Author of this article: Iris Mankiw
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 up 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 "dollar hegemony" in the Web3 era.
On March 26, 2025, the U.S. 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 U.S. 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 yet to be voted on and passed by the House of Representatives and the Senate before it can officially become law. This is not only a response to the long-term regulatory vacuum in the stablecoin market, but perhaps also a key step in trying to build the next generation of the "institutional infrastructure" of the U.S. dollar payment network.
So, what exactly does this new bill solve? Does the difference with MiCA reflect the US’s “institutional strategy”? And is it paving the way for Web3 dollar hegemony?
Attorney Mankiw will share these issues one by one in this article.
What kind of US dollar stablecoin will the STABLE Act establish?
According to the document, the Stablecoin Act is an attempt to establish a clear and exclusive compliance framework for "Payment Stablecoins". We have summarized its five key 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: USD-anchored stablecoins issued to the public and directly used for payment and settlement. In other words, what is truly included in the regulatory framework are those crypto assets used as "USD alternatives" on the chain, rather than all tokens claiming to be pegged to the USD.
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 in daily transactions for the public are considered "payment stablecoins" and need to be subject to regulatory arrangements under this bill.
From this perspective, the STABLE Act is not really concerned about the "technical carrier" of stablecoins, but whether it is building a "dollar chain payment network." It regulates the issuance method and operating basis of the "digital dollar", not all tokens with the word USD.
2. Establishing the “right of redemption” mechanism, 1:1 USD anchoring
In addition to regulatory entry thresholds and issuer qualification requirements, the STABLE Act particularly emphasizes the "redemption rights" of stablecoin holders, that is, the public has the right to redeem the stablecoins in their hands for US dollar fiat currency at a 1:1 ratio, 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 "internal circulation system tokens."
At the same time, in order to prevent liquidity crises or bank runs, the bill also sets clear requirements for asset reserves and liquidity management. Issuers must hold high-quality, readily liquid U.S. dollar assets (such as government 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 early stablecoin models with "partial reserves" and "vague disclosures" in the market, the STABLE Act incorporates "1:1 redeemability" into federal legislation, which represents the United States' higher requirements for the underlying credit mechanism of the "digital dollar alternative."
This not only responds to the public's concerns about the "depegging" and "explosion" of stablecoins, but also aims to create an anchor system of institutional guarantees + legal trust for the US dollar stablecoin to support its long-term use in the global clearing network.
3. Strengthen supervision of funds and reserves to avoid “trust in vain”
On the basis that "stablecoins must be redeemable at a 1:1 ratio", the STABLE Act further clarifies the types, management methods and audit mechanisms of reserve assets, with the intention of controlling risks at the source and avoiding the hidden danger of "surface anchoring and actual idleness".
Specifically, the bill requires all payment stablecoin issuers to:
An equal amount of "high-quality liquid assets" must be held, including cash, short-term U.S. Treasury bonds, and deposits in Federal Reserve accounts, to guarantee user redemption requests;
Reserve assets must not be used for lending, investment or other purposes to prevent systemic risks caused by "using reserve money to make profits";
Regularly accept independent audit and regulatory reporting obligations, including reserve transparency disclosure, risk exposure reporting, asset portfolio description, etc., to ensure that the public and regulators can understand the asset base behind stablecoins;
Reserve assets must be kept in isolation in FDIC-insured bank or other compliant custodian accounts to prevent project parties from incorporating them into their own funding 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 gives the Federal Reserve, the Treasury Department and designated regulatory agencies long-term supervisory rights over reserve management, including freezing illegal accounts, suspending issuance rights, forced redemption and other intervention measures, forming a relatively complete stablecoin credit closed loop.
4. Establish a “registration system” to bring all issuers under supervision
In terms of regulatory path design, the STABLE Act does not adopt "license classification management", but instead establishes a unified registration-based access mechanism. The core point is that all institutions that intend to issue payment-type stablecoins, whether or not they are banks, 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 deposit institutions (Insured Depository Institutions), which can directly apply to issue payment stablecoins; the other is non-depository institutions (Nondepository 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 can also refuse or revoke registration if 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, the issuance of all dollar-payment stablecoins must be included in the federal regulatory network, and it will no longer be allowed to circumvent review through methods such as "state registration only" or "technology neutrality".
