The rules: GENIUS Act, MiCA and the global map

Why regulators care

A stablecoin looks like a bank account: you hand over a dollar and expect a dollar back. Regulators care because the promise can fail in the same ways a bank can, without a bank's safeguards.

The first risk is a run. If holders doubt the reserve, they all try to redeem at once, and an issuer holding anything less liquid than cash must sell assets at a loss. The collapse of TerraUSD in May 2022, which had no real reserve, and the USDC wobble in March 2023, when part of Circle's reserve was stuck in Silicon Valley Bank, showed both versions.

The second risk is crime. A token that moves across borders in seconds, without a bank in the middle, is useful for sanctions evasion and fraud unless the issuer can see and stop flows. The third risk is quieter: every dollar moved from a bank deposit into a stablecoin is a dollar the bank can no longer lend. Bank lobbies in the US and the EU argue this point hard, and it explains much of the fight over yield.

Regulators had already acted without a dedicated law. On 13 February 2023 New York's financial regulator ordered Paxos to stop minting BUSD, Binance's branded stablecoin, over its oversight of that partner. The token was fully backed and holders were paid out, but it disappeared by order. Dedicated laws replaced that case-by-case approach with fixed rules.

The GENIUS Act in plain words

The Guiding and Establishing National Innovation for U.S. Stablecoins Act, signed on 18 July 2025, is the US stablecoin law. It creates a category called a payment stablecoin: a token meant for payments whose issuer is legally bound to redeem it at a fixed dollar value. The law does not mention blockchains; it regulates the promise to pay.

Only three kinds of firm may issue one. A subsidiary of an insured bank. A non-bank company approved by the Office of the Comptroller of the Currency (OCC), the federal bank supervisor. Or a state-licensed issuer, but only while it has less than 10 bn USD in circulation; above that it must move under federal supervision. Large non-financial companies, the likes of Meta or Amazon, need unanimous approval from a federal committee.

The reserve rules are strict. Every token must be backed one-for-one by cash, insured bank deposits, Treasury bills of 93 days or less, repo loans backed by those bills, or government money-market funds. Gold, bitcoin, company debt and shares are not allowed. The issuer must publish monthly reserve reports checked by an accounting firm, redeem at par, and cannot lend the reserve out again except in narrow cases. If the issuer goes bankrupt, holders are paid from the reserve before other creditors.

Two more rules shape the business. The issuer may not pay holders interest or yield. And the issuer counts as a financial institution under the Bank Secrecy Act, the US anti-money-laundering law, so it must run a full compliance programme and be able to freeze, block and reject transactions on lawful orders. The under-the-hood chapter shows how that freeze power works in the contracts.

Foreign issuers get a narrower door. A stablecoin issued abroad can be offered in the US only if the Treasury finds the home country's regime comparable and the issuer meets US conditions. In September 2026 the Treasury had not yet published how it would judge comparability.

A law signed, rules still pending

A law is only a frame; agencies must write the detailed rules. The act gave them one year, to 18 July 2026. They missed it. By then the OCC, the FDIC and the Treasury had published proposals, but no agency had issued a final rule. The OCC, whose February 2026 proposal ran to 376 pages, has said it aims to finalise by November 2026 so it can accept applications early in 2027.

The act takes effect on the earlier of two dates: 120 days after final rules, or 18 January 2027. With no final rules in time, the backstop date applies. Until then the US has a signed law, a pile of proposals, and firms positioning early. On 12 December 2025 the OCC conditionally approved national trust bank charters for five crypto firms, including Circle, Ripple and Paxos.

MiCA: the EU's version

The EU got there first. Markets in Crypto-Assets, known as MiCA, applied its stablecoin rules from 30 June 2024 and its rules for exchanges and other service providers from 30 December 2024. Firms already operating had until 1 July 2026 to get licensed.

MiCA splits stablecoins in two. An e-money token (EMT) tracks a single currency, such as USDC or a euro token. An asset-referenced token (ART) tracks a basket or something else, such as a mix of currencies or a commodity. Only a bank or a licensed electronic-money institution may issue an EMT. Holders have the right to redeem at any time, at par, without a fee. Issuers may not pay interest, and neither may exchanges on the issuer's token.

The reserve rule is where MiCA and the US part ways. MiCA requires at least 30% of an EMT reserve to sit in deposits at EU banks, and 60% for tokens large enough to be designated significant. The US wants Treasury bills. One design keeps stablecoin money in European banks; the other channels it to the US government.

