Stablecoins have become one of the most durable pillars of the crypto ecosystem at a moment when much of the market has struggled. While speculative digital assets have swung sharply with investor sentiment, demand for dollar backed stablecoins has remained strong. Traders and institutions have consistently moved capital into these tokens when volatility rises, viewing them as predictable and cash like. What makes this moment different is that stablecoins are no longer operating in a gray zone. Clear rules are finally arriving, and they are reshaping how stablecoins will function inside the financial system, both in the United States and around the world.
This shift marks a turning point. Stablecoins are moving from loosely governed crypto tools into regulated financial instruments. With that transition comes a new competitive landscape, new expectations for issuers, and a growing role in domestic payments and international trade.
What a Stablecoin Is and Why It Exists
A stablecoin is a type of cryptocurrency designed to maintain a stable value by being backed by reserves tied to a fiat currency, most commonly the U.S. dollar. Each token is intended to be redeemable one to one for dollars or dollar equivalent assets. This structure allows stablecoins to function as digital cash, offering the speed and programmability of blockchain technology without the price swings seen in other cryptocurrencies.
Stablecoins first emerged in 2014. BitUSD was tethered to Bitcoin, while Tether launched with a direct peg to the U.S. dollar. That launch marked the first real connection between crypto markets and traditional money. Over time, stablecoins became the primary settlement layer for crypto trading and a practical tool for cross border payments, especially in countries with volatile local currencies or weak banking infrastructure.
For years, adoption outpaced regulation. Stablecoins grew quickly, but the rules governing reserves, disclosures, and oversight were unclear. That uncertainty kept many banks and large institutions on the sidelines.
A Defining Moment for U.S. Policy
That uncertainty is now fading. The United States has taken its most decisive steps yet to define how stablecoins must operate.
The GENIUS Act creates a federal framework for issuing dollar backed stablecoins. It requires full one hundred percent backing with cash or high quality liquid assets, bans the reuse of reserves for risk taking activities, and mandates monthly disclosures verified by independent auditors. These requirements are designed to prioritize safety and transparency over yield.
At the same time, the CLARITY Act defines regulatory boundaries for digital assets and prevents securities regulators from asserting authority where it does not apply. In addition, Congress voted to rescind SAB 121, an accounting bulletin that had made it impractical for U.S. banks to custody digital assets.
Together, these actions represent what CertiK describes as the end of broad principles and the beginning of enforceable oversight. CertiK CEO Prof. Ronghui Gu said, “The new U.S. stablecoin framework moves the sector past broad principles and into bank level expectations.” He added that issuers who succeed will be those “already operating with mature, institutional grade infrastructure, particularly around reserves and transparency.”
Gu also emphasized that the rules fundamentally change the business model for many issuers. “The requirements shift the model toward safety over yield,” he said, noting that strict reserve controls and independent audits mirror traditional financial institutions rather than crypto startups.
Banks Step Back In
With clearer rules in place, banks are beginning to engage directly. The Federal Deposit Insurance Corp. has issued a proposed rule outlining how FDIC supervised banks can apply to issue payment stablecoins through subsidiaries under the GENIUS Act. Under the proposal, applications would be automatically approved after 120 days if regulators take no action.
Acting FDIC Chair Travis Hill said the agency will continue issuing implementing regulations, including capital and liquidity standards for stablecoin issuance. This signals that stablecoins are being integrated into the banking system rather than treated as an external experiment.
Bank of America expects this process to unfold over several years. In a recent report, the firm said faster stablecoin rules and bank charters are pulling crypto into the regulated system and pushing banks toward an onchain future. Analysts pointed to conditional approvals from the Office of the Comptroller of the Currency and noted that the Federal Reserve and FDIC are working on coordinated standards.
According to the report, this could lead to payments, deposits, and even securities transactions migrating onto blockchain infrastructure.
A Global Divide in Stablecoin Rules
While the United States is embracing stablecoins as a strategic asset, other regions are taking different paths. Four major regulatory frameworks now shape the global stablecoin landscape: the GENIUS Act in the United States, MiCA in Europe, VARA in Dubai, and MAS in Singapore.
MiCA places caps on stablecoin issuance and requires a significant share of reserves to be held as bank deposits. It also bans interest payments, reflecting Europe’s focus on protecting euro monetary sovereignty. GENIUS also bans interest and restricts long maturity bonds but allows broader scaling. Dubai and Singapore take more flexible approaches and may allow interest payments under certain conditions.
CertiK argues that these differences will reshape global liquidity. Gu said, “We are entering a phase where U.S. and EU frameworks are taking distinctly different paths. The U.S. federal regime positions USD backed stablecoins as a strategic asset. Meanwhile, MiCA is built around protecting Euro monetary sovereignty.”
The result is a two track world. Global issuers must build separate reserve models, custody structures, and compliance systems to operate across regions. Only the most well capitalized issuers will be able to scale globally without sacrificing liquidity or resilience.
Regulation Shifts the Competitive Battle
As regulatory uncertainty fades, a new challenge takes its place. Operational and security maturity are becoming the main points of competition.
The GENIUS Act requires on chain role based access controls, including lawful freezing mechanisms supported by hardware security modules and multi signature governance. Issuers must ensure that no single compromised operator can freeze or drain assets. Beyond that, regulators expect alignment with cybersecurity standards like the NIST Cybersecurity Framework and New York’s Part 500 rules.
Issuers must also meet AML and sanctions requirements that include automated screening, clustering analytics, and cross chain monitoring. CertiK describes this infrastructure as non optional in a regulated environment.
“As regulatory uncertainty recedes, the competitive frontier becomes operational,” Gu said. “The most underestimated challenges sit at the infrastructure layer.”
Why Visa Is Expanding Its Role
This new environment helps explain why Visa has launched a Stablecoins Advisory Practice. The company is helping banks, fintechs, and businesses decide whether stablecoins fit their strategy and how to implement them safely.
“Helping our clients grow is frankly the reason we exist in stablecoin,” said Carl Rutstein, global head of Visa Consulting and Analytics. He explained that clients come to Visa with questions about strategy, technology, and operations.
Visa’s advisory already has dozens of clients, including Navy Federal Credit Union and VyStar. Common use cases include cross border payments, particularly in countries with volatile currencies, and business to business transactions. Rutstein said some clients move forward after the advisory process, while others decide stablecoins are not yet necessary.
Visa expects the practice to grow significantly. The company is already deeply involved in the space, having piloted stablecoin settlement using USDC in 2023. Visa supports more than 130 stablecoin linked card programs across 40 countries and processes about $3.5 billion in annualized stablecoin settlement volume.
Matt Freeman, senior vice president at Navy Federal Credit Union, said stablecoins “may represent an opportunity to enhance speed and lower cost in payments,” especially for its 15 million members worldwide.
Stablecoins are entering a new phase. They are no longer defined by regulatory uncertainty but by regulatory expectations. The United States now has a functioning rulebook. Europe, Asia, and the Middle East have their own. The competition is no longer about avoiding oversight but about thriving under it.
As CertiK’s analysis makes clear, regulatory clarity does not level the playing field. It tilts it toward issuers that can meet institutional standards for transparency, security, and compliance. The next wave of growth will belong to those who treat stablecoins not as experimental crypto products, but as core financial instruments built for a regulated global economy.
