Stablecoins, a type of cryptocurrency designed to maintain stable value, have made significant progress over the past decade and are playing an increasingly vital role in cross-border payments, decentralized finance (DeFi), value storage, and other areas. As market demand continues to grow, countries worldwide are reassessing their stance on stablecoins and placing greater emphasis on their compliance.

This article will delve into the current development of the stablecoin market, major countries’ attitudes towards stablecoins, and briefly review the compliant stablecoin projects currently available for reference.

Overview of Stablecoins

The cryptocurrency market is known for its high volatility. To counteract and reduce this volatility while still retaining the advantages of cryptocurrencies—such as global accessibility and fast transactions—stablecoins were developed. Their value is typically pegged to a fiat currency (such as the US dollar) or other valuable assets (such as gold or oil) to ensure price stability.

Based on their mechanisms for maintaining price stability, stablecoins are generally divided into four main categories: fiat-backed, crypto-backed, algorithmic, and commodity-backed. Fiat-backed stablecoins dominate the market.

Tether issued the first stablecoin, USDT, in 2014. Over the past decade, the stablecoin market has seen explosive growth. According to data from DeFiLlama, the total market value of stablecoins has now surpassed $206 billion, with USDT leading the market with a 66.69% market share. Following behind are USDC, USDe, and DAI, with market values of $45.7 billion, $5.8 billion, and $4.4 billion, respectively.

Source: DeFiLlama

Most stablecoins, such as USDT, USDC, and TUSD, support multiple blockchains, while a few, like USR, DEUSD, and USDB, currently support only a single blockchain. Among all blockchains, the largest concentration of stablecoins is found on the Ethereum network, with a market capitalization of $113.4 billion, representing nearly half of the total market. Following Ethereum are Tron, BNBChain, Solana, and Arbitrum, with market values of $59.2 billion, $6.9 billion, $5.9 billion, and $3.8 billion, respectively.

Attitudes of Major Countries Toward Stablecoins

The rapid development of the stablecoin market, particularly its widespread adoption in cross-border payments and financial innovation, has garnered significant attention from regulatory authorities worldwide. Over the past few years, countries and regions like the United States, Europe, Singapore, Japan, and Hong Kong have introduced relevant policies and regulations to standardize the stablecoin market further and create a healthier environment for participants.

United States

Currently, the United States does not have a specific federal law governing stablecoins. However, agencies such as the SEC (Securities and Exchange Commission) and CFTC (Commodity Futures Trading Commission) have been intensifying their regulatory oversight. For instance, in February 2023, the SEC declared that BUSD was an unregistered security and planned to sue its issuer, Paxos, with potential enforcement actions. In November of the same year, PayPal was also subpoenaed by the SEC regarding its newly launched USD-pegged stablecoin, PYUSD.

In addition, the regulatory approach to stablecoins varies across U.S. states. Some states have mandated that stablecoin issuers obtain compliance-based crypto currency licenses. Examples include the Money Transmitter License for financial services and the BitLicense, which was introduced by the New York Department of Financial Services (NYDFS).

Europe

Europe’s stablecoin regulatory framework is primarily based on the Markets in Crypto-Assets Regulation (MiCA), which was proposed in September 2020, approved by the EU Council in April 2023, and will come into effect on June 30, 2024. Full implementation is set for December 30, 2024.

In summary, MiCA classifies stablecoins into two categories: Asset-Referenced Tokens (ART) and Electronic Money Tokens (EMT). ART refers to stablecoins backed by a basket of assets, while EMT refers to stablecoins pegged 1:1 to fiat currencies. This distinction means that algorithmic stablecoins, which lack physical backing and rely on market mechanisms to maintain value, are completely banned under MiCA. Additionally, MiCA outlines issuance requirements for stablecoins, including institutional licensing, asset reserves, and information disclosure.

