Laboure set out how stablecoins can be categorised into four main categories: fiat-backed, asset-backed, crypto-backed and algorithmic. \u201cThe market is overwhelmingly dominated by those pegged to the USD, representing 99% of total market capitalisation.\u201d In her paper, this is explained further: \u201cThe popularity of dollar-backed stablecoins stems from their utility as a medium of exchange and their aim to maintain a \u2018stable\u2019 value by pegging their price to the \u2018safe haven\u2019 properties of a portfolio of cash, bank deposits, and short-term securities (mainly US Treasuries), issuing tokens 1:1 against these assets.\u201d<\/p>\n
Around 85% to 90% of stablecoins are used for crypto trading as several countries do not allow direct investment into crypto assets and, said Laboure, it is \u201ceasier, faster and less expensive to have stablecoins for this\u201d. Stablecoins are increasingly recognised for real-world utility in B2B payments and remittances, and she estimates around 2% are used for retail payments, 2% for remittances and a further 7% for settling payments for real-world asset trades. Key benefits include lower transaction fees and FX conversion costs along with improved transaction transparency, streamlined reconciliation and strengthened compliance.<\/p>\n
The Guiding and Establishing National Innovation for US Stablecoins (GENIUS) Act passed in July 20253<\/a> was pivotal because, explained Laboure, \u201cit encouraged USD-stablecoin growth\u201d. The GENIUS Act:<\/p>\n Focuses only on stablecoins (not crypto broadly). In comparison, the EU\u2019s MICA is a broad crypto rulebook designed to protect monetary sovereignty and financial stability and:<\/p>\n Covers crypto broadly, not just stablecoins. While the potential for rapid USD-backed stablecoin growth extends American monetary reach, it also introduces new risks to the international monetary system. These risks span financial stability, monetary policy transmission, and capital flow management, warned Laboure, pointing out that in 2024 63% of illicit crypto use involved stablecoins.<\/p>\n
\nLegally creates \u201cpermitted stablecoin issuers\u201d for the first-time. Issuers can be non-banks but must meet bank-like federal or state standards.
\nHas a strict 1:1 backing: US cash, \u226493-day T-bills, repos\/reverse repos, or money-market funds holding those assets.
\nNo yield by issuers \u2013 so stablecoins are treated as money, not investment products (but distributors such as exchanges, brokers, dealers, and affiliates can and do offer these incentives. How this loophole in the US regulation might be closed has yet to be clarified).4<\/a>
\nFull AML\/KYC\/BSA alignment with banks.
\nApplies to foreign issuers operating in the US (for example, Tether).<\/p>\n
\nAddresses explicit concern about threats to the euro and monetary transmission.
\nApplies caps on non-euro stablecoins (\u20ac200m transactions per day).
\nReserves must be held in the EU, with EU-regulated custodians.
\nIssuers must establish and maintain an EU presence.<\/p>\n