Regulation Drives Stablecoin Market into a New Rise Cycle

Recently, the United States and Hong Kong have successively introduced regulations related to stablecoins, marking the official entry of the global digital asset market into a new growth phase driven by regulation. These regulations not only fill the regulatory gap concerning stablecoins pegged to fiat currencies but also provide a clear compliance framework for the market, including asset isolation, redemption guarantees, and anti-money laundering requirements, effectively reducing systemic risk.

This article will analyze the core content of the legislations in both regions, and combined with quantitative forecasts, it will look forward to the rise trajectory of compliant US dollar stablecoins over the next decade and their impact on the blockchain ecosystem.

I. The Growth Drivers of Stablecoins under the U.S. GENIUS Act

In May 2025, the U.S. Senate passed the GENIUS Act, which established a detailed regulatory framework for stablecoin issuers. The act requires issuers to hold at least 1:1 high-liquid dollar assets as reserves and undergo regular audits, comply with anti-money laundering and customer identification requirements. The act also prohibits stablecoins from offering interest, restricts foreign issuers from entering the U.S. market, and clarifies that stablecoins are neither securities nor commodities.

The implementation of the GENIUS Act is expected to have a profound impact on the global crypto market:

1. Investing in highly liquid US dollar assets will benefit the issuance of US Treasury bonds, making stablecoins an important channel for distributing US Treasury bonds, alleviating pressure on the US fiscal situation, and strengthening the international settlement position of the US dollar.

2. A clear regulatory framework may attract more financial institutions and technology companies into the stablecoin space, fostering innovation in payment systems.

3. The bill has also sparked some controversies, such as potential conflicts of interest and the international regulatory coordination issues that may arise from restrictions on foreign issuers.

Nevertheless, the GENIUS Act provides institutional support for the development of stablecoins, marking an important step for the United States in the global competition for digital asset regulation.

According to a prediction by a certain investment bank, under clear regulations, the global stablecoin market value will rise from 230 billion USD in 2025 to 1.6 trillion USD in 2030. This prediction is based on two key assumptions: compliant stablecoins will accelerate the replacement of traditional cross-border payment channels, saving approximately 40 billion USD in international remittance costs each year; the locked amount of stablecoins in decentralized financial protocols will exceed 500 billion USD, becoming the foundational liquidity layer.

2. The Differentiated Positioning of the Hong Kong Stablecoin Regulatory Framework

The recent release of the "Stablecoin Regulation" by the Hong Kong SAR Government marks its systematic layout in the Web 3.0 field. This regulation establishes a licensing system for stablecoin issuance, requiring issuers to obtain permission from the Hong Kong Monetary Authority and to meet strict requirements for reserve asset management, redemption mechanisms, and risk control. Hong Kong also plans to introduce a dual licensing system for over-the-counter trading and custody services within the next two years, improving the comprehensive regulatory framework for virtual assets.

The Hong Kong Monetary Authority plans to release guidelines for the tokenization of real-world assets in 2025, promoting the on-chain tokenization of traditional assets. Hong Kong is committed to building an innovative ecosystem that integrates traditional finance and blockchain technology, opening up broader application spaces for the development of Web3.0. Under Hong Kong's regulatory framework, the issuance of stablecoins will manifest a multi-currency and multi-scenario development trend.

The Hong Kong "Stablecoin Regulation Draft" draws on the regulatory logic of the United States, but there are significant differences in implementation details.

III. Evolution of the Global Stablecoin Landscape under Regulatory Competition

( The strengthening effect of the global reserve currency of ) US dollar stablecoin

The GENIUS Act requires payment stablecoins to use U.S. Treasury bonds as reserve assets, giving dollar stablecoins strategic significance beyond digital currencies. Stablecoins have become a new distribution channel for U.S. Treasury bonds, building a global capital circulation system: when users purchase dollar stablecoins, the issuing institutions allocate funds to Treasury bond assets, facilitating the flow of funds back to the U.S. Treasury, thereby strengthening the global use of the dollar.

From the perspective of international settlement, stablecoins signify a paradigm shift in the US dollar clearing system. Blockchain-based stablecoins are directly embedded in various distributed payment systems in the form of "on-chain dollars," breaking through the limitations of traditional financial institutions. This not only expands the international use cases of the US dollar but also represents a modernization upgrade of the dollar's settlement sovereignty in the digital age, further consolidating its core position in the global monetary system.

( two ) The regulatory coordination challenges in Asia between Hong Kong and Singapore

Although Hong Kong was the first to establish a stablecoin licensing system, the Monetary Authority of Singapore simultaneously launched a "stablecoin sandbox" that allows for the experimental issuance of tokens pegged to existing fiat currencies. Regulatory arbitrage between the two regions may lead issuers to engage in "regulatory location" behavior, necessitating the establishment of unified reserve auditing standards and anti-money laundering information sharing mechanisms through regional financial regulatory forums.

Hong Kong adopts a cautiously tightening regulatory approach, positioning stablecoins as "substitutes for virtual banks" and strictly adhering to traditional financial regulatory frameworks. In contrast, Singapore upholds an experimental regulatory concept, allowing innovative pilots that link digital tokens with fiat currency, reserving flexible space for technological and business model innovation.

These regulatory differences may lead issuing institutions to selectively register to evade strict scrutiny, or to exploit discrepancies in regulatory standards for arbitrage operations, thereby undermining the effectiveness of the fiat currency peg mechanism's review. In the long term, if coordination is lacking, this divergence may undermine regulatory fairness and policy consistency, and even trigger regional regulatory competition risks, causing both areas to fall into a competition that leads to internal friction.

Regulatory authorities in both regions need to strengthen policy coordination, seeking a better balance between preventing systemic risks and encouraging financial innovation, in order to enhance Asia's overall influence in global digital financial governance.

Conclusion: Regulatory Clarity Opens a Golden Decade for Stablecoins

The joint implementation of the U.S. GENIUS Act and the Hong Kong Ordinance draft marks the transition of digital asset regulation from fragmentation to systematization. Compliant dollar stablecoins are expected to experience a magnitude rise within the next decade, becoming the core bridge connecting traditional finance and the crypto ecosystem. The technological evolution of blockchain infrastructure will determine whether it can capture the maximized value dividends within the regulatory framework. For issuers, building a multi-chain, multi-coin, and multi-regulatory compatible stablecoin system will be the key strategy to win the competition in the next decade.