That deposit rule is why USDT left the EU's regulated venues. Tether never applied for authorisation and objected publicly to holding most of its reserve in bank deposits. European exchanges delisted it in stages: Coinbase removed it for users in the European Economic Area on 13 December 2024, Binance ended USDT spot trading there on 31 March 2025, and by the 1 July 2026 deadline no MiCA-licensed exchange offered USDT trading pairs. Holding USDT in your own wallet remains legal. Circle took the opposite path, obtaining a French electronic-money licence in July 2024 and becoming the first large global issuer compliant with MiCA.

The fight over yield

Every major regime bans the issuer from paying interest to holders. The reason is the deposit argument: a regulated dollar token that paid Treasury-bill rates would pull money out of bank accounts at scale.

The gap is in who else may pay. The US law names the issuer, not its partners. Coinbase pays USDC holders on its platform a reward of up to 3.5% a year, funded from its share of Circle's reserve income. The OCC's February 2026 proposal would presume that some issuer-affiliate reward arrangements break the ban, and banking groups have lobbied Congress to close the gap outright. The comment period closed on 1 May 2026, and the final rule was still pending in September.

Congress has not settled it either. The CLARITY Act, a broader bill on crypto market structure that also touches rewards, failed a procedural vote in the Senate on 15 September 2026 by 49 to 50, short of the 60 votes needed. The yield question now moves to the regulators' final rules and to whatever version of the bill returns.

Deep dive How the market routes around the ban

Yield-bearing products sit next to payment stablecoins rather than inside them. Sky's sUSDS and Ethena's sUSDe are separate tokens that pay savings or trading income and are not payment stablecoins under US law. Tokenized money-market funds such as BlackRock's BUIDL pay interest openly because they are registered as funds. The UK rules go furthest, restricting third parties from passing reserve income on to holders while still allowing non-yield rewards.

The rest of the map

Outside the US and EU, the main financial centres have written their own rules. They agree on the basics, full backing and redemption at par, and differ on who may issue, how the reserve is invested, and how far along they are.

Hong Kong shows how tight the gate can be. Its regulator received 36 applications by 30 September 2025 and granted two licences, both to bank-linked issuers: Anchorpoint, a joint venture of Standard Chartered, HKT and Animoca Brands, and HSBC. The UK added a two-tier design, in which the Bank of England will co-supervise any stablecoin large enough to be treated as systemic.

What changed for Tether and Circle

The rules pushed the two leaders onto opposite strategies. Neither became the other.

Tether moved its corporate base from the British Virgin Islands to El Salvador in January 2025, under a licence from that country's digital-asset regulator. It kept USDT outside both the EU and US regimes, accepted the loss of licensed EU exchanges, and built USAT as a separate route into the US. The bet is that USDT's users in emerging markets care more about liquidity than about a European or American licence.

Circle collected licences instead: a New York BitLicense in 2015, the French e-money licence in 2024, approvals in other markets, and in 2026 final OCC approval for a national trust bank. That stack is expensive to run, but it means no single regulator can cut USDC off from a large market the way MiCA cut off USDT.

Both strategies run into a second licence that stablecoin laws rarely mention. An issuance licence lets a firm mint tokens and hold the reserve. A payment licence lets it receive, hold and send customers' money: a banking licence, an e-money licence, or in the US a money-transmitter licence from each state. A firm with a perfect token still cannot take a customer's wire without the second one. Bridge, Stripe's stablecoin company, holds 33 US money-transmitter licences plus one EU e-money licence, and that licence map is what Stripe gained when it bought the company in 2025.

What to watch next

• OCC final rule by November 2026: the first final GENIUS Act rule will fix reserve, capital and reporting details, and open the application window for federal issuers.
• Rules on partner rewards: whether the final US rules treat programmes like Coinbase's 3.5% USDC reward as banned yield will decide how issuers and distributors share income.
• Treasury's comparability test for foreign issuers: it decides whether offshore tokens, USDT above all, can keep circulating through US platforms after 2027.
• Singapore's law and the UK application window: both regimes turn from policy into binding law between late 2026 and October 2027, and the first licences will show who is in.
• Bank-issued tokens: a group of 21 banks announced a joint dollar stablecoin on 1 September 2026, aimed at 2027. Clear rules make that possible; watch whether banks issue or keep to tokenized deposits.