Interpreting the US Stablecoin Act, the "hegemony" of the US dollar on the chain?

Over the past few decades, the global dominance of the US dollar has relied on the evolutionary mechanism of the "Bretton Woods system-petrodollar-US debt + Swift system". However, in the Web3 era, decentralized financial technology is gradually shaking the traditional clearing and payment paths, and stablecoins anchored to the US dollar are quietly becoming a new tool for "dollars to go overseas".

In this context, the significance of stablecoins has long surpassed the compliance of a single crypto asset. It may be the digital carrier for the continuation of the "dollar hegemony" in the Web3 era.

On March 26, 2025, the US Congress formally proposed the "STABLE Act" (Stablecoin Transparency and Accountability for a Better Ledger Economy Act), which systematically established the issuance threshold, regulatory framework and circulation boundaries of the US dollar stablecoin for the first time. As of now, the bill has been reviewed by the House Financial Services Committee on April 2, and it is still pending the House of Representatives and the Senate to vote before it can officially become law. This is not only a response to the long-term regulatory vacuum in the stablecoin market, but also perhaps a key step in trying to build the next generation of the US dollar payment network "institutional infrastructure".

So, what exactly does this new bill want to solve? Does the difference with MiCA reflect the "institutional strategy" of the United States? Is it paving the way for Web3 dollar hegemony?

Attorney Mankiw will share these questions one by one in this article.

What kind of dollar stablecoin does the STABLE Act want to establish?

According to the documents, the stablecoin bill launched this time attempts to establish a clear and exclusive compliance framework for "payment stablecoins". We refine its 5 core points:

1. Clarify the regulatory objects and focus on "payment stablecoins"

The first step of the STABLE Act is to clarify the core objects of regulation: dollar-anchored stablecoins issued to the public and directly used for payment and settlement. In other words, what are truly included in the regulatory framework are those crypto assets used as "dollar substitutes" on the chain, rather than all tokens claiming to be pegged to the US dollar.

In order to avoid the spread of risks, the bill also explicitly excludes some high-risk or structurally unstable token models. For example, algorithmic stablecoins, partially collateralized stablecoins, or "pseudo-stablecoins" with speculative attributes and complex circulation mechanisms are not within the scope of this bill. Only stablecoins that are fully backed by 1:1 US dollar assets, have a transparent reserve structure, and are circulated for daily transactions by the public are considered "payment stablecoins" and need to be subject to regulatory arrangements under this bill.

From this perspective, the real focus of the STABLE Act is not the "technical carrier" of stablecoins, but whether it is building a "US dollar on-chain payment network." It regulates the issuance method and operating basis of the "digital dollar", not all tokens with the word USD.

2. Establish a "redemption right" mechanism, 1:1 US dollar anchoring

In addition to regulatory entry thresholds and issuer qualification requirements, the STABLE Act particularly emphasizes the "redemption rights" of stablecoins to holders, that is, the public has the right to redeem the stablecoins in their hands for US dollar legal tender at a ratio of 1:1, and the issuer must fulfill this obligation at any time. This institutional arrangement is essentially to ensure that stablecoins do not become "pseudo-anchored assets" or "system tokens for internal circulation".

At the same time, in order to prevent liquidity crises or bank runs, the bill also sets clear asset reserve and liquidity management requirements. Issuers must hold high-quality, readily convertible U.S. dollar assets (such as treasury bonds, cash, central bank deposits, etc.) in a 1:1 ratio and be subject to continuous review by the Federal Reserve. This means that stablecoin issuers cannot "invest users' money in high-risk assets" or use algorithms or other derivative structures to achieve "anchoring".

Compared with some "partial reserve" and "fuzzy disclosure" stablecoin models in the early market, the STABLE Act writes "1:1 redeemable" into federal legislation, which represents the United States' higher requirements for the underlying credit mechanism of "digital dollar substitutes".

This not only responds to the public's concerns about the "de-anchoring" and "explosion" of stablecoins, but also aims to create an anchor system of institutional guarantees + legal trust for U.S. dollar stablecoins to support their long-term use in the global clearing network.

