Interpretation of the US stablecoin legislation STABLE Act, on-chain dollar "hegemony"?

Author of this article: Iris, Lawyer Mankun

Over the past few decades, the global dominance of the US dollar has relied on the evolutionary mechanism of the "Bretton Woods System - Petrodollar - US Treasury Bonds + Swift System". However, entering the Web3 era, decentralized financial technology is gradually shaking the traditional clearing and payment pathways, and stablecoins pegged to the US dollar are quietly becoming a new tool for "dollar outbound".

In this context, the significance of stablecoins has long transcended the compliance of a single cryptocurrency asset; it may very well be the digital vessel for the continuation of "dollar hegemony" in the Web3 era.

On March 26, 2025, the U.S. Congress officially introduced the STABLE Act (Stablecoin Transparency and Accountability for a Better Ledger Economy Act), which systematically establishes the issuance thresholds, regulatory framework, and circulation boundaries for U.S. dollar stablecoins for the first time. As of now, the bill has been reviewed by the House Financial Services Committee on April 2 and awaits voting approval from both the House and Senate to officially become law. This not only responds to the long-term regulatory vacuum in the stablecoin market but may also be a key step in attempting to build the infrastructure for the next generation of U.S. dollar payment networks.

So, what problems does this new bill actually aim to address? Does the difference from MiCA reflect the United States' "institutional strategy"? Is it also paving the way for Web3 dollar hegemony?

These questions will be shared one by one by Attorney Mankun in this article.

What kind of USD stablecoin does the STABLE Act aim to establish?

According to the document, the newly introduced stablecoin legislation seeks to establish a clear compliance framework specifically applicable to "Payment Stablecoins". We have distilled its five core points:

1. Clarify regulatory targets, focusing on "payment stablecoins"

The first step of the STABLE Act is to clarify the core regulatory targets: US dollar-pegged stablecoins that are issued to the public and can be used directly for payments and settlements. In other words, what is truly included in the regulatory framework are the crypto assets that are used as "dollar substitutes" on-chain, rather than all tokens that claim to be pegged to the dollar.

To avoid the spread of risks, the bill explicitly excludes certain high-risk or structurally unstable token models. For example, algorithmic stablecoins, partially collateralized stablecoins, or “pseudo-stablecoins” with speculative attributes and complex circulation mechanisms are not within the scope of this bill. Only stablecoins that achieve full backing by 1:1 dollar assets, have a transparent reserve structure, and are intended for public daily trading and circulation are considered "payment stablecoins" and are subject to regulatory arrangements under this bill.

From this perspective, the STABLE Act is not truly focused on the "technical carrier" of stablecoins, but rather on whether it is building a "payment network on the dollar chain." What it aims to regulate is the issuance method and operational basis of the "digital dollar," rather than all tokens that bear the USD label.

2. Establish a "redemption right" mechanism, 1:1 dollar peg

In addition to regulatory access thresholds and issuer qualification requirements, the STABLE Act particularly emphasizes the arrangement of "redemption rights" for holders of stablecoins, meaning that the public has the right to redeem their stablecoins for fiat currency in US dollars at a 1:1 ratio, and the issuer must fulfill this obligation at all times. This institutional arrangement is essentially to ensure that stablecoins do not become "pseudo-anchored assets" or "internally circulating system tokens."

At the same time, to prevent liquidity crises or bank run risks, the bill also establishes clear asset reserve and liquidity management requirements. Issuers must hold high-quality, liquid dollar assets (such as government bonds, cash, central bank deposits, etc.) at a 1:1 ratio and are subject to continuous scrutiny by the Federal Reserve. This means that stablecoin issuers cannot "use customer funds to invest in high-risk assets," nor can they achieve "pegging" through algorithms or other derivative structures.

Compared to some earlier stablecoin models on the market that had "partial reserves" and "ambiguous disclosures," the STABLE Act writes "1:1 redeemable" into federal legislation, representing a higher requirement from the United States for the underlying credit mechanism of "digital dollar alternatives."

This not only addresses public concerns about stablecoins being "unpegged" or "collapsing," but also aims to create a system of institutional guarantees and legal trust as a benchmark system for US dollar stablecoins, to support their long-term use in the global settlement network.

3. Strengthen capital and reserve supervision to avoid "trust vacuum".

Based on the principle that "stablecoins must be redeemable 1:1," the STABLE Act further clarifies the types of reserve assets, management methods, and auditing mechanisms, intending to control risks from the source and avoid the hidden dangers of "superficial anchoring and actual idleness."