Compared with the previous more relaxed multi-path discussion plan (such as the GENIUS Act that allows starting with state regulation), the STABLE Act clearly demonstrates stronger regulatory uniformity and federal leadership, attempting to establish the legal boundaries of the US dollar stablecoin with a "national registration and regulatory 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 diversified compliance paths for different types of issuers. This institutional arrangement not only continues the "federal-state dual-track" structure of the U.S. financial regulatory system, but also responds to the market's expectations for flexibility in compliance thresholds.
The bill sets out 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 the U.S. federal banking regulator (such as OCC, FDIC, etc.);
Second, as a licensed savings bank or commercial bank issuing stablecoins, it can enjoy a higher level of trust endorsement, but it must comply with traditional bank capital and risk control requirements;
Third, operate based on state-level licenses, but must accept federal-level “registration + supervision” and meet unified standards such as reserves, transparency, and anti-money laundering.
The intention behind this institutional design is to encourage stablecoin issuers to "register on the chain" in accordance with the law and include them in the scope of financial supervision, but not to force banking on a "one-size-fits-all" basis, 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 to 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.
The United States has taken a different route compared to MiCA
In the global stablecoin regulatory competition, the EU 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: "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 United States' "STABLE Act" has obviously chosen another path: it does not comprehensively regulate all stablecoins, nor does it build an all-encompassing regulatory system based on financial risks. Instead, it focuses on the core scenario of "payment-type stablecoins" and uses an institutionalized approach 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 "dominate 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 full-asset regulatory system similar to MiCA, but instead focuses on "on-chain dollars" that are 1:1 backed by the U.S. dollar, have actual payment functions, and are acceptable to the public for widespread holding and use.
From the perspective of institutional design, the two present a sharp contrast:
Different regulatory scope: MiCA attempts to "catch everything in one fell swoop", 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 "function of the US dollar."
Different regulatory objectives: The EU emphasizes financial order, system stability and consumer protection, while the United States focuses more on clarifying through laws which assets can serve as legal forms of "on-chain dollars" to build an institutional-level dollar payment infrastructure.
Different issuing entities: MiCA requires that stablecoins must be issued by regulated electronic money institutions or trust companies, almost locking the entrance within the financial institution system; while the STABLE Act establishes a "new licensing mechanism" that allows non-bank entities that have passed 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% U.S. dollar cash or short-term Treasury bonds, strictly excluding any leverage or illiquid assets; the European Union allows a variety of asset forms including bank deposits, bonds, etc., which also reflects the different levels of rigor in regulatory thinking.
Different adaptability to Web3 startups: MiCA is highly dependent on traditional financial licenses and audit processes, which naturally forms a high barrier for crypto startups; while the US STABLE Act, although strict in requirements, leaves room for innovation in the system, aiming to encourage the development of "on-chain dollars" through compliance standards.
In short, the United States is not taking a route of "comprehensive regulation", but rather a system path of screening "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 just a financial regulatory tool, but the beginning of the institutionalization of the digital dollar system.
Attorney Mankiw's Summary
"Making the U.S. dollar the benchmark unit for global Web3" may be the real strategic intention behind the STABLE Act.
The U.S. government is trying to use stablecoins to build a "new generation digital dollar network" that can be identified by programs, audited, and integrated, in order to comprehensively deploy the underlying Web3 payment protocol.
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 included stablecoins in the international asset statistics system for the first time, and emphasized their new role in cross-border payments and global financial flows. This not only lays the foundation for the "global institutional legitimacy" of 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 dollar anchor.
It can be said that the global institutional acceptance of stablecoins is becoming a prelude to sovereign competition in the era of digital currency.
This is just as attorney Mankiw observed: The compliance story of Web3 is ultimately a competition of institutional building, and the US dollar stablecoin is the most realistic battlefield in this competition.
