Stablecoin Regulation Impact 2025: Market Shifts & Competitive Dynamics
On July 18, 2025, the GENIUS Act was signed into law by U.S. President Trump, marking the beginning of a new era for stablecoins. The global stablecoin landscape is currently experiencing significant changes and heightened competition, with its future direction being influenced by increasingly sophisticated regulatory frameworks, including the newly implemented GENIUS Act. The cryptocurrency sector has effectively crystallized into three primary factions, represented by Tether’s USDT, Coinbase-Circle’s USDC, and USD1, which has been introduced by the Trump family. USDT has managed to generate considerable profits through its strategic investments and streamlined operations. In contrast, USDC has earned the confidence of conventional financial institutions thanks to its strong compliance and transparency, even going public. Meanwhile, USD1 has swiftly penetrated the business-to-business payment sector, leveraging its unique background. Each entity employs distinct strategies, fiercely competing for market dominance. Simultaneously, stablecoins are increasingly recognized as vital connectors between traditional finance and blockchain technology, serving as focal points for global enterprises aspiring to innovate in financial technology and payment systems.
In 2025, a myriad of traditional firms have ramped up their strategic initiatives in the stablecoin payment arena. This includes major fintech companies, retail and technology leaders, banks, and other financial institutions, which have collectively contributed to the broadening of stablecoin applications and advancements in compliance. This report by CoinEx Research will provide a thorough examination of stablecoin regulatory frameworks across three key global regions, an in-depth market landscape analysis, and insights into the business models and market sizes of the three leading stablecoins. It will also delve into the strategic activities of traditional businesses within the stablecoin payment sector. Moreover, the report will explore potential future opportunities in the stablecoin domain, examining the driving factors behind its evolution and its role in shaping related industry chains. It aims to highlight the transformative influence of stablecoins as they transition from crypto-centric assets to integral components of global payment infrastructure, thus fueling financial innovation.
Global Stablecoin Regulatory Frameworks Compared: U.S. GENIUS Act, EU MiCA, and Hong Kong Stablecoin Bill
The following table illustrates the fundamental regulatory distinctions and overarching policy implications. There is a noticeable trend among major economies toward harmonizing stablecoin regulations, with a shared emphasis on compliance, transparency, asset reserve integrity, and consumer protection. However, varying financial strategies and market characteristics across jurisdictions lead to differences in specific implementations and regulatory priorities.
U.S. GENIUS Act: Dual Assurance of Dollar Hegemony and Financial Stability Advantages
The GENIUS Act seeks to eliminate the fragmented regulation currently existing at the state level in the U.S. by establishing a cohesive federal framework specifically for stablecoins. This move is anticipated to enhance market certainty and encourage more compliant companies to develop operations within the U.S. By classifying stablecoins as payment methods rather than securities, the Act mitigates potential conflicts with the SEC, thereby facilitating industry growth. The introduction of stringent 1:1 reserve requirements, transparency mandates, and bankruptcy prioritization rules is expected to significantly bolster investor confidence.
Impact on U.S. Treasury Bonds
Under the Act, stablecoin issuers are mandated to back their reserves with high-quality liquid assets, including U.S. Treasury bonds. This requirement is projected to drive substantial demand for U.S. Treasuries, with Treasury Secretary Janet Yellen suggesting that stablecoins could generate up to $2 trillion in additional demand, assisting in deficit financing. This development would create a new support mechanism for the U.S. government’s fiscal strategy, further entrenching the dollar’s status as the world’s reserve currency.
Challenges and Impacts
While the Act excludes stablecoins that generate yields or interest to mitigate speculative risks and avoid categorization as securities, this decision could restrict the innovative applications of stablecoins, particularly in decentralized finance (DeFi). It may also conflict with existing models like USDT, which generates profits through yield mechanisms. Furthermore, the stringent compliance requirements placed on foreign stablecoins, such as USDT, will compel issuers aiming to enter the U.S. market to undergo significant adjustments. The passage of the Act is expected to have far-reaching implications for the global stablecoin market, reinforcing the dollar’s pivotal role in the digital asset ecosystem.
EU MiCA: A Pioneer Prioritizing Compliance and Financial Stability Advantages
The Markets in Crypto-Assets Regulation (MiCA) is recognized as the first comprehensive regulatory framework for crypto-assets globally, providing legal clarity and consistency within the EU’s stablecoin market, which simplifies cross-border operations. Its stringent reserve requirements for “significant stablecoins” (which mandate that at least 60% of reserves be held in EU-regulated banks) aim to bolster financial stability and enhance regulatory oversight over major issuers. Additionally, obligations for transparency, auditing, and whitepapers are intended to safeguard investors.