Specifically, the bill requires all payment stablecoin issuers:

• Must hold an equivalent amount of "High-Quality Liquid Assets" (HQLA), including cash, short-term U.S. Treasury bonds, deposits in Federal Reserve accounts, etc., to ensure user redemption requests are met;
• Reserve assets must not be used for lending, investment, or other purposes, to prevent systemic risk arising from "using reserve funds for profit";
• Regularly accept independent audit and regulatory reporting obligations, including reserve transparency disclosure, risk exposure reports, and asset portfolio descriptions, to ensure that both the public and regulatory agencies can understand the asset base behind the stablecoin;
• Reserve assets must be stored separately in accounts at FDIC-insured banks or other compliant custodial institutions to prevent the project party from mixing them into their own fund pool.

This institutional arrangement aims to ensure that the "anchor" truly exists, is auditable, and can be fully redeemed, rather than being merely "anchored in words and inflated on the chain." Historical experience shows that the stablecoin market has repeatedly faced credit crises due to inadequate reserves, misappropriation of funds, or lack of information disclosure. The STABLE Act aims to close these risk gaps at the institutional level, reinforcing the "institutional backing" of the dollar anchor.

Based on this, the bill also grants the Federal Reserve, the Treasury, and designated regulatory agencies long-term supervisory authority over reserve management, including intervention measures such as freezing non-compliant accounts, suspending issuance rights, and enforcing redemptions, thereby forming a relatively complete credit loop for stablecoins.

4. Establish the "registration system", all issuers included in supervision

The STABLE Act, in terms of regulatory pathway design, does not adopt a "license classification management" approach, but instead establishes a unified registration system for access. The core point is that all institutions intending to issue payment stablecoins, whether or not they are banks, must register with the Federal Reserve and undergo federal-level regulatory scrutiny.

The bill establishes two types of legal issuer pathways: first, insured depository institutions that are regulated by federal or state authorities can directly apply to issue payment stablecoins; second, nondepository trust institutions can also register as stablecoin issuers as long as they meet the prudential requirements set by the Federal Reserve.

The bill also emphasizes that the Federal Reserve not only has the authority to approve registrations but can also deny or revoke registrations if it believes there is systemic risk. Additionally, the Federal Reserve is granted the ongoing authority to review the reserve structures, solvency, capital ratios, risk management policies, and other aspects of all issuers.

This means that in the future, the issuance of all dollar-pegged stablecoins must be included in the federal regulatory network, and it will no longer be allowed to bypass scrutiny through methods such as "only registered in the state" or "technology neutrality."

Compared to the previously more relaxed multi-path discussion schemes (such as the GENIUS Act allowing state-level regulation to start), the STABLE Act clearly demonstrates a stronger regulatory uniformity and federal leadership, attempting to establish the legal boundaries of dollar stablecoins with a "national registration regulatory system."

5. Establish a federal-level licensing mechanism to clarify diverse regulatory pathways.

The STABLE Act also establishes a federal-level licensing system for stablecoin issuance and provides diversified compliance pathways for different types of issuers. This system arrangement not only continues the "federal-state dual track" structure of the U.S. financial regulatory system but also responds to the market's expectations for flexibility in compliance thresholds.

The bill sets three optional paths for the issuance of "payment stablecoins":

• First, become a federally recognized National Payment Stablecoin Issuer, directly supervised and licensed by U.S. federal banking regulators (such as the OCC, FDIC, etc.);
• Second, issuing stablecoins as a licensed savings bank or commercial bank can enjoy a higher level of trust endorsement, but must comply with traditional banking capital and risk control requirements;
• Third, operate on the basis of state-level licensing, but must accept federal-level "registration + supervision" and meet unified standards for reserves, transparency, anti-money laundering, etc.

The intention behind this system design is to encourage stablecoin issuers to "register on the chain" in accordance with the law, bringing them into the scope of financial regulation, but not enforcing a one-size-fits-all banking approach, thus achieving risk control while protecting innovation.

In addition, the STABLE Act also grants the Federal Reserve (FED) and the Treasury Department broader coordination powers to impose additional requirements on the issuance, custody, and trading of stablecoins based on the level of systemic risk or policy needs.

In short, this system creates a multi-layered, multi-path, and scalable regulatory compliance network for stablecoins in the United States, which not only enhances the resilience of the system but also provides a unified institutional foundation for stablecoins going abroad.

