’ exploration of digital currencies.

III. Market Maturity and the Case for Regulation

Explosive Growth in the Early 2020s

By early 2019, the total stablecoin market capitalization was around $5 billion. By the end of 2020, it had reached $28 billion, and by early 2024, surpassed $150 billion.

The drivers of this growth included:

• Use in crypto trading pairs (e.g., BTC/USDT)

• Liquidity provision in DeFi protocols

• Use as remittance and savings tools in developing markets

• Demand for digital dollars during times of fiat instability

Stablecoins were now embedded in the financial architecture of both centralized and decentralized markets.

Emerging Risks and Red Flags

Despite their growing utility, stablecoins introduced new risks:

• Tether faced repeated scrutiny for inadequate reserve transparency. It reached a settlement with the New York Attorney General in 2021, agreeing to improve disclosures.

• TerraUSD (UST), an algorithmic stablecoin, collapsed in May 2022, wiping out over $40 billion in market value and triggering industry-wide contagion.

• In March 2023, USDC temporarily depegged to $0.88 after Silicon Valley Bank, one of its reserve banks, collapsed. USDC later recovered, but the episode highlighted exposure to the banking system.

These incidents signaled the need for structured, enforceable regulation to ensure consumer protection and financial stability.

IV. The GENIUS Act and the Future of Regulated Stablecoins

Legislative Journey (2022–2025)

Between 2022 and 2025, U.S. lawmakers debated several versions of federal stablecoin legislation. With growing pressure from industry leaders, international regulators, and central banks, Congress passed the GENIUS Act in July 2025. It became the first comprehensive federal law governing payment stablecoins in the United States.

Key Provisions of the GENIUS Act

• Licensing: Issuers must obtain a license from the Office of the Comptroller of the Currency (OCC) or operate under a state regime approved as substantially equivalent. Issuers with more than $10 billion in circulation must be federally licensed.

• Reserves: All stablecoins must be backed 1:1 by high-quality liquid assets (such as cash and U.S. Treasuries).

• Redemption: Holders must be able to redeem tokens for dollars at par value, with clear terms and timelines.

• Segregated Accounts: Stablecoin reserves must be held in bankruptcy-remote accounts, protecting customers if the issuer fails.

• Transparency: Issuers are required to publish monthly reserve reports and submit to independent audits if above certain thresholds.

• Enforcement: U.S. regulators are authorized to restrict offshore stablecoins that pose systemic risks or fail to comply with standards.

• Big Tech Guardrails: Large non-financial companies (e.g., social media firms) cannot issue stablecoins without approval from a federal review committee.

This regulatory framework offers a balance between fostering innovation and protecting the public, giving banks, fintechs, and crypto firms a clear path to issue compliant digital dollars.

Conclusion

Stablecoins have come a long way since the early days of BitUSD and NuBits. What began as experiments in collateral and code are now instruments used daily by millions of people and institutions around the world.

The GENIUS Act represents a shift in how the United States approaches financial innovation: no longer ignoring or resisting digital assets, but integrating them into a supervised, rules-based financial system. As adoption grows and the technology matures, stablecoins are likely to become a foundational layer of both crypto and traditional finance.

The next decade will likely see stablecoins used not just for crypto trading, but for payroll, remittances, commerce, and even cross-border settlement—bringing the vision of frictionless digital dollars closer to reality.