Analysis of the Regulatory Framework for Stablecoins: Balancing Innovation and Risk

Stablecoins, as an important component of the cryptocurrency ecosystem, have shown tremendous growth potential in recent years. However, their technological innovations have also brought about potential risks. According to data analysis, the total amount of illegal transactions completed through stablecoins reached 40 billion USD between 2022 and 2023. Among them, most cryptocurrency scams and transactions aimed at evading sanctions utilized stablecoins.

To balance innovation and risk, global regulatory agencies are accelerating the construction of a systemic regulatory framework for stablecoins. The United States is advancing relevant legislative processes, while Hong Kong has passed relevant regulations and established a regulatory mechanism. This approach aims to achieve a dynamic balance between technological neutrality and risk prevention, marking the evolution of the stablecoin industry from reckless growth to a stage of compliance.

Main Risks of Stablecoins

The stablecoin industry mainly faces two major risks:

1. Endogenous risk: The value stability of stablecoins is built on a balance of market consensus and trust mechanisms. Once the foundation of trust shows cracks, the stability of stablecoins will quickly collapse, potentially triggering a chain reaction in the market. The Luna-UST incident in 2022 fully exposed this risk.

2. External Risks: The anonymity and cross-border liquidity of stablecoins make them susceptible to illegal activities. In the absence of effective regulation, especially anti-money laundering and counter-terrorism financing compliance requirements, stablecoins may become a covert channel for illicit fund flows.

Regulatory Framework for Stablecoins in Major Countries and Regions

Hong Kong

1. Regulatory Process

• January 2022: The Hong Kong Monetary Authority released a discussion paper exploring the regulatory framework for stablecoins.
• December 2023: Release of the consultation document for the draft regulatory framework.
• March to July 2024: Launch the "stablecoin sandbox" program.
• December 2024: Publication of the stablecoin regulatory draft.

2. Main Content of the Regulatory Framework

• Clearly define the definition of "designated stablecoin" and regulated activities.
• Establish issuer access thresholds, including requirements for corporate identity, financial resources, etc.
• Require equal or excess reserves and regularly disclose reserve asset information.
• Establish anti-money laundering mechanisms to safeguard the redemption rights of holders.
• Establish a "stablecoin sandbox" mechanism to provide issuers with a testing environment.

America

1. Regulatory Process

• The "GENIUS Act" was passed in the Senate in March 2025.
• The "STABLE Act" was passed by the House Financial Services Committee in April 2025.

2. Main Content of the Regulatory Framework

• Define the regulatory payment stablecoin definition.
• Specify the types of issuers that are permitted.
• Requirement of 1:1 reserve support, clearly specify the category of reserve assets.
• Specify reserve information disclosure and audit requirements.
• Interest payments to holders are prohibited.
• Build a parallel regulatory system at the federal and state levels.

The Impact of Regulatory Frameworks on the Stablecoin Industry

With the improvement of the regulatory framework, the stablecoin industry will enter a new stage of balanced development between standardization and innovation. This requires issuers to enhance their compliance capabilities and provides institutional space for exploring new business models. In the future, the stablecoin industry will seek new growth momentum and value creation points within the global financial regulatory system through technological iteration and institutional adaptation.