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Once used with the sole purpose of buying crypto, stablecoins have rapidly evolved into a cornerstone of the global digital economy. Pegged to fiat currencies such as the US dollar or euro and increasingly used for payments and remittances, stablecoins now sit at the intersection of finance, technology, and even geopolitics.
As per the latest European Central Bank data, the global stablecoin market already exceeds USD 250-290 billion, with US dollar stablecoins comprising about 99% of the total supply. That said, governments are racing to define regulatory frameworks that both safeguard users and gain a strategic position on the international stage to compete with the US (a giant in stablecoins) and command the majority of stablecoins’ global circulation.
This article compares how major jurisdictions, including the US, the EU, Asia, Latin America, and the Middle East, regulate stablecoins, including requirements for issuers, and how regulation is shaping future dominance.
How Are Stablecoins Regulated in the US?
Overall Rating: 7.5/10
The United States has taken a pragmatic yet strategically sound approach to stablecoin regulation. For several years, mixed guidance emerged from the federal government until, for the first time, the enactment of the GENIUS Act provided a comprehensive framework wholly focused on US stablecoin rulemaking. Since then, US stablecoin regulation has been seen as credible and institution-friendly at the international level, though still complex and highly demanding for new entrants.
Key Provisions of the GENIUS Act
The GENIUS Act seeks to establish a federal licensing regime for payment stablecoin providers. The legislation introduces clear issuer eligibility requirements, maintaining full reserve backing with high-quality liquid assets and stricter redemption rights.
Namely, stablecoin issuers must:
- obtain federal or state-chartering authority, whichever is applicable, aligning with the existing banking and payments infrastructure,
- keep all assets fully backed; strict custody and disclosure requirements,
- meet transparency, management, and reimbursement standards,
- and comply with heightened AML/KYC obligations, among others.
In addition, the Act provides for two different categories: one for foreign and one for domestically managed providers, thus reducing regulatory uncertainty while bringing stablecoins into the existing bank and payments framework.
The US model has several structural advantages. Mainly, it is their seamless connection to the existing dollar system, enhancing trust, liquidity, and global adoption, and thus reinforcing the dominance of USD-denominated stablecoins in international markets.
Nonetheless, the US approach is not without limitations. The regulatory burden is substantial, particularly for smaller non-US issuers, raising barriers to entry and accelerating most of the market concentration in the hands of a few large players like Tether. Compliance costs, which could be very high, are what increase the entry bar for smaller providers.
Overall, the US strategy currently offers a great balance between innovation and compliance expectations, yet lots of gaps to address still exist.
How Are Stablecoins Regulated in the EU?
Overall Rating: 8/10
With the adoption of the Markets in Crypto-Assets, or MiCA regulation, the European Union has become one of the world leaders in digital assets regulation.
Through the Markets in Crypto-Assets Regulation (MiCAR), the EU has replaced fragmented national approaches to regulating stablecoins and broader cryptocurrencies with a harmonized framework that applies uniformly across all 27 member states. From a legal standpoint, MiCA is widely regarded as clear and robust, offering robust consumer protection and monetary stability, though sometimes criticized for its limited flexibility and being tough on businesses.
Key Requirements of MiCA for Stablecoins
MiCA classifies stablecoins primarily as either E-money Tokens (EMTs) or Asset-Referenced Tokens (ARTs), each subject to distinct requirements:
- Stablecoin Classification: EMTs are pegged to one fiat currency, whereas ARTs are backed by a basket of assets.
- Licensing: EMT issuers must become authorized Electronic Money Institutions; ART issuers need special authorization from national oversight bodies.
- Reserve Requirements: Issuers shall maintain fully backed, highest-quality, liquid reserves, redeemable on a daily basis. Large stablecoins are also subject to volume and operational caps.
- Mandatory White Paper: An issuer must publish a regulator-approved detailed document (referred to as a “MiCA-compliant crypto-asset white paper”) detailing risks, management, reserves, and user protection, among others.
- Limitations: Algorithmic stablecoins are heavily restricted, and marketing rules are very tight for non-EU issuers.
