The U.S. House of Representatives passes three encryption-related bills, preliminary framework for stablecoin regulation established.

Recently, the U.S. House of Representatives passed three pieces of legislation related to cryptocurrency: the CLARITY Act, the GENIUS Act, and the Anti-CBDC Surveillance State Act. The GENIUS Act is expected to be officially signed into law this Friday. This marks the first time the U.S. has established a national regulatory framework for stablecoins, indicating that stablecoins are gradually moving out of the gray area and aligning with the mainstream financial system.

At the same time, major financial centers such as Hong Kong and the EU are accelerating related legislative processes, and the global stablecoin landscape is undergoing a reshaping. Looking back over the past few months, stablecoins have almost overnight transitioned from a regulatory focus to being recognized as new infrastructure by officials. The reasons behind this are worth exploring in depth, and we also need to rationally view this wave of enthusiasm.

Policy Drives Stablecoins from Web3 Narrative to National Strategy

Since the beginning of the year, stablecoins have become the focal point of global financial policy and public opinion. This is not a result of the natural evolution of technology, but rather a structural shift driven by policy forces. Among them, the policy propositions of specific political figures have played an important role.

On one hand, there are politicians who explicitly oppose central bank digital currencies (CBDC) and support a market-driven digital dollar route. On the other hand, actions ranging from supporting family businesses to launch USD1, to promoting the GENIUS Act, are also fulfilling the promise made during the campaign to ease regulations on the encryption market.

These signals have directly prompted global regulators to re-examine stablecoins. In just a few months, stablecoins have jumped from a marginal topic in the encryption circle to a key discussion point at the national strategic level. In addition to Hong Kong finalizing a timeline for the "Stablecoin Regulation", major global economies are also beginning to accelerate the establishment of compliance frameworks for stablecoins:

• The EU's MiCA Regulation, which will take effect in 2024, will comprehensively cover the regulation of encryption assets and provide detailed classifications for stablecoins.
• The ruling party of South Korea has proposed the "Digital Asset Basic Law," which states that South Korean companies can issue stablecoins if they meet certain conditions.

The passage of the GENIUS Act not only signifies the loosening of regulations on stablecoins in the United States but also represents a clear choice for a digital dollar route—supporting compliance-based dollar stablecoins issued by the private sector rather than central bank digital currencies. This statement is likely to become a reference paradigm for regulatory designs in other countries, promoting the inclusion of stablecoins in the common discussion framework of global financial policy.

Changes in the Structure and Development Path of the Stablecoin Market

In the past few years, the stablecoin market has been primarily dominated by USDT and USDC, representing the two paths of "circulation efficiency" and "compliance transparency:"

• USDT focuses on cross-platform circulation and matching efficiency, dominating in exchanges and informal settlement networks.
• USDC emphasizes asset compliance and transparency, deeply cultivating regulatory-friendly scenarios and institutional client systems.

From an overall scale perspective, stablecoins have continued to grow since 2023. As of July 18, the total market capitalization of stablecoins across the network is approximately $262 billion, an increase of over 20% compared to the beginning of the year. This indicates that during the recovery of the encryption market, stablecoins remain the most essential "liquidity entry point." The duopoly of USDT and USDC remains solid, with the two combined market share approaching 90%.

Starting from 2024, an increasing number of Web2 financial companies and traditional capital forces are entering the market, utilizing stablecoins to build on-chain settlement tools. PayPal's PYUSD and the emerging USD1 are two representative examples:

• PYUSD was launched by payment giant PayPal, naturally equipped with cross-border settlement scenarios and a global merchant network.
• USD1 aims to achieve compliant on-chain deposits and withdrawals as well as cross-border business, receiving support from governmental and commercial resources, targeting enterprise settlement scenarios.

With the support of institutions and national powers, these emerging stablecoin projects are driving the function of stablecoins from "Web3 liquidity tools" to a value bridge connecting Web3 and the real economic system. Their use cases are gradually penetrating into diverse applications such as supply chain finance, cross-border trade, freelancer settlements, and over-the-counter transactions, moving beyond exchanges and wallets.

The Real Challenges Facing the Development of Stablecoins

The GENIUS Act, while providing institutional recognition for stablecoins, has also brought about more compliance requirements, setting clearer regulatory boundaries for their development. For example, issuers must comply with KYC/AML regulations, funds must have custodial isolation and third-party audits, and there may be limits on issuance amounts or usage restrictions. This means that stablecoins have gained a legitimate identity but have also formally entered the "regulated currency role."

From this perspective, whether stablecoins can break through the application limits of Web3 is the key to realizing incremental landing. The greatest growth potential of stablecoins does not lie within the internal circle of cryptocurrencies, but rather in the broader Web2 and the global real economy.

The main increment of USDT and USDC no longer comes from on-chain interaction users, but rather from small and medium-sized enterprises and individual merchants with a strong demand for cross-border settlement, emerging markets and financially vulnerable areas that cannot access traditional financial networks, residents of inflationary countries looking to escape local currency fluctuations, and content creators and freelancers who are unable to use mainstream payment systems.

In other words, the biggest growth of stablecoins in the future will not be in Web3, but in Web2. The true killer application of stablecoins is not "the next DeFi protocol," but rather "replacing traditional dollar accounts."

This also means that once stablecoins become the fundamental vehicle for the digital dollar globally, it will inevitably involve sensitive issues such as monetary sovereignty, financial sanctions, and geopolitical order. Therefore, the next stage of growth for stablecoins will be closely related to the new landscape of the dollar's globalization and will also become a new competitive arena among governments, international institutions, and financial giants.

Conclusion

The essence of currency issuance has always been an extension of power. It relies not only on asset reserves and settlement efficiency but also on national credit, regulatory approval, and international standing. Stablecoins are no exception; to truly penetrate the real economic system from the world of cryptocurrencies, it is not enough to rely solely on market mechanisms or business logic.

The compliance boost brought about by the global policy shift in 2023 is undoubtedly an important driving force for stablecoins to move towards the mainstream, but it also means that they must survive in a more complex game. This is a long-cycle game, and we are at the stage where it is truly beginning.