In practice, the official implementation of MiCA has significantly impacted the current stablecoin market. For instance, since USDT (Tether) does not yet meet MiCA’s full set of requirements, prominent exchange Coinbase decided to delist USDT in Europe temporarily. It will reassess the situation before deciding whether to relist it. Meanwhile, stablecoins that comply with MiCA’s regulations, such as EURC issued by Circle and EURCV issued by Société Générale, are more likely to be promoted and adopted.

However, MiCA provides an 18-month transition period, meaning that stablecoins like USDT must meet compliance requirements by June 30, 2026, to continue operating in the European market.

Singapore

Singapore has a clear regulatory framework for stablecoins. In 2019, the authorities passed the Payment Services Act (PSA), classifying stablecoins as digital payment tokens. In August 2023, the regulatory guidelines were finalized, requiring stablecoin issuers to obtain a license from the Monetary Authority of Singapore (MAS). These issuers must maintain a 1:1 asset reserve and regularly disclose their reserve status, among other requirements.

Notably, StraitsX, a digital asset payment infrastructure, has already received preliminary approval from the MAS to issue a Singapore Dollar-backed stablecoin, XSGD, which will be launched on the Hedera network. In November 2024, Paxos also partnered with DBS Bank to launch a Singapore-compliant stablecoin, Global Dollar (USDG).

Japan

Japan’s regulatory approach to stablecoins is mainly based on the Payment Services Act (PSA), revised in June 2022 and officially implemented in June 2023. The law categorizes fiat-backed stablecoins as Electronic Payment Instruments (EPI) and limits stablecoin issuers to three types of institutions: banks, registered money transfer agents, and trust companies. Additionally, entities wishing to engage in stablecoin-related activities in Japan must register as Electronic Payment Instrument Service Providers (EPISP) and obtain the relevant licenses.

Hong Kong

According to the latest developments, the Hong Kong government has submitted the Stablecoin Bill to the Legislative Council for its first reading. It will be formally enacted into law if it passes all three readings. The bill primarily addresses stablecoin issuer licenses and requirements, marketing restrictions, and broader consumer protections. For instance, stablecoin issuers in Hong Kong must obtain approval from the Hong Kong Monetary Authority (HKMA), which acts as the central bank of the Special Administrative Region.

Meanwhile, the HKMA is also steadily advancing its Stablecoin Issuer Sandbox Program, with institutions such as JD Coin Chain Technology, Standard Chartered (Hong Kong), and ANX Group becoming some of the first participants.

Overall, based on the current attitudes of regulatory bodies in different countries, there has been a shift from cautious observation to active regulation. By managing and supervising details such as asset reserves and information disclosure from stablecoin issuers, regulators aim to standardize the market environment further, better protect consumer interests, and ensure financial stability. The gradual compliance of stablecoins will also significantly contribute to the healthy development of the broader cryptocurrency market.

Which Stablecoins are Compliant?

Regulatory policies across different countries are still evolving, and more targeted regulations are expected to be introduced. According to incomplete statistics, the following are currently the main compliant stablecoins:

US Dollar-Pegged Stablecoins

USD Coin (USDC)

USDC is jointly issued by Coinbase and Circle. Coinbase strongly emphasizes compliance and has obtained operational licenses from authorities such as the SEC (U.S. Securities and Exchange Commission) and the FCA (Financial Conduct Authority) in the UK. Circle also holds multiple compliance licenses, including virtual currency licenses from New York State and Louisiana and relevant international licenses from jurisdictions such as Singapore, the UK, and Bermuda.

Source: circle.com

USDC is 100% backed by cash and highly liquid cash-equivalent assets, ensuring it can always be redeemed at a 1:1 ratio with USD. Additionally, USDC is highly transparent, undergoes regular independent audits, and publishes relevant reports periodically. As of now, USDC’s circulating market value exceeds $45 billion, making it the second-largest stablecoin, just behind USDT. USDC is primarily circulated on the Ethereum network, accounting for 64.67% of its market share, followed by Solana and Base with 10.54% and 7.47%, respectively.

