The hopes for a lightning-speed establishment of the Strategic Bitcoin reserve were high. However, it is the stablecoins regulation that becomes a dominant narrative in the high-profile crypto discussions. While the government is working on the legal framework, not everyone in the crypto community understands well how they can capitalize off stablecoins.
The U.S. is not going to develop a local CBDC, but the officials are already working on the regulation of the stablecoins pegged to the American dollar. On Feb. 6, 2025, Financial Services Committee Chairman French Hill and Digital Assets, Financial Technology, and Artificial Intelligence Subcommittee Chairman Bryan Steil introduced a discussion draft of a bill that will regulate the issuance and operation of the USD-pegged stablecoins.
While not everyone agrees that the Strategic Bitcoin reserve is going to strengthen the American dollar in the global arena, Steil believes that properly regulated stablecoins will do this. According to Steil, clear regulations will “bolster the U.S. dollar’s position as the world’s reserve currency and protect consumers and investors.”
Senate Banking Committee Chairman Tim Scott outlined another important benefit of stablecoins–namely, financial inclusion. Through the expansion of the USD-pegged stablecoins, the American dollar value can reach countries with a high unbanked population or weak local currencies. None other than Sen.
The new bill is not the first effort aimed at regulating stablecoins in the U.S. The previous effort is known as the Clarity for Payment Stablecoin Act of 2023, however, it is different from the bill discussed these days.
On top of this bill, there is a bipartisan bill introduced by the Senate team that includes an author of the Bitcoin reserve proposal, sen. Cynthia Lummis. The bill is called Guiding and Establishing National Innovation for U.S. Stablecoins, or GENIUS Act. It regulates stablecoins with a market cap exceeding $10 billion.
The new bill is called Stablecoin Transparency and Accountability for a Better Ledger Economy, or STABLE Act. The bill obliges U.S. stablecoin issuers to obtain permission from the Office of the Comptroller of the Currency and back their crypto 1:1 by cash, short-term U.S. Treasury bills, or central bank reserves. The bill makes OCC accountable for the control over the federally qualified non-bank payment stablecoin issuers.
Tether situation
Both bills will impact the future of Tether, a USD-pegged stablecoin with the biggest market cap. Tether has a long history of legal battles and speculations concerning the solvency of the company. The audits provided by Tether in the past were not always met with trust.
On Feb. 13, JPMorgan analysts voiced their concerns over Teather’s prospects in the light of the upcoming regulations, claiming that Tether will probably have to sell part of its Bitcoin holdings in order to fit the new requirements. According to JPMorgan, Tether has only 66% to 83% of the required amount to back its crypto supply, depending on which bill will be adopted.
Although Tether CEO Paolo Ardoino dismissed JPMorgan’s concerns with wit and humor and added that the company holds enough money. The biggest stablecoin issuer already had to leave Europe following the adoption of the new stablecoin laws while the main competitor of Tether, the Circle, managed to comply with the new rules.
Introduced bills are not looking just to hunt down dubious players, they rather aim to offer safe opportunities for U.S. citizens and companies and cement the global American dollar dominance in the crypto race era. The latter task especially needs speedy solutions as de-dollarization became a consistent narrative of many major countries in the 2020s.
Bitwise portfolio manager and head of Alpha Strategies Jeff Park, whose posts about economy and cryptocurrencies usually turn heads, outlines the growing momentum of stablecoins for a good reason: unlike Bitcoin, they take the American dollar value across the world with an unseen ease. The countries whose residents rely on the USD but have troubled access to it may enjoy the benefits of the USD’s strengths while maintaining independence from the local economic conditions and restrictions.
Some Americans cannot understand how they will benefit from the rise of the USD-pegged stablecoins if their value is not changing. The answer is simple: as stablecoins facilitate wider exposure of the USD value across the world, it will increase international demand for the American dollar, driving its value and benefiting the U.S. position in the global economy. Demand for easy-in-use dollars will drive liquidity of stablecoins, benefiting the crypto market per se. Those who want faster returns may think of more sophisticated ways like investing in the American stablecoin issuers’ stocks.
During a Feb. 12 speech at a San Francisco conference, Fed governor Christopher Waller expressed the very same sentiment, outlining the stablecoins’ potential in expanding the U.S. dollar abroad. However, he warned about possible problems if the framework turns out to be flawed.
The new regulations will hit at the right time, as stablecoins are on the rise. The latest examples are coming from Ripple and MasterCard. Ripple launched its stablecoin RLUSD this year. In several weeks, the market cap hit a whopping $100 million mark. MasterCard has recently acknowledged it was using blockchain for its transactions in 2024. According to the company statement, around 30% of its transactions were tokenized that year. The company went further to claim stablecoins have the potential to disrupt traditional finance.
