21 Keys to Stablecoin Policy

In September 2025, Australia’s Treasury released exposure draft legislation requiring stablecoin issuers and platforms to hold an Australian Financial Services (AFS) license, with a dual-track regime for digital asset platforms and payment stablecoins. The rules, open for consultation until October 2025, ease licensing for intermediaries until 2025 to encourage innovation, mandating safeguards for consumers in tokenized assets. This aligns with global standards, as seen in the UK-Australia Joint Forum in September 2025, focusing on cross-border stablecoin oversight.

In its 2025 Annual Economic Report, the BIS outlined principles assessing stablecoins against criteria like singularity, settlement finality, and safety, concluding they fall short as sound money without robust regulation due to volatility and redemption risks. BIS emphasized that stablecoins on permissionless blockchains pose threats to monetary sovereignty, recommending oversight to address illicit finance and market fragmentation, with evidence from 2025 studies showing asymmetric effects on stablecoin prices from market events. The principles advocate for tokenized central bank reserves as a safer alternative, influencing global policies like the U.S. GENIUS Act.

The BitLicense, administered by NYDFS since 2015, requires entities engaging in digital asset activities like stablecoin issuance to obtain approval, with 2025 expansions applying blockchain analytics expectations to banks for monitoring. In 2025, approvals like Bullish’s BitLicense and settlements with issuers for compliance failures underscore strict reserves and AML rules for USD-pegged stablecoins. The regime complements federal laws like the GENIUS Act, ensuring stablecoins meet oversight for consumer protection and financial integrity.

A Central Bank Digital Currency (CBDC) is a digital asset issued and backed by a central bank, functioning as a digital form of a country’s fiat currency (e.g., digital USD or EUR). Unlike decentralized stablecoins, CBDCs are fully controlled by central authorities, ensuring stability and regulatory oversight. They aim to enhance payment efficiency, financial inclusion, and monetary policy implementation. Examples include China’s e-CNY, with over 180 million wallets by mid-2024, and pilot projects in countries like the Bahamas and Nigeria.

The e-CNY, or digital yuan, is a Central Bank Digital Currency (CBDC) issued by the People’s Bank of China (PBOC), launched in pilot phases since 2020. Fully backed by the PBOC, it functions as legal tender in digital form, used for retail payments, cross-border transactions, and government services. By mid-2024, e-CNY had over 180 million personal wallets and facilitated billions in transactions, aiming to enhance financial inclusion and reduce reliance on private digital payment systems like Alipay.

The FATF Travel Rule, under Recommendation 16, requires virtual asset service providers (VASPs) to transmit customer data for transfers exceeding thresholds like USD/EUR 1,000, applying equally to stablecoins as seen in 2025 updates addressing their use by illicit actors such as DPRK groups. By 2025, 73% of jurisdictions had legislation for VASPs, with progress in Travel Rule adoption, though gaps persist in enforcement for DeFi and stablecoins. In the U.S., the GENIUS Act of 2025 integrates Travel Rule compliance for stablecoin issuers, enhancing AML/CFT measures amid rising sanctions evasion risks.

The Genius Act is a proposed U.S. legislative framework aimed at regulating stablecoins, introduced to establish clear rules for issuers regarding reserve management, transparency, and compliance with anti-money laundering (AML) standards. While not yet enacted as of September 2025, it seeks to address regulatory uncertainty in the U.S. stablecoin market, ensuring consumer protection and financial stability. The act targets stablecoins like USDT and USDC, aiming to foster innovation while mitigating risks associated with their widespread adoption.

The Hong Kong Stablecoin Bill was passed by the Legislative Council of Hong Kong SAR, China on May 21, 2025, to regulate the issuance of fiat-referenced stablecoins (FRS), a type of digital asset designed to maintain a stable value pegged to fiat currencies like the Hong Kong dollar. Under this regime, administered by the Hong Kong Monetary Authority (HKMA), any entity issuing FRS in Hong Kong or claiming stability referenced to the Hong Kong dollar must obtain a license, with requirements including full backing by high-quality reserve assets, segregation of client funds, robust stabilization mechanisms, and redemption at par value within reasonable timelines. Licensees must also adhere to anti-money laundering (AML) and counter-terrorist financing (CFT) standards, risk management protocols, regular auditing, and fitness and propriety assessments for key personnel.

The ordinance prohibits unlicensed FRS offerings to retail investors and restricts advertisements to only those from licensed issuers, including during a six-month transitional non-contravention period starting August 1, 2025. Pre-existing issuers had until October 31, 2025, to apply for licenses, with the HKMA confirming 36 applications received by the end of September 2025, and initial approvals anticipated in early 2026. This framework aligns with the “same activity, same risks, same regulation” principle, enhancing investor protection and supporting Hong Kong’s digital asset ecosystem while preventing fraud and maintaining financial stability.

As part of broader digital asset regulations, the ordinance complements existing rules for trading platforms and sets the stage for further consultations on over-the-counter trading, custodian services, and a second policy statement on digital assets, fostering sustainable industry growth in Hong Kong.

In 2025, the IMF published guidance in “Stablecoins and the Future of Finance,” estimating international stablecoin flows and advocating compliance-by-design for decentralized systems to reshape payments. Reports like “Decrypting Crypto” detail methodologies for tracking flows, warning of macroeconomic impacts in developing countries. The IMF urges policies to mitigate risks like currency substitution while harnessing stablecoins for efficient cross-border transactions.

IOSCO’s 2025 Work Program prioritizes crypto resilience, including stablecoins, building on prior guidance that stablecoin arrangements must observe international standards for transparency and risk management. In collaboration with CPMI, IOSCO’s rules confirm stablecoins as subject to securities oversight if they function like investments, influencing frameworks like MiCA and U.S. GENIUS Act. The focus in 2025 includes investor education on crypto risks, with reports emphasizing systemic stability in digital assets.