Binance-Pegged BUSD (BUSD)

BUSD is issued by the trust company Paxos, with branding and support from the exchange Binance, and has been approved by NYDFS (New York Department of Financial Services). BUSD is pegged 1:1 to the US dollar and undergoes regular audits and reporting. It’s important to note that since February 2023, Paxos has ceased issuing new BUSD tokens, and users can convert their BUSD into USD or exchange them for USDP.

Currently, BUSD has a circulating market value of about $300 million, with 98.73% of it circulating on the BNBChain.

Global Dollar (USDG)

USDG is a collaboration between Paxos and DBS Bank and is backed by a 1:1 USD reserve. The reserve comprises USD deposits, short-term U.S. government bonds, and other cash equivalents. USDG received MAS (Monetary Authority of Singapore) approval in July 2024 and initially operates on the Ethereum network, with plans to launch on other MAS-approved blockchains in the future.

Lift Dollar (USDL)

USDL is issued by Paxos on the Ethereum network and is regulated by the Abu Dhabi Global Market (ADGM) Financial Services Regulatory Authority (FSRA). The reserves of USDL consist of cash and cash equivalents, and users can always redeem it 1:1 for USD. Monthly audit reports are published.

What sets USDL apart from other stablecoins is its yield-bearing feature. The income generated from its cash and cash-equivalent reserves is distributed to eligible holders. Currently, USDL offers an APY (Annual Percentage Yield) of 3.8%, though this is not available in the U.S., EU, or Canada.

Pax Dollar (USDP)

USDP is issued by Paxos and complies with NYDFS regulatory requirements. It is pegged 1:1 to the USD, with its reserves fully backed by cash and cash equivalents, and periodic audit reports are issued.

Currently, USDP is circulated on the Ethereum and Solana networks. The circulating market value on Ethereum is approximately $93.12 million, while the circulating market value on Solana is about $450,000.

PayPal USD (PYUSD)

PYUSD is issued through a partnership between Paxos and PayPal and is designed specifically for payments. It complies with NYDFS regulatory requirements. The reserves for PYUSD are 100% backed by USD deposits, U.S. Treasury bonds, and cash equivalents, with a 1:1 peg to the USD.

Source: paypal.com

PYUSD is circulating on the Ethereum and Solana networks, with Ethereum being the primary network. The issuance volume is approximately $353 million, and the circulating market value on Solana is around $169 million. Institutions and users can purchase, sell, hold, or transfer PayPal USD (PYUSD) directly on PayPal, while developers can also use the Paxos API to purchase.

Gemini Dollar (GUSD)

GUSD is issued by Gemini Trust Company and has been approved by the NYDFS. GUSD is pegged 1:1 to the US dollar and is 100% backed by cash or cash-equivalents held in bank accounts, money market funds, and U.S. Treasury bills. Proof of reserves is published monthly by the independent auditing firm BPM LLP.

GUSD currently circulates only on the Ethereum network. According to the latest data, GUSD’s circulating market value is approximately $58.57 million, with 20,036 addresses holding it. The top 100 addresses account for 89.45% of the total supply.

Euro-Pegged Stablecoins

EURC

EURC is issued by Circle and is pegged 1:1 to the Euro. It complies with the MiCA (Markets in Crypto-Assets Regulation) standards. EURC follows a full reserve model and publishes proof of reserves every month.

Source: circle.com

EURC supports multiple blockchain networks. The latest data shows that EURC has a market value of approximately €85.89 million, with the majority circulating on the Ethereum, Solana, and Base networks, accounting for 34.83%, 33.34%, and 28.34%, respectively. Due to its compliance with the MiCA standards, EURC has become the largest euro-pegged stablecoin by market value.

