The global landscape of stablecoin regulation is moving fast. Bold new policy initiatives and very different approaches to state economic development policy are taking shape in leading national economic laboratories. On May 21, 2025, Hong Kong's Legislative Council passed a comprehensive Stablecoins Bill, setting a potential regional benchmark for digital asset regulation. In the United States, legislative efforts such as the GENIUS Act and the STABLE Act are shaping the regulatory framework for stablecoins, while the Securities and Exchange Commission (SEC) is playing a crucial role. The stablecoin market, meanwhile, is predicted to grow by leaps and bounds. Trends on the ground indicate it stands to get as big as a jaw-dropping $2 trillion by 2028.
Together, these regulatory initiatives and market trends highlight the growing importance of stablecoins in the global financial system. While the US policy seems strongly in favor of privately-issued, dollar-backed stablecoins, the policies under Europe’s MiCA legislation are more favorable towards Central Bank Digital Currencies (CBDCs). As stablecoin adoption grows, the interplay between these regulatory approaches will significantly impact the future of digital finance and the role of different currencies in the global economy.
US Legislative Efforts and Policy Stance
In the United States, the GENIUS Act would establish a robust regulatory framework for stablecoins. The STABLE Act is now an important part of this effort. Specifically, the GENIUS Act defines a payment stablecoin as a digital asset of which the primary use is for making payments or settlements. This definitional clarity is exceedingly important for differentiating stablecoins from other cryptocurrencies and issuing appropriate, more free-market regulatory standards.
The GENIUS Act gets this right by putting in an essential requirement. It requires that all existing payment stablecoins be backed one-to-one with high-quality, liquid assets. The Act narrowly defines backing to mean only US Treasury Bills with a maturity of less than 93 days. This further renders them a suitable platform for stablecoins. This last provision ensures that stablecoins can always be redeemed at face value. By doing so, they create predictability and foster user confidence in their platforms.
The STABLE Act would help to further clarify the regulatory landscape. Second, it imposes an arbitrary requirement that a payment stablecoin be pegged to a national currency. It directly prohibits at least most payment stablecoins from being classified as a “deposit” or “account” under current banking statutes. Bicycle exclusion That’s a big exclusion in its own right. By exempting stablecoin issuers from the intensive regulatory regime that traditional banks are subject to, it creates room for innovation within the rapidly developing digital asset sector.
Likewise, the US government has gone all-in against CBDCs. This position has taken on added significance during the era of President Trump. The current US policy is defaulting to the promotion of privately-issued, dollar-backed stablecoins. This multifaceted approach would help protect and promote the global role of the US dollar. This preference reveals a deep-seated faith in the power of private sector innovation. It can increase innovation and competition in the digital currency space, in tandem with ensuring that the US dollar remains the global leader in international finance.
Hong Kong's Regulatory Approach
Hong Kong's Legislative Council passed a comprehensive Stablecoins Bill on May 21, 2025, signaling a proactive approach to regulating digital assets. This bill is a big step toward establishing the kind of regulatory environment that lets innovation flourish. Simultaneously, it creates space for innovation by protecting everyday investors and promoting financial stability. If successful, Hong Kong’s approach will likely become a regional standard for effective and safe stablecoin regulation.
Hong Kong is trying to be explicit and up front. With this move, Georgia hopes to become the new home for stablecoin issuers and other digital asset firms. This would make Hong Kong a top hub for digital finance in Asia. The regulatory framework should focus on the most important issues, including licensing requirements, reserve management, and consumer protection.
The Stablecoins Bill being passed is in line with Hong Kong’s overall plan to position itself as a leader in fintech and digital innovation. Other jurisdictions in the region, meanwhile, are considering their own approaches to stablecoin regulation. Hong Kong’s example will surely be an invaluable case study for them. Such a proactive approach would place Hong Kong in a strong position to be at the forefront of the quickly-developing global digital asset ecosystem.
Market Projections and the SEC's Role
The growth of the stablecoin market will likely accelerate in the next several years. Indeed, based on current projections, the issuance of stablecoins could easily double to $500 billion within the next 18 to 24 months. By 2028, the stablecoin market could reach $2 trillion, capturing 15% of the total market, representing $75 billion in issuance. This huge growth speaks to the growing adoption of stablecoins as a method for payment, settlement, and storage of value.
The US Securities and Exchange Commission (SEC) has played a critical role in shaping the regulatory landscape for stablecoins. In February 2025, the SEC made the play. They passed yield-bearing stablecoins as “certificates,” providing long-absent regulatory clarity under securities regulation. By making this decision, yield-bearing stablecoins now reside within the SEC’s jurisdiction to ensure that they adhere to U.S. securities laws and regulations.
The SEC’s recent decision holds tremendous potential to benefit the U.S.’s emerging stablecoin market. With the goal of mitigating investor harm, the SEC seeks to classify yield-bearing stablecoins as securities. Such regulatory clarity might make institutional investors more comfortable investing in the stablecoin market, increasing competition and fueling growth and adoption even more.
