Unified borders for a borderless stablecoin future | Opinion
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Stablecoins have become a key focus in 2025, thanks to supportive institutions and forward-thinking policymakers taking note and pushing regulations forward.
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In an optimistic scenario, global bank Citi predicts this asset class will grow to $3.7 trillion by 2030. Although this is encouraging for the stablecoin market, we must consider how it can be implemented given the ongoing opposition when it comes to financial regulations, driven by the reluctance to adopt digital assets.
Crypto natives are clear on the promising use cases and the importance of adopting stablecoins into our central banking system. However, a lack of clear and unanimous consensus across countries makes it difficult for stablecoin issuers to achieve mainstream adoption, resulting in uncertainty and global friction. Is the rise of this asset class a pipe dream if major financial centres like the United States and Europe struggle to take the right steps to establish clear stablecoin regulations?
Clear frameworks for stablecoins
An important advancement towards the potential for stablecoin market adoption will be the establishment of explicit federal frameworks. The support from regulators will signal a vote of confidence for large financial institutions to follow suit and back the adoption of stablecoins.Â
In a positive move for the United States, the Guiding and Establishing National Innovation for U.S. Stablecoins (GENIUS) Act, which was created on February 4, 2025, passed a procedural vote on May 20, 2025, after previously failing to pass a crucial Senate hurdle. This raises hopes for the establishment of a federal regulatory framework for stablecoins. In June 2024, Markets in Crypto-Assets Regulation was implemented in European markets. MiCA aims to create a unified, transparent regulatory framework while ensuring consumer protection, financial stability, and market integrity.
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Although we are still a little away from a world where stablecoins are widely adopted and regulations across different countries are unified, policy changes to advance clear rules for stablecoin issuers are a step in the right direction. With major financial powers like the EU and the US making moves, it is only a matter of time before other countries follow their lead.
Should USD be the standard?
Regulations are necessary to maintain stablecoins’ financial stability to safeguard consumers and promote innovation. The question then arises of who gets to call the shots and determine regulatory guidelines for this asset class? Today, most stablecoins are USD-based, keeping the US as a key player in this market. However, should stablecoins continue to be backed by the USD or the local currency in light of the developments in regulatory policies in other parts of the world where the USD is not the primary currency?
Currency-based regulation argues that if a stablecoin is pegged to the U.S. dollar, the US Federal Government should have the final say, regardless of where it circulates. Meanwhile, jurisdiction-based regulation, like the EU’s MiCA, says that if a token is used heavily within a region, local authorities have the final say.
This divide impacts issuers by limiting their ability to scale globally. While US issuers continue to face uncertainty, EU issuers will be able to navigate the strict but clear regulations of MiCA. For users, this means fewer stablecoin options, as issuers avoid markets with unclear regulations. USD’s role in global finance could weaken if delays allow euros or other currency-backed stablecoins to gain traction or push issuers to jurisdictions with clearer rules, reducing USD dominance in crypto and global markets.
A workable solution
For stablecoins to grow without needless limitations, the US and EU need widespread and transparent regulations. Instead of competing frameworks, regulators need to work together to create a system that balances oversight and innovation. Rather than forcing a one-size-fits-all global framework, each region should develop policies that work within their financial systems while allowing stablecoins to function globally.
Neither side will be prepared to sacrifice their financial interests, but a world with conflicting frameworks makes stablecoin issuers and users uncertain, discouraging adoption, which will not benefit either side. It can be viewed that the world is not ready for such new ideas, but stablecoins challenge traditional regulatory frameworks and are here to stay. The best way forward is a coordinated approach that considers both the nature of the underlying currency and the markets where stablecoins operate.
Regulators run the risk of losing innovation, escalating competition, and undermining stablecoins’ place in international finance if they are unable to find a balance. However, with the right framework, stablecoins can enhance efficiency, accessibility, and financial inclusion globally. It will no longer be a pipe dream to have a class of international currency that cuts across borders, and the optimistic scenario of $3.7 trillion by 2030 seems far more realistic.
Read more:Beyond the peg: Synthetic dollars are reshaping stablecoins | Opinion
Vincent Chok
Vincent Chokis the CEO at First Digital Group, Asia’s leading digital assets custodian and trust company, which safeguards, advances, and innovates to help clients navigate digital assets, as well as benefit from trusted next-generation financial services. An experienced executive, prior to founding First Digital Trust in 2017, Vincent served as CEO of Legacy Trust Company, a traditional financial services firm, and previously managed mortgage financing and raised capital for commercial real estate in the Canadian Exempt Securities market.
2025-06-03 18:18:07
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