Direct Impact on Non-Compliant Stablecoins
One of the most significant consequences of MiCA is its requirement for delisting stablecoins that lack proper licenses, such as USDT. Several prominent exchanges have already begun removing USDT from their platforms in the EU to comply with these regulations, which undermines USDT’s market share and influence within the region. This action highlights the EU’s commitment to regulatory compliance and may incentivize more stablecoin issuers to pursue compliant pathways or to introduce euro-pegged stablecoins that align with MiCA standards, like Circle’s EURC, although their current market presence is limited.
Challenges and Impacts
While the focus on stability is commendable, the requirement to hold a majority of reserves in EU banks raises potential concerns regarding systemic risks to the European banking system, particularly if a major stablecoin issuer were to face financial difficulties.
Hong Kong Stablecoin Regulation: Pragmatic Innovation and International Positioning Advantages
Hong Kong’s approach to stablecoin regulation is designed to enhance market standardization and security through a licensing system, high capital thresholds (minimum paid-up capital of HKD 25 million for non-bank entities), and strict reserve requirements. The regulations advocate for independent reserve asset portfolios and regular audits, thereby ensuring user fund safety.
Diversified Pegging Options and Exploration of Application Scenarios
The regulatory framework permits licensed issuers to select various fiat currencies as their peg and mandates that they outline specific commercial applications. For instance, JD.com’s stablecoin initiatives encompass diverse scenarios, including cross-border payments, investment trading, and retail transactions. This approach reflects Hong Kong’s pragmatic and open perspective on stablecoin development, aiming to integrate stablecoins more deeply into the real economy, particularly in business-to-business environments like cross-border payments, while laying the groundwork for future renminbi internationalization. Major players, such as Ant Group, are actively engaging in sandbox testing, indicating industry endorsement of Hong Kong’s regulatory stance. On June 17, JD.com’s Liu Qiangdong expressed the company’s ambition to secure stablecoin licenses across key global currencies to facilitate corporate foreign exchange, targeting a 90% reduction in cross-border payment costs and achieving transaction speeds of under ten seconds.
Challenges and Impacts
The stringent capital and compliance requirements may present obstacles for smaller enterprises, potentially leading to increased market consolidation where only larger institutions with adequate resources can issue stablecoins. Furthermore, it is noteworthy that the current market exhibits a heightened focus on stablecoin payment mechanisms within the Hong Kong stock market and even the A-share market, rather than purely crypto-centric activities. This trend underscores Hong Kong’s commitment to integrating digital assets with traditional financial systems and the real economy, positioning itself as a competitive international regulatory leader in the stablecoin sector.
Stablecoin Market Share & Issuer Business Models in 2025
As of July 2025, the total market capitalization of stablecoins has surpassed $250 billion, with over 90% linked to U.S. dollar assets, showcasing the dollar’s role as the primary value anchor for most stablecoins. A report from Deutsche Bank indicates that the total on-chain settlement volume for stablecoins in 2025 has reached $28 trillion, exceeding the combined transaction volumes of Visa and Mastercard. Among these, USDT and USDC are the clear frontrunners, together representing over 80% of the market share. Although USD1 is still a nascent entrant with a market cap of merely $2.2 billion, its unique issuance context offers potential growth opportunities. Overall, the stablecoin market is progressing toward greater scale.
The strategic direction of traditional enterprises in adopting stablecoin payments
Key Differences and Trend Summary: Financial institutions, such as JPMorgan Chase, are gravitating towards private blockchains like Quorum, while retail giants like Amazon are utilizing cloud services such as AWS Blockchain. Hong Kong firms, including JD.com and ZA Bank, are focusing on compatibility with the Ethereum ecosystem for DeFi integration. Compliance strategies differ, with U.S. enterprises needing to adhere to stringent bank-level requirements under the STABLE Act, while Hong Kong companies leverage sandbox mechanisms for gradual compliance. The application scenarios vary, with payment giants like Ant Group prioritizing cross-border remittances for consumers, retail behemoths like Walmart engaging in closed-loop payments within their ecosystems, and banks like JPMorgan Chase servicing large-scale B-end settlements. All enterprises, with the exception of algorithm-based stablecoins (which are prohibited), collectively adopt a reserve model based on 100% fiat currency or short-term bond collateral, with some, such as ZA Bank, enhancing credibility through added insurance.
Stablecoin Market Structure & Related Data
As of June 4, the total issuance of stablecoins has surpassed $250 billion, encompassing over 250 distinct stablecoins. The market demonstrates a structure characterized by one dominant player (USDT), a strong contender (USDC), and a vibrant diversity of others.
