Interpreting the US stablecoin legislation STABLE Act, the "hegemony" of Web3 dollars?

Written by: Iris, Mankun Lawyer

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 Treasury Bonds + Swift System." However, entering the Web3 era, decentralized financial technology is gradually shaking traditional clearing and payment paths, and stablecoins pegged to the US dollar are quietly becoming a new tool for "dollar outbound."

In this context, the significance of stablecoins has long transcended the compliance of a single crypto asset; it may very well be the digital vehicle for the continuation of "dollar hegemony" in the Web3 era.

On March 26, 2025, the U.S. Congress officially proposed the "STABLE Act" (Stablecoin Transparency and Accountability for a Better Ledger Economy Act), which systematically establishes the issuance thresholds, regulatory framework, and circulation boundaries for U.S. dollar stablecoins for the first time. As of now, the bill has been reviewed by the House Financial Services Committee on April 2 and is pending approval by the House and Senate before it can officially become law. This is not only a response to the long-standing regulatory vacuum in the stablecoin market but may also be a key step in attempting to create the "institutional infrastructure" for the next generation of U.S. dollar payment networks.

So, what problem is this new bill trying to address? Does the difference with MiCA reflect the "systemic strategy" of the United States? Is it paving the way for the Web3 dollar hegemony?

These questions will be shared one by one by Lawyer Mankun in this article.

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

According to the document, the stablecoin bill being introduced attempts to establish a clear compliance framework specifically applicable to "Payment Stablecoins." We have distilled its 5 core points:

1. Clarify the target of supervision and focus on "payment stablecoins"

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

To avoid the spread of risks, the legislation 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 legislation. Only stablecoins that achieve 1:1 full support by dollar assets, possess a transparent reserve structure, and are available for public daily trading circulation are considered "payment stablecoins" and are subject to the regulatory arrangements under this legislation.

From this point of view, what the STABLE Act really focuses on is not the "technical carrier" of stablecoins, but whether it is building a "payment network on the US dollar chain". What it needs to regulate is the issuance method and operation basis of the "digital dollar", not all tokens with the word USD.

2. Establish a "redemption right" mechanism, 1:1 USD pegged.

In addition to the regulatory access thresholds and issuer qualification requirements, the STABLE Act particularly emphasizes the "redemption rights" arrangement for stablecoin holders, which means that the public has the right to redeem their stablecoins for US dollars at a 1:1 ratio, and the issuer must fulfill this obligation at all times. This system arrangement essentially ensures that stablecoins do not become "pseudo-pegged assets" or "internally circulating system tokens."

At the same time, to prevent liquidity crises or run risks, the legislation also sets clear requirements for asset reserves and liquidity management. Issuers must hold high-quality, readily convertible dollar assets (such as government bonds, cash, central bank deposits, etc.) in a 1:1 ratio and are subject to ongoing review by the Federal Reserve. This means that stablecoin issuers cannot "use user funds to invest in high-risk assets," nor can they achieve "pegging" through algorithms or other derivative structures.

Compared to some early stablecoin models in the market that employed "partial reserves" and "ambiguous disclosures," the STABLE Act enshrines "1:1 redeemability" into federal legislation, representing a higher standard for the underlying credit mechanism of a "digital dollar alternative" set by the United States.

This not only addresses public concerns about stablecoins being "unpegged" and "collapsing," but also aims to create a system of institutional safeguards and legal trust as a framework for the dollar stablecoin, supporting its long-term use in the global settlement network.

3. Strengthen fund and reserve supervision to avoid "trust turnover".

Based on the premise that "stablecoins must be redeemable 1:1", the STABLE Act further specifies the types of reserve assets, management methods, and auditing mechanisms, intending to control risks from the source and avoid the hidden dangers of "superficial anchoring and actual idling."

Specifically, the bill requires all payment stablecoin issuers:

Must hold an equal amount of "High-Quality Liquid Assets", including cash, short-term U.S. Treasury bonds, Federal Reserve account deposits, etc., to protect users' redemption requests;

Reserve assets must not be used for lending, investment, or other purposes, in order to prevent systemic risks caused by "using reserve funds for profit."

Regularly undergo independent audits and regulatory reporting obligations, including reserve transparency disclosures, risk exposure reports, and asset portfolio descriptions, to ensure that the public and regulatory agencies can understand the asset base behind the stablecoin.

Reserve assets must be kept in accounts at FDIC-insured banks or other compliant custodial institutions, to prevent the project party from mixing them into their own fund pool.

The purpose of this institutional arrangement is to ensure that the "anchoring" is real, auditable, and fully redeemable, rather than being just "anchored in words, floating profits on the chain." Historical experience shows that the stablecoin market has repeatedly faced credit crises due to inadequate reserves, misappropriation of funds, or lack of information disclosure. The STABLE Act aims to address these risks at the institutional level, strengthening the "institutional backing" of the dollar anchoring.

On this basis, the bill also grants the Federal Reserve, the Treasury, and designated regulatory agencies long-term oversight authority over reserve management, including intervention measures such as freezing non-compliant accounts, suspending issuance rights, and enforcing redemptions, forming a relatively complete credit loop for stablecoins.

4. Establish a "registration system", all issuers are subject to regulation.

The STABLE Act does not adopt a "license classification management" approach in its regulatory path design, but instead establishes a unified registration system for entry. The core point is that all institutions intending to issue payment-type stablecoins, regardless of whether they are banks, must register with the Federal Reserve and are subject to federal-level regulatory scrutiny.

The bill establishes two types of legitimate issuer pathways: one is insured depository institutions, which are regulated by federal or state authorities and can directly apply to issue payment stablecoins; the other is nondepository trust institutions, which can also register as stablecoin issuers as long as they meet the prudent requirements set by the Federal Reserve.