Note: Access to the EU market also requires authorization as a regulated crypto-asset service provider, mandating firms to apply for a CASP license in one of the member states, namely Lithuania, Bulgaria, the Czech Republic, Poland, Estonia, and Cyprus.
Advantages of the European Union Approach
The European model’s greatest strength lies in its clarity and harmonization. A single regulatory framework applies across the entire EU, allowing compliant providers and exchanges to operate seamlessly across the union. Meanwhile, strong consumer protection rules, fair markets, and the clear classification of what is considered a “stablecoin” all increase institutional confidence in the region.
In the end, the EU stands particularly attractive for large, compliance-driven firms seeking long-term regulatory stability.
Disadvantages and Barriers
Some of the downsides of MiCA are that hardly any firms so far have been able to obtain a CASP license, which proves that market entry is extremely challenging; licensing requirements are costly and time-consuming.
Small stablecoin issuers face high barriers to entry, which is further compounded by a shortage of experienced compliance professionals, thus raising concerns that the framework might be favoring so-called “incumbents” over fostering innovation and creating an environment where projects could thrive.
The EU has opted for tight control over regulatory flexibility, shaping a market that rewards large-scale, mature businesses willing to commit to the long term.
Stablecoin Regulation in Asia: Key Countries
Asia is currently one of the most promising regions for digital assets, and stablecoins are no exception. Japan, Hong Kong (China), and Singapore have all introduced specialized stablecoin regulations, balancing customer stability with business-friendliness to their own standards.
1. Japan
Overall Rating: 7/10
Japan was one of the first major economies to introduce a comprehensive legal framework for stablecoins, primarily through the Payment Services Act (PSA).
The established regime is notably restrictive. Under the PSA, only licensed banks, trust companies, and registered money transfer agents are allowed to issue stablecoins. Even so, however, they must ensure full backing by safe assets, typically cash deposits held in regulated financial institutions with rigorous safekeeping and rights to redemption.
The Japanese model’s key strength lies in high levels of customer protection and legal certainty. Stablecoins are clearly defined under the PSA, and the framework aligns perfectly with traditional financial regulation.
However, the country’s eligibility criteria are extremely narrow, compliance costs are high, and only a small number of entities can realistically qualify as issuers – and only with the right legal expert’s support.
The highly conservative stance of Japan’s stablecoin regulation creates an environment where long-term stability goes first, before rapid market growth.
2. Hong Kong
Overall Rating: 6.5/10
Hong Kong has also positioned itself as a center for digital assets with its licensing regime (FRS) for fiat-pegged stablecoins. The framework is designed to focus on prudential oversight while still leaving a small room for innovation.
Key features of the stablecoin regulation in Hong Kong:
- Mandatory Licensing: Stablecoin issuers shall obtain authorization from the Hong Kong Monetary Authority (HKMA).
- Strict Requirements: Key requirements include high-quality, liquid reserve assets, full backing, robust governance, redemption guarantees, and strict safeguarding of client funds.
- Ongoing Monitoring: The Hong Kong stablecoin regulation puts a strong emphasis on risk management, transparent disclosures of risks, and ongoing supervision of issuers.
Despite being severely restricted – even when compared to the US and the EU stablecoin regulation – the Hong Kong regime remains attractive for its international credibility, growth-friendly climate, and the country’s ambition to be a regional digital finance hub.
Nevertheless, the Hong Kong regime is subject to different challenges, such as notably lengthy approval timelines and the fact that the Hong Kong stablecoin regulation is still evolving, which may cause certain uncertainty for new market entrants.
3. Singapore
Overall Rating: 8.5/10
The Monetary Authority of Singapore (MAS), established in 1971, is a body overseeing the crypto and stablecoin regulation in the region in a highly institution-friendly yet old-fashioned way.
Principal requirements for MAS-regulated stablecoins involve:
- Licensing Process: All crypto firms seeking to issue their own stablecoin under the MAS supervision must apply for a relevant authorization permit under the Payment Services Act.
- High-Quality Liquid Reserves: Issuers must maintain fully backed reserves in cash or cash equivalents.