3. Strengthen the supervision of funds and reserves to avoid "trust idleness"

On the basis of "stablecoins must be 1:1 redeemable", the STABLE Act further makes clear provisions on the types, management methods and audit mechanisms of reserve assets, intending to control risks from the source and avoid the hidden dangers of "surface anchoring and actual idleness".

Specifically, the Act requires all payment stablecoin issuers to:

Must hold an equal amount of "high-quality liquid assets" (High-Quality Liquid Assets), including cash, short-term US Treasury bonds, and deposits in federal reserve accounts, to ensure user redemption requests;

Reserve assets must not be used for lending, investment or other purposes to prevent systemic risks caused by "using reserve money for returns";

Regularly accept independent audit and regulatory reporting obligations, including reserve transparency disclosure, risk exposure reports, asset portfolio descriptions, etc., to ensure that the public and regulators can understand the asset base behind stablecoins;

Reserve assets must be isolated and stored in FDIC-insured banks or other compliant custodian accounts to prevent project parties from incorporating them into their own fund pools for mixed use.

The purpose of this institutional arrangement is to ensure that the "anchor" is real, auditable, and fully redeemable, rather than "anchored in words and floating profits on the chain". From historical experience, the stablecoin market has repeatedly experienced credit crises caused by false reserves, misappropriation of funds or lack of information disclosure. The STABLE Act is to plug these risk outlets at the institutional level and strengthen the "institutional endorsement" of the dollar anchor.

On this basis, the bill also grants the Federal Reserve, the Treasury Department and designated regulatory agencies long-term supervision rights over reserve management, including freezing illegal accounts, suspending issuance rights, and forced redemption, forming a relatively complete stablecoin credit closed loop.

4. Establish a "registration system" and include all issuers in supervision

In terms of regulatory path design, the STABLE Act does not adopt "license classification management", but establishes a unified registration system access mechanism. The core point is that all institutions that intend to issue payment-type stablecoins, whether they are banks or not, must register with the Federal Reserve and accept federal regulatory review.

The bill sets out two legal issuer paths: one is federal or state-regulated depository institutions (Insured Depository Institutions), which can directly apply to issue payment stablecoins; the other is non-depository trust institutions, which can also register as stablecoin issuers as long as they meet the prudential requirements set by the Federal Reserve.

The bill also specifically emphasizes that the Federal Reserve not only has the right to approve registration, but also can refuse registration or revoke registration when it believes there is a systemic risk. In addition, the Federal Reserve is also given the right to continuously review the reserve structure, solvency, capital ratio, risk management policy, etc. of all issuers.

This means that in the future, all issuances of US dollar payment stablecoins must be included in the federal regulatory network, and it is no longer allowed to bypass the review by "registering only in the state" or "technical neutrality".

Compared with the previous more relaxed multi-path discussion plan (such as the GENIUS Act allows starting with state supervision), the STABLE Act obviously shows stronger regulatory unity and federal dominance, and attempts to establish the legal boundaries of US dollar stablecoins with a "national registration and supervision system".

5. Establish a federal licensing mechanism and clarify multiple regulatory paths

The STABLE Act also establishes a federal-level stablecoin issuance licensing system and provides multiple compliance paths for different types of issuers. This institutional arrangement not only continues the "federal-state dual-track" structure of the US financial regulatory system, but also responds to the market's expectations for flexibility in compliance thresholds.

The Act sets three optional paths for the issuance of "payment stablecoins":

First, become a federally recognized payment stablecoin issuer (National Payment Stablecoin Issuer), and be directly reviewed and licensed by US federal banking regulators (such as OCC, FDIC, etc.);

Second, as a licensed savings bank or commercial bank issuing stablecoins, it can enjoy higher trust endorsement, but must comply with traditional bank capital and risk control requirements;

Third, operate on the basis of state-level licensing, but must accept federal-level "registration + supervision" and meet unified standards such as reserves, transparency, and anti-money laundering.

The intention behind this system design is to encourage stablecoin issuers to "register on the chain" in accordance with the law and include them in the financial regulatory field, but not to force banking in a "one-size-fits-all" manner, so as to achieve controllable risks while protecting innovation.

In addition, the STABLE Act also gives the Federal Reserve (FED) and the Treasury Department broader coordination powers, and can impose additional requirements on the issuance, custody, and trading of stablecoins based on the level of systemic risk or policy needs.