Stablecoin Market Structure:
USDT stands out as the dominant force with an issuance exceeding $150 billion, while USDC has a scale surpassing $60 billion. Both are classified as off-chain stablecoins, collectively commanding nearly 87% of the market share.
Structured/Synthetic-backed:
USDe is notable as it is minted through the deposit of cryptocurrencies into the Ethena protocol in exchange for an equivalent stablecoin. This process simultaneously establishes perpetual short contracts on centralized exchanges to hedge against price volatility of reserve assets.
Overcollateralized Crypto-backed:
DAI and USDS are issued based on DAI through the Sky protocol, with both being redeemable at a 1:1 ratio.
Market Share of Various Stablecoins
Stablecoins can be categorized based on their collateral structure and issuance models. USDT and USDC are fully backed by fiat and issued by centralized entities, with reserves stored in off-chain bank accounts. Conversely, USDe represents a new genre of synthetic stablecoins that utilize on-chain crypto collateral while employing perpetual futures contracts to mitigate volatility, signifying a growing trend towards structured stablecoins aimed at yield and capital efficiency.
Opportunities and Risks in Stablecoin Adoption and Yield Models
1:1 pegged stablecoins are distinct from decentralized alternatives, primarily emphasizing functionality and utility value. To effectively compete with native stablecoins, they must offer compelling use cases that persuade users to switch, such as USDT functioning as an exchange trading pair and USDC as a tool for on-off ramps. This necessitates addressing the reasons users might abandon mainstream stablecoins like USDT, highlighting unique scenarios such as USD1’s MEME Launch or collaborations with Binance for trading pairs. Additionally, providing annualized returns through various channels is crucial, which is an inherent strength of interest-bearing stablecoins. As the variety of stablecoins expands, users will face an increasing array of choices. The growth in stablecoin adoption hinges on the establishment of major channels, creating a cyclical challenge where user adoption can only increase significantly once these channels are firmly in place.
Localization Challenges: Fiat-Crypto Conversion and Payment Sector Opportunities
The primary use case for stablecoins revolves around payments, and issuers universally encounter the challenge of integrating real payment functionalities while complying with the regulations of local financial institutions. Currently, the method of operation involves converting stablecoins into local currencies through on-off ramps for payment purposes. Should major players from the Web2 payment sector like Visa and Mastercard decide to enter the stablecoin market, they could facilitate issuance and settlement processes, thereby enhancing competition. However, these entities cannot circumvent the on/off ramp procedure.
Stablecoin Outlook
The future trajectory of stablecoins will be significantly influenced by their integration into payment scenarios, with large corporations and traditional financial institutions acting as key catalysts for growth and maturation. As the market continues its evolution, stablecoins are anticipated to become integral components of the global payment framework, with their full market potential still largely untapped.
Payment Scenarios: The Growth Ceiling for Stablecoins
The advancement of stablecoins is closely tied to their application in payment scenarios, particularly in cross-border transactions, institutional transfers, and retail payments. USDT, often referred to as a “shadow dollar,” leverages its value anchoring to create a robust network effect, particularly in over-the-counter and exchange markets, reaching areas where compliant stablecoins have yet to establish a foothold. Conversely, USDC, with its superior compliance, is focused on delivering stable fund inflow and outflow services.
Large Corporation Participation: Accelerating Market Explosion
The involvement of major corporations and traditional financial institutions is a pivotal element in propelling the stablecoin market’s further development. Initiatives by companies like PayPal and the participation of industry giants like Facebook, X, Alibaba, and JD.com not only enhance the credibility and stability of the market but also have the potential to attract a substantial influx of new users beyond the existing crypto community. This engagement is expected to catalyze significant market expansion, particularly in payment applications.
Other Types of Stablecoins: Niche Segments with Potential
While stablecoins represent a largely untapped market, competition is primarily concentrated among major players. Traditional firms with robust channels naturally hold a competitive edge, while crypto-native companies must focus on niche segments. Although USDT and USDC dominate the landscape, decentralized stablecoins like DAI and yield-bearing variants like Ethena may still carve out a small share of the market. These alternatives appeal to specific user demographics due to their unique mechanisms, such as decentralization or yield offerings, although their overall market presence is limited by factors like basis compression and arbitrage opportunities stemming from significant capital inflows.
Long-Term Trend: Decoupling from Crypto Cycles, Regulation Driving Mainstream Adoption
The stablecoin market is gradually transitioning away from reliance on short-term fluctuations associated with crypto cycles, moving towards becoming a long-term, sustainable asset class. This shift may result in an increased flow of assets into stablecoins rather than direct investments in other crypto assets. The enhancement of regulatory frameworks, particularly for stablecoins in the U.S. and EU, will further bolster mainstream adoption by fostering a safer and more transparent environment for broader institutional and user engagement.
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