EUR CoinVertible (EURCV)

EURCV is issued by Société Générale (a French bank) and has received the ACPR (Autorité de Contrôle Prudentiel et de Résolution) electronic money institution license, meeting the MiCA standards. EURCV is fully backed by cash deposits.

Currently, EURCV circulates only on the Ethereum network, with a circulating market value of about €39.86 million. However, the number of addresses holding EURCV is only 37.

Eurite (EURI)

EURI is issued by Banking Circle S.A. and is authorized as a credit institution under the supervision of the Luxembourg Financial Supervisory Authority (CSSF), meeting the MiCA regulatory requirements. EURI is pegged 1:1 to the euro and fully backed by euro-denominated cash reserves, with regular audits.

EURI currently circulates on both the Ethereum and BNBChain networks, and users can redeem it for free.

Quantoz EURD (EURD) / Quantoz EURQ (EURQ)

Both EURD and EURQ are issued by Quantoz Payments, a payments subsidiary of the Dutch blockchain company Quantoz. Quantoz Payments is licensed as an electronic money institution (EMI) under the supervision of the Dutch National Bank and complies with the MiCA regulations.

EURD and EURQ are pegged 1:1 to the euro and fully backed by fiat reserves and government bonds. EURD currently operates exclusively on the Algorand network, with a circulating market value of approximately $940,000. EURQ is only issued on the Ethereum network and has a market value of about $1.54 million.

Yen-Pegged Stablecoins

So far, no company has completed the EPISP (Electronic Payment Instrument Service Provider) registration in Japan, which means that no fully compliant yen-pegged stablecoin can circulate domestically. However, there are some yen-pegged stablecoin projects worth noting:

JPY Coin (JPYC)

JPYC is issued by the Japanese company JPYC Inc. and is currently classified as a prepaid payment instrument, not as a stablecoin. JPYC is always fully backed by yen reserves and can be redeemed 1:1 for Japanese yen. Users can use JPYC to redeem items such as V-Preca gift cards and other everyday goods. It is reported that JPYC is in the process of applying for licenses for fund transfer services and electronic payment tool exchange services.

JPYC supports multiple blockchains, including Ethereum, Polygon, Gnosis, Shiden, Avalanche, and Astar. According to data, JPYC has the largest issuance on Polygon, with a circulating market value of about $13.35 million and 7,859 holding addresses. Ethereum follows with a circulating market value of around $620,000 and 395 holding addresses.

GMO Japanese Yen (GYEN)

GYEN is issued by GMO Trust, a subsidiary of the Japanese internet giant GMO Group, and complies with NYDFS (New York Department of Financial Services) regulations. However, it is important to note that GYEN does not comply with Japanese domestic regulations and cannot circulate within Japan.

GYEN is 100% backed by yen reserves and is pegged 1:1 to the yen. It is regularly audited, and reports are published. GYEN supports multiple blockchains, with a total circulating market value of approximately $9.5 million, most of which circulates on the Ethereum network, accounting for 92.37%, followed by Stellar at 6.55%.

Source: DeFiLlama

While there are several compliant stablecoin projects, many of the most widely adopted ones still need more effort to meet regulatory standards. Although regulatory compliance for stablecoins is steadily progressing, only a small number of stablecoins in the top market cap rankings, such as USDT, USDe, DAI, and USDS, have fully complied with regulations. Further steps will be required for these stablecoin projects to meet the global regulatory framework.

Conclusion

Compliance has always been a key development direction for the cryptocurrency industry. As the industry continues to expand, whether a project can meet regulatory requirements largely determines its market acceptance and real-world application, and stablecoins are no exception.

Overall, regulatory policies for stablecoins are being systematically discussed in various countries. While the existing regulations impose relatively strict requirements, they provide tangible protections for consumer rights, which will be more favorable for the industry’s sustainable development and broader adoption. While awaiting the introduction of more regulations, users should still closely monitor relevant regulatory developments and potential risks when using these stablecoins.