In short, this system creates a multi-level, multi-path, and hierarchically regulated stablecoin compliance network for the United States, which not only improves the resilience of the system, but also provides a unified institutional foundation for the overseas expansion of stablecoins.

Compared with MiCA, the United States has taken a different route

In the global stablecoin regulatory competition, the European Union is the earliest region with the most complete framework. Its "MiCA Act", which was officially implemented in 2023, includes all crypto tokens anchored to assets into the regulatory field through two types of "EMT" (electronic money token) and "ART" (asset reference token), emphasizing macro-prudential and financial stability, and intends to build a "firewall" in the digital financial transformation.

However, the US STABLE Act has obviously chosen another path: it does not comprehensively manage all stablecoins, nor does it build an all-encompassing regulatory system based on financial risks, but focuses on the core scenario of "payment stablecoins" and uses institutionalized methods to build the next-generation payment network on the US dollar chain.

The logic behind this "selective legislation" is not complicated - the US dollar does not need to "take over the world" in the stablecoin world, it only needs to consolidate the most critical scenario: cross-border payments, on-chain transactions, and global US dollar circulation.

This is why the STABLE Act does not attempt to establish a MiCA-like full-asset regulatory system, but focuses on "on-chain dollars" that are 1:1 supported by US dollars, have actual payment functions, and are widely held and used by the public.

From the perspective of institutional design, the two present a sharp contrast:

Different regulatory scope: MiCA attempts to "catch all", covering almost all stablecoin models, including extremely risky reference asset products; while the US STABLE Act actively narrows the scope of application, focusing only on assets that are truly used for payment and can represent the "US dollar function".

Different regulatory objectives: The EU emphasizes financial order, system stability and consumer protection, while the US focuses more on clarifying which assets can be used as legal forms of "on-chain dollars" through laws, thereby building an institutional-level dollar payment infrastructure.

Different issuing entities: MiCA requires that stablecoins must be issued by regulated electronic currency institutions or trust companies, almost locking the entrance within the financial institution system; while the STABLE Act establishes a "new license mechanism" to allow non-bank entities after compliance review to participate in the issuance of stablecoins in accordance with the law, thereby retaining the possibility of Web3 entrepreneurship and innovation.

Different reserve mechanisms: The United States requires 100% US dollar cash or short-term treasury bonds, strictly excluding any leverage or illiquid assets; the EU allows a variety of asset forms including bank deposits, bonds, etc., which also reflects the different rigor of regulatory thinking.

Different adaptability to Web3 entrepreneurship: MiCA is highly dependent on traditional financial licenses and audit processes, which naturally forms a high barrier to crypto startups; while the US STABLE Act, although strict, leaves room for innovation in the system, intending to encourage the development of "on-chain dollars" through compliance standards.

In short, the United States is not taking a "comprehensive regulation" route, but an institutional path to screen "qualified assets for US dollar payments" through compliance licenses. This not only reflects the change in the United States' acceptance of Web3 technology, but also the "digital extension" of its global currency strategy.

This is why we say that the STABLE Act is not a simple financial regulatory tool, but the beginning of the institutionalization of the digital dollar system.

Lawyer Mankiw concludes

"Let the US dollar become the benchmark unit of the global Web3", which may be the real strategic intention behind the "STABLE Act".

The US government is trying to build a "new generation digital dollar network" that can be identified, audited and integrated by programs through stablecoins, in order to comprehensively lay out the underlying protocol of Web3 payments.

It may not be perfect yet, but it is important enough at the moment.

It is worth mentioning that at the international level, the seventh edition of the Balance of Payments Manual (BPM7) released by the IMF in 2024 will include stablecoins in the international asset statistics system for the first time, and emphasize its new role in cross-border payments and global financial flows. This not only lays the "global institutional legitimacy" for the sovereign compliance of stablecoins, but also provides institutional support and external recognition for the United States to build a stablecoin regulatory system and strengthen the significance of the US dollar anchor.

It can be said that the global institutional acceptance of stablecoins is becoming a prelude to sovereign competition in the digital currency era.

This is just as Lawyer Mankiw observed: The compliance story of Web3 is ultimately a competition for institutional construction, and the US dollar stablecoin is the most realistic battlefield in this competition.