Compared to MiCA, the United States has taken a different route

In the global stablecoin regulatory race, the European Union is the region that started earliest and has the most complete framework. The "MiCA Regulation," which officially came into effect in 2023, includes all asset-backed crypto tokens under regulatory oversight through two types: "EMT" (Electronic Money Tokens) and "ART" (Asset-Referenced Tokens). It emphasizes macroprudential oversight and financial stability, aiming to build a "firewall" in the digital financial transformation.

However, the U.S. STABLE Act clearly chooses a different path: it does not aim to comprehensively regulate all stablecoins, nor does it build an all-encompassing regulatory framework from the perspective of financial risks, but rather focuses on the core scenario of "payment stablecoins" and seeks to construct the next-generation payment network on the dollar chain in an institutional manner.

The underlying logic of this "selective legislation" is not complicated - the US dollar does not need to dominate the stablecoin world; it just needs to solidify the most critical scenario: cross-border payments, on-chain transactions, and global circulation of the US dollar.

This is also why the STABLE Act does not attempt to establish a comprehensive asset regulatory system similar to MiCA, but instead focuses on a "on-chain dollar" that is 1:1 backed by the dollar, has actual payment functionality, and is acceptable for widespread public holding and use.

![Interpretation of the US Stablecoin Bill STABLE Act, on-chain dollar "hegemony"?]###https://img.gateio.im/social/moments-17c8d2615c8f51e296f71291d9f7b4a1(

From the perspective of institutional design, the two present a stark contrast:

• Different regulatory scopes: MiCA attempts to "cover all bases," almost encompassing all stablecoin models, including those with extremely high risk associated with reference asset products; while the US STABLE Act actively narrows the scope of application, focusing only on assets that are truly used for payments and can represent the "dollar function."
• Different regulatory objectives: The EU emphasizes financial order, systemic stability, and consumer protection, while the US focuses more on clearly defining which assets can serve as a legal form of "on-chain dollars" through legislation, thereby constructing a dollar payment infrastructure at the institutional level.
• Different issuing entities: MiCA requires stablecoins to be issued by regulated electronic money institutions or trust companies, effectively locking the entry into the financial institution system; whereas the STABLE Act establishes a "new licensing mechanism" that allows non-bank entities, after compliance review, to legally participate in the issuance of stablecoins, thereby preserving the possibility of Web3 entrepreneurship and innovation.
• Different reserve mechanisms: The United States requires 100% cash in USD or short-term government bonds, strictly excluding any leverage or illiquid assets; the European Union allows various forms of assets including bank deposits and bonds, which also reflects the differing levels of rigor in regulatory thinking.
• Different adaptability to Web3 entrepreneurship: MiCA creates a higher barrier for crypto startups due to its heavy reliance on traditional financial licenses and auditing processes; whereas the U.S. STABLE Act, although it has strict requirements, leaves room for innovation in its framework, aiming to encourage the development of "on-chain dollars" through compliance standards.

In short, what the United States has adopted is not a route of "comprehensive regulation," but a system path that selects "dollar payment qualified assets" through compliance licenses. This not only reflects the change in the United States' acceptance of Web3 technology but also serves as a "digital extension" of its global currency strategy.

This is also why we say that the STABLE Act is not merely a financial regulatory tool, but the beginning of the institutionalization of the digital dollar system.

) Mankun Lawyer Summary

"Making the US dollar the benchmark unit for global Web3" may be the true strategic intent behind the "STABLE Act".

The U.S. government is trying to build a "next-generation digital dollar network" through stablecoins, which can be programmatically recognized, audited, and integrated, in order to comprehensively lay out the underlying protocols for Web3 payments.

It may not be perfect, but it is important enough at the moment.

It is worth mentioning that at the international level, the IMF's 2024 edition of the "Balance of Payments Manual" (BPM7) includes stablecoins for the first time in the international asset statistical system and emphasizes their new role in cross-border payments and global financial flows. This not only lays the foundation for the "global institutional legitimacy" of stablecoin sovereign compliance but also provides institutional support and external recognition for the United States to construct a stablecoin regulatory system and strengthen the significance of the dollar peg.

It can be said that the institutional acceptance of stablecoins globally is becoming a prelude to sovereign competition in the era of digital currency.

As observed by attorney Mankin: the compliance narrative of Web3 is ultimately a race for institutional development, and the dollar stablecoin is the most meaningful battleground in this competition.