Japan’s stablecoin framework, established through 2023 amendments to the Payment Services Act, classifies stablecoins as “currency-denominated assets” and allows issuance by regulated entities like banks and trusts, with reserves in short-term Japanese Government Bonds for yen-denominated tokens. In 2025, the Financial Services Agency approved the first yen-pegged stablecoin by startup JPYC, marking a historic shift, and Circle’s USDC became the first foreign stablecoin licensed in March 2025. The 2025 amendments reduced burdens on issuers by permitting investments in government bonds and lowering entry barriers, aiming to promote stablecoin adoption for cross-border payments while maintaining strong oversight for stability.

The Monetary Authority of Singapore (MAS) finalized its stablecoin regulatory framework in August 2023, with ongoing implementations and recognitions in 2025, targeting single-currency stablecoins (SCS) pegged to the Singapore Dollar or G10 currencies like USD. Issuers must meet requirements on value stability, capital adequacy, redemptions, and disclosures to be labeled “MAS-regulated stablecoins,” with reserves held in cash, cash equivalents, or short-term debt securities. This opt-in framework applies across Singapore, excluding financial free zones, and in 2025, MAS sought U.S. recognition under the GENIUS Act for comparability, promoting safer stablecoins while fostering innovation in digital asset payments.

The Markets in Crypto-Assets Regulation (MiCA) is a comprehensive EU framework, effective for stablecoins since June 30, 2024, and for crypto-asset service providers from December 20, 2024. It categorizes stablecoins as asset-referenced tokens (ARTs) or e-money tokens (EMTs), imposing strict rules on licensing, reserve management, and transparency. MiCA aims to enhance consumer protection and financial stability across the EU’s 27 member states, potentially setting a global standard, though challenges remain in national implementation.

A stablecoin is designed to maintain a stable value by pegging to assets like fiat currency (e.g., USD) or commodities(e.g., gold), to minimize volatility for payments, decentralized finance (DeFi), and cross-border transfers. Stablecoin types include fiat-backed (e.g., USDT and USDC, supported by reserves), crypto-backed (over-collateralized), and algorithmic.

In 2025, in the U.S., the GENIUS Act (Guiding Effective Non-Fiat Innovation and Utility for Stablecoins) was passed to establish a tailored regulatory framework for stablecoins. It emphasizing consumer protection, reserve transparency, and financial stability to foster innovation while mitigating risks like de-pegging.

In 2025, Mastercard joined Paxos’ Global Dollar Network, enabling USDG, USDC, PYUSD, and FIUSD across its network for merchant settlements and acquirers. Partnerships with Circle expanded digital settlements in the Middle East, allowing stablecoin use for faster payments. Mastercard views stablecoins as complementary, reporting 17% revenue growth in Q2 2025 amid stablecoin adoption.

Stripe introduced Stablecoin Payments in 2025, allowing businesses in 101 countries to accept USDC and other stablecoins via its Settlement Payouts, with legal terms updated in August 2025. Through acquisitions like Bridge and launches like Tempo blockchain, Stripe reported 30% month-over-month growth in stablecoin volumes since January 2025. This facilitates faster, cheaper payments, positioning Stripe as a leader in digital asset integration for fintechs.

In September 2025, Visa launched a pilot at SIBOS allowing banks and fintechs to prefund Visa Direct with stablecoins such as Circle’s USDC and EURC, enabling instant international transfers. This initiative, available by April 2026, treats stablecoins as cash equivalents for faster payouts, reducing costs for remittances. Visa’s solutions integrate stablecoins for merchants and wallets, enhancing digital settlements.

In September 2025, SWIFT announced the addition of a blockchain-based shared ledger to its infrastructure, enabling seamless integration of stablecoins for international payments and reducing settlement times. Collaborating with banks, SWIFT tested on-chain payments using Ethereum’s Linea, facilitating stablecoin transfers alongside traditional fiat. This move at Sibos 2025 aims to scale digital finance, addressing stablecoin growth while maintaining security in global transactions.

The Central Bank of the UAE (CBUAE) issued the Payment Token Services Regulation in June 2024, fully effective by August 2025, mandating that merchants accept only licensed dirham-backed stablecoins, excluding non-AED tokens and other digital assets. In 2025, approvals like AE Coin in December and ADQ’s stablecoin highlight centralized oversight for stability, with fintechs required to obtain licenses by July 2025. The framework operates across mainland UAE, excluding free zones like DIFC and ADGM, which have separate rules, receiving US$30 billion in digital assets by mid-2024.

The UK’s stablecoin regulation, advanced through FCA Consultation Paper CP25/14 in May 2025, mandates prior authorization for issuing stablecoins, treating them as money-like instruments backed fully by real-world assets like cash or equivalents. Draft legislation in April 2025 under the Financial Services and Markets Act introduces new activities for crypto custody and stablecoin issuance, with final rules expected by end-2026. This aligns with the GENIUS Act’s cross-border implications, requiring UK issuers to comply with redemption rights and reserve transparency for consumer protection.

Under US GAAP, fiat-backed stablecoins pegged to USD can be classified as cash equivalents if they meet criteria for liquidity and stability, as clarified in SEC guidance in August 2025. FASB’s ASU 2023-08, effective 2025, requires fair value measurement for crypto assets, but stablecoins under GENIUS Act may qualify as financial assets with reserve attestations. AICPA’s 2025 Criteria for Stablecoin Reporting provide voluntary disclosure standards, aligning with IFRS for cash-like treatment.