- Segregation of Client Funds. Meeting strict capital and liquidity requirements is necessary.
- Necessary Audits. Undergoing regular audits for issuers is meant to signal a high standard of safety and reliability to investors and other industry stakeholders.
The main strengths of Singapore’s approach to regulating stablecoins include the much-needed clarity brought by clear and transparent guidelines and the subsequent great international credibility. All of this makes Singapore an outstanding choice for large-scale stablecoin issuers.
At the same time, however, issuing a stablecoin in Singapore might be quite expensive, with intense supervision also limiting the region’s accessibility for small and experimental projects.
Stablecoin Regulation in LATAM
The South, or Latin America, remains one of the most rapidly developing markets in the world for stablecoins, with locals using stablecoins to move funds across borders, preserve savings, and protect against sharp and frequent currency fluctuations.
At the same time, stablecoin regulation still largely remains limited throughout LATAM, with most countries lacking specific guidelines and instead referring to broader international financial or anti-money laundering legislation. The setting is far from being codified compared to the regulation of US stablecoins or even the way the EU stablecoin regulation through MiCA mandates.
Currently, Brazil is the only major LATAM economy actively developing a dedicated regulatory regime that is likely to cover stablecoins.
Brazil
Overall Rating: 6.5/10
Brazil is at the forefront of regulating digital assets in the region, primarily through its broader Virtual Asset Service Provider (VASP) licensing and ongoing Central Bank of Brazil (BCB) rulemaking. Still, the clarity is lacking at the moment.
Key Features of Brazil’s Growing Stablecoin System
Under the Banco Central do Brasil (BCB) new regulatory framework that seeks to oversee all digital asset activities, all stablecoin issuers are expected to meet certain standards to legally operate within the region:
- Dedicated Authorization: Stablecoin issuers are expected to be treated similarly to traditional payment institutions and, hence, shall be registered with or licensed by the Central Bank of Brazil.
- Asset Composition: Providers will have to maintain fully collateralized, transparent reserves focused on high-quality liquid assets.
- Custodial Requirements: Segregation of customer funds, related audits, and rights of redemption will have to comply with the best international practices.
- Suspicious Activity Monitoring: The framework places great emphasis on fraud and illicit financing threats, thus being in line with the overall illicit finance strategy (AML/CTF) of Brazil.
Brazil Stablecoin Regulation: Key Advantages
Brazil’s stablecoin approach offers issuers three core advantages: strong central bank supervision, seamless payment-system integration, and a clear priority on systemic and illicit-finance risk control. Added momentum comes from national instant-payment and tokenization programs, which make the region even more attractive to issue stablecoins.
Disadvantages
Regulatory clarity in Brazil is still evolving, while implementation timelines remain uncertain. At the same time, compliance is expected to prove demanding for smaller or foreign issuers and may limit early innovation as regulators prioritize oversight over experimentation while pushing compliance costs higher.
Overall, Brazil represents a cautious step toward formal and tailored stablecoin regulation in LATAM, while the rest of the region still continues to operate in a somewhat “gray zone.”
Stablecoin Regulation in the Middle East
Similar to Asia Pacific, the Middle East has taken a selective and cautious approach to stablecoin regulation, with the United Arab Emirates (UAE) clearly leading in the region.
The UAE has arguably the most developed, mature, and well-structured framework regulating stablecoins, while most neighboring jurisdictions continue to rely on general financial and AML rules.
Rather than adopting a unified framework, the UAE introduced something unique: a combination of federal laws and emirate-level regimes, particularly in the free zones. In sharp contrast with US stablecoin regulation and the EU stablecoin regulation under the MiCA directives, the UAE stands out by offering a notably more progressive environment, cementing its role as a key global Web3 hub.
How Are Stablecoins Regulated in the UAE?
Overall Rating: 9.1/10
The United Arab Emirates has emerged to boast one of the most modern digital-asset environments in the Middle East. Standards cut across several tiers: national mandates, emirate-level structures like Dubai’s VARA, and specialized free zones (DIFC, ADGM).