The bill also emphasizes that the Federal Reserve not only has the authority to approve registrations but can also refuse or revoke registrations when it believes there is systemic risk. Furthermore, the Federal Reserve is granted the continuous right to review the reserve structures, solvency, capital ratios, and risk management policies of all issuers.

This means that in the future, the issuance of all dollar-pegged stablecoins must be incorporated into the federal regulatory network, and it will no longer be allowed to bypass scrutiny through means such as "only registered in the state" or "technology-neutral."

Compared to the previously more flexible multi-path discussion scheme (such as the GENIUS Act allowing for state-level regulation to start), the STABLE Act clearly demonstrates stronger regulatory uniformity and federal leadership, attempting to establish the legal boundaries of dollar stablecoins through a "national registration regulatory system".

5. Establish a federal-level licensing mechanism and clarify multiple regulatory pathways.

The STABLE Act also establishes a federal-level licensing system for stablecoin issuance and provides diverse compliance pathways for different types of issuers. This system 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 three optional paths for the issuance of "payment stablecoins":

First, become a federally recognized payment stablecoin issuer, directly supervised by U.S. federal banking regulators (such as OCC, FDIC, etc.) for examination and licensing;

Secondly, issuing stablecoins as a licensed savings bank or commercial bank can enjoy a higher level of trust endorsement, but must comply with traditional banking capital and risk control requirements.

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

The intention behind this system design is to encourage stablecoin issuers to "register on-chain" in accordance with the law, bringing them into the scope of financial supervision, but without a "one-size-fits-all" mandatory banking requirement, thus achieving controllable risks while protecting innovation.

In addition, the STABLE Act also grants 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-layered, multi-path, and scalable regulatory compliance network for stablecoins in the United States, enhancing system resilience while providing a unified institutional foundation for stablecoins to go overseas.

Compared to MiCA, the United States has taken a different route.

In the global stablecoin regulatory competition, the European Union is the region that started earliest and has the most complete framework. The "MiCA Regulation," which came into effect in 2023, incorporates all asset-backed crypto tokens into the regulatory view through two types: "EMT" (Electronic Money Token) and "ART" (Asset-Referenced Token), emphasizing macro-prudential oversight and financial stability, with the intention of building a "firewall" in the digital financial transformation.

However, the U.S. STABLE Act clearly chooses a different path: it does not aim to comprehensively regulate all stablecoins, nor does it build an all-encompassing regulatory system based on financial risks, but instead focuses on the core scenario of "payment stablecoins" and aims to construct the next-generation payment network on the dollar chain through institutional means.

The underlying logic of this "selective legislation" is not complicated — the US dollar does not need to dominate the stablecoin world; it only needs to solidify the most critical scenario: cross-border payments, on-chain transactions, and global circulation of the US dollar.

This is also why the STABLE Act does not attempt to establish a comprehensive asset regulatory system similar to MiCA, but rather focuses on a "on-chain dollar" that is 1:1 dollar-backed, has actual payment functions, and can be widely held and used by the public.

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

Different regulatory scopes: MiCA attempts to "capture everything", almost encompassing all stablecoin models, including those with extremely high risk based on reference assets; while the U.S. STABLE Act proactively narrows its applicability, focusing only on assets that are truly used for payments and can represent the "dollar function".

Regulatory goals differ: the European Union emphasizes financial order, system stability, and consumer protection, while the United States focuses more on clearly defining which assets can be considered a legal form of "on-chain dollars" through legislation, thus building the institutional infrastructure for dollar payments.

Different issuing entities: MiCA requires stablecoins to be issued by regulated electronic money institutions or trust companies, effectively locking the entry point within the financial institution system; while the STABLE Act establishes a "new licensing mechanism" that allows non-bank entities to participate in stablecoin issuance in accordance with compliance review, thereby preserving the potential for Web3 entrepreneurship and innovation.

Different reserve mechanisms: The United States requires 100% cash in USD or short-term government bonds, strictly excluding any leverage or illiquid assets; the European Union, on the other hand, allows various forms of assets including bank deposits, bonds, etc., which also reflects the differing levels of rigor in regulatory thinking.

The adaptability to Web3 entrepreneurship varies: MiCA, due to its heavy reliance on traditional financial licenses and auditing processes, naturally creates higher barriers for crypto startups; whereas the U.S. STABLE Act, although it has strict requirements, leaves room for innovation in its framework, aiming to encourage the development of "on-chain dollars" through compliance standards.

In short, what the United States has adopted is not a route of "full regulation," but a systematic approach that filters "qualified dollar payment assets" through compliance licenses. This not only reflects the United States' changing acceptance of Web3 technology but also serves as a "digital extension" of its global monetary strategy.

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

Summary of Lawyer Mankun

Making the US dollar the benchmark unit for global Web3 may be the real strategic intent behind the STABLE Act.

The U.S. government is trying to build a "next-generation digital dollar network" through stablecoins, which can be programmatically recognized, auditable, and integrated, in order to comprehensively layout the underlying protocols for 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 IMF's "Balance of Payments and International Investment Position Manual" (BPM7) released in 2024, for the first time, incorporates stablecoins into the international asset statistical system and emphasizes their new role in cross-border payments and global financial flows. This not only lays the foundation for the "global institutional legitimacy" of sovereign compliance for stablecoins but also provides institutional support and external recognition for the United States in building a stablecoin regulatory framework and strengthening the significance of the dollar's peg.

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

As observed by lawyer Mankun, the compliance narrative of Web3 is ultimately a competition of institutional building, and the dollar stablecoin is the most pragmatically significant battlefield in this competition.