Why Stablecoin Regulation Is Dashing Up — From D.C. to Hong Kong | by OKG Analysis | The Capital

[ad_1] This week, the U.S. Senate and the Hong Kong Legislative Council practically concurrently took main steps in stablecoin regulation: the previous overwhelmingly handed a procedural movement on the GENIUS Act, clearing the best way for the primary federal stablecoin laws in the US; the latter handed the third studying of the “Stablecoin Ordinance Invoice,” making Hong Kong the primary jurisdiction in Asia-Pacific to ascertain a stablecoin licensing regime. The synchronicity of Japanese and Western legislative progress isn't any coincidence — it displays a broader contest for affect over the longer term monetary order.

In keeping with preliminary statistics from OKG Analysis, the worldwide stablecoin market capitalization is approaching $250 billion, having grown greater than 22-fold over the previous 5 years. Because the starting of 2025, on-chain transaction quantity has surpassed $3.7 trillion and is projected to succeed in practically $10 trillion for the 12 months. Stablecoins comparable to USDT and USDC are actually extensively utilized in rising markets for buying and selling and remittances, with utilization volumes surpassing conventional fee techniques in some areas. What was as soon as thought of a fringe asset has develop into a core node in international fee networks and a instrument for sovereign competitors. The near-simultaneous legislative efforts within the U.S. and Hong Kong signify that the worldwide stablecoin market has entered a interval of accelerated regulatory alignment.

Based mostly on this, OKG Analysis — drawing on Normal Chartered’s earlier projection mannequin and factoring within the tempo of present regulatory alerts and institutional sentiment — has developed the next estimates below an optimistic state of affairs the place international regulatory frameworks are adopted and stablecoins acquire widespread use by people and establishments:

World stablecoin provide might attain $3 trillion by round 2030.Month-to-month on-chain transaction quantity might attain $9 trillion.Annual transaction quantity could exceed $100 trillion. This could place stablecoins not solely alongside conventional digital fee techniques however as foundational property in international clearing networks. When it comes to asset scale, stablecoins would develop into the “fourth main base forex asset” after sovereign bonds, money, and financial institution deposits — serving as a key medium for digital funds and asset circulation.

Extra notably, the reserve construction of stablecoins below such growth might have macroeconomic implications. As OKG Analysis beforehand reported, present stablecoin holdings account for roughly 3% of maturing short-term U.S. Treasury payments — rating nineteenth amongst abroad holders.

Contemplating the GENIUS Act mandates that 100% of reserves be held in extremely liquid U.S. greenback property — with short-term Treasuries as a major part (over 80% of present USDT/USDC reserves are linked to short-term Treasuries) — a conservative 50% allocation of a $3 trillion market would create no less than $1.5 trillion in structural demand for short-term U.S. debt. This quantity is near the present holdings of sovereign traders like China or Japan, suggesting stablecoins might quickly develop into the U.S. Treasury’s largest “invisible creditor.”

Whereas the U.S. and Hong Kong differ in legislative paths and technical particulars, they share consensus on core rules: fiat-pegging, full reserve backing, and licensed issuance.

The GENIUS Act applies to “fee stablecoins,” outlined as tokens pegged to authorized tender (e.g., USD), redeemable at 1:1 worth, and prohibited from providing curiosity — making certain they don't seem to be handled as securities or funding automobiles. Hong Kong, whereas additionally requiring full backing, doesn't limit curiosity funds or asset constructions within the present draft, leaving room for future improvements in a dollar-dominated stablecoin panorama.

Each jurisdictions mandate full reserve backing with high-liquidity property, although the GENIUS Act defines acceptable reserve property (T-bills, money, repos) and mandates month-to-month audits. Hong Kong equally requires audits and segregated custody however leaves asset varieties extra open.

When it comes to regulatory construction, the GENIUS Act adopts a federal-state twin framework, providing three issuance pathways: (1) by means of a licensed financial institution or its subsidiary (regulated by the Fed, FDIC, and so on.), (2) straight licensed by the OCC for non-bank entities, or (3) by means of certified state licensing regimes. Hong Kong’s Financial Authority (HKMA) handles all licensing and mandates that any issuer — whether or not primarily based in Hong Kong or overseas — should apply for a license if issuing HKD-pegged stablecoins or advertising companies to Hong Kong residents.

Concerning overseas issuers, the GENIUS Act prohibits unlicensed abroad stablecoins from circulating within the U.S., permitting the Treasury to designate “non-compliant stablecoins” and instructing digital asset service suppliers to dam their stream. Hong Kong focuses totally on HKD-pegged stablecoins and stays extra open to foreign exchange.

These structural variations replicate divergent coverage objectives. The U.S. seeks to protect greenback hegemony and deal with fiscal wants by extending greenback dominance onto the blockchain. In distinction, Hong Kong goals to draw international Web3 tasks whereas sustaining native monetary stability, crafting a “regulated sandbox” in Asia-Pacific that balances management with openness and interoperability.

The actual significance of stablecoin regulation lies in offering foundational infrastructure for large-scale Web3 adoption.

In DeFi, whereas USDT and USDC are already key settlement property, their unsure authorized standing has hindered institutional participation. The enactment of frameworks just like the GENIUS Act would permit compliant issuers to develop into the settlement spine of “compliant DeFi,” incorporating KYC, AML, and asset recognition modules. Decentralized finance would evolve into “auditable on-chain monetary networks.”

In Web3 funds, regulation will take away grey zones between property and fee situations, reworking stablecoins from transaction intermediaries into fee channels. Since Visa introduced over $225 million in stablecoin settlements, many fintech corporations have built-in stablecoins into service provider flows. Web3 wallets use stablecoins as default property for microtransactions like top-ups, suggestions, and subscriptions. The transition from “crypto-native transfers” to “enterprise-grade monetary APIs” will depend on regulatory readability.

At a deeper degree, this reshapes international clearing structure. Stablecoins — pegged 1:1 to fiat currencies — bridge fiat and on-chain property whereas bypassing conventional banking rails, enabling peer-to-peer clearing. This might permit stablecoins to interchange conventional banks with cross-border funds, commerce finance, and RWA (real-world asset) payouts.

Traditionally, discussions on Web3 adoption centered an excessive amount of on tech and UX, neglecting the legitimacy of core monetary property. Compliant stablecoins supply the lacking piece: legally acknowledged, programmable, fiat-linked digital property that can be utilized throughout DeFi and NFT ecosystems.

In essence, stablecoins aren't auxiliary to Web3 — they're a major catalyst. With regulatory help, they'll underpin every little thing from RWA tokenization to payroll, cross-border settlements, and Web3 fee rails — changing into the foundational infrastructure for international on-chain economies.