Key Provisions of UAE Stablecoin Regulation
- Regulatory Bodies: Creators are required to seek permission from the relevant regulatory authority, such as the Central Bank of the UAE (CBUAE), ADGM FSRA, or Dubai VARA, through mandatory disclosures, protection requirements, and operational checks.
- National & Emirate-Level Supervision: The UAE applies a two-pillar system to regulating stablecoins. Nationwide, SCA-enacted federal laws apply across the UAE, while ADGM and VARA operate separate digital-asset authorization regimes, including for stablecoins.
- Stablecoin Classification: The newly established national requirements provide that only dirham-backed stablecoins, such as AED-pegged tokens, are permitted. Instruments denominated in foreign currencies and deemed, for instance, the USDT stablecoin, are typically treated more conservatively and may face jurisdiction-specific constraints.
- Reserve Requirements: All stablecoins must be fully collateralized 1:1 by high-quality, liquid reserve assets.
Main Strengths of the UAE Stablecoin Regulatory Framework
When talking about the UAE stablecoin regulation, the main benefit is clearly the clarity within each framework, strong oversight, and policymakers’ openness to innovation and industry input in shaping the rules.
The country has long been challenging the “industry norms” by introducing favorable and thus successfully attracting a large number of major digital asset firms from all over the world.
Note: A comprehensive list of advantages of the UAE as a place to run a crypto business may be found here.
UAE Stablecoin Rules: What Are the Drawbacks?
Not all classes of stablecoins are approved, especially the foreign-pegged tokens.
The many structures over free zones may puzzle the newcomer.
Different rules that apply depending on the currency backing a stablecoin and whether it operates onshore or within a free zone may initially puzzle the newcomer. Furthermore, not all stablecoins are permitted for issuance, and navigating multiple regulators and their requirements may add an additional layer of complexity to operating in the UAE.
Yet, the UAE represents the most advanced and credible regulatory environment for stablecoins in the Middle East, combining the nation’s ambition with high demand for the reliable headquarters (HQ) base in the region.
Final Thoughts: Key Similarities and Differences
Across leading jurisdictions, stablecoin regulation commonly covers how a token is defined, who may issue it, how it must be backed, how holders redeem, and how compliance is enforced – though each country applies them differently.
1. Classification & Authorized Issuers
Under the MiCA directive, the EU unequivocally categorizes stablecoins and limits their issuance to licensed EMIs. In the US, these terms have different meanings under US stablecoin regulation, while in many cases in Asia and the Middle East, financial institutions are permitted, or uniquely sanctioned bodies.
2. Licensing
Strict authorization is present everywhere, but cross-border recognition is only provided by the EU. The US and UAE relied on multi-level structures; others used per-instance endorsements.
3. Reserve Backing
All countries mentioned in this guide require fully collateralized assets, though the “quality” requirement does vary.
4. Redemption
Guaranteed redemption in the US, EU, Singapore, UAE, and Japan.
5. Compliance requirements
While AML/KYC rules are common across markets, practical expectations and checks are not uniform.
Differences, however, are also in place and remain significant. Licensing models and timelines, government attitudes (supportive vs. cautious), and approaches to risk management vary dramatically across the EU, the UAE, Singapore, Japan, and LATAM.
While MiCA has established a unified EU standard for digital assets and stablecoins, the US continues to refine its more fragmented regime. Still, across markets, one trend message is clear: stablecoins are entering mainstream finance at an enormous pace, becoming widely recognized for faster settlement, better payments, and greater financial inclusion.
Stablecoins: The Future of Money
Stablecoins have emerged as a cornerstone of modern digital finance, enabling near-instant cross-border transfers, preserving savings amid inflation, and bridging crypto with traditional payment rails. Stablecoin usage is growing steadily, while global oversight frameworks are developing rapidly to keep pace.
Stablecoins are emerging as the digital foundation of tomorrow’s financial system. Worldwide, policymakers are gradually moving to regulate them and demanding enhanced protections due to their potential to impact mainstream banking and payments. Over the long term, stablecoins may be the future of finance, accelerating the digital revolution of the current “money” concept.
Contact Inteliumlaw for stablecoin and token issuance support across jurisdictions with a compliant and future-proof setup.
