The United States Officially Establishes Stablecoin Regulatory Framework

Recently, the U.S. President officially signed the "Guidance and Establishment of the American Stablecoin National Innovation Act" at the White House, marking the first formal establishment of a regulatory framework for digital stablecoins in the United States.

The president stated that stablecoins will increase demand for U.S. Treasury bonds, lower U.S. interest rates, and help ensure the dollar's status as the global reserve currency. Since taking office, he has introduced several initiatives to support cryptocurrencies. What impact will the recent acceleration of the legislative process for this bill have on the United States?

Accelerating the Legislative Process

On June 17, the U.S. Senate passed the bill with a vote of 68 in favor and 30 against, marking the first time the Senate has approved major cryptocurrency legislation.

On July 17, the U.S. House of Representatives voted to pass three bills related to stablecoins and other cryptocurrencies, including the "Guidance and Establishment of a National Stablecoin Innovation Act," the "Digital Asset Market Clarity Act," and the "Anti-Central Bank Digital Currency Surveillance National Act."

The next day, the President officially signed the bill, calling it "one of the greatest transformations in financial technology since the birth of the internet." He also reiterated that "a central bank digital currency will never be allowed in the United States."

Interpretation of U.S. Cryptocurrency-Related Legislation

Introduction to stablecoin

Cryptocurrencies are generated through algorithms and use a decentralized model, with the number updated for holders according to the algorithm. Major cryptocurrencies include Bitcoin, stablecoins, etc.

Unlike Bitcoin, stablecoins have a relatively stable price, usually pegged to the US dollar at a 1:1 ratio. After the implementation of the new legislation, stablecoins will be required to be backed by liquid assets such as the US dollar or US short-term Treasury bonds, while issuers will be required to disclose detailed reserves of stablecoins on a monthly basis.

Currently, the two largest stablecoins by market capitalization account for about 90% of the total market cap.

Stablecoins were first launched in 2014. In 2020, the global market value of stablecoins was only $20 billion. Since then, stablecoins have entered a rapid growth phase supported by two main drivers:

1. In cryptocurrency trading, over 90% of Bitcoin transactions are settled through major stablecoins, becoming "crypto dollar-pegged".

2. In emerging market countries, stablecoins have become the "digital safe-haven assets" for the common people, accounting for as much as 72% of the cryptocurrency trading volume in these countries.

According to statistics, the stablecoin market size is currently about $247 billion. The U.S. Treasury Secretary expects that the stablecoin market will grow to $3.7 trillion by 2030.

The purpose of the U.S. government promoting stablecoins

Experts point out that during the development of digital currencies, the value and influence of the US dollar have been impacted. The United States hopes to leverage the existing advantages of the dollar by promoting stablecoins, aiming to maintain and enhance its influence in the stablecoin and digital currency sectors.

Some officials suggested that issuing stablecoins might alleviate future pressure on US debt.

From a fundamental perspective, the U.S. government promotes stablecoins in hopes of maintaining its dominance in the global monetary and payment systems, further influencing the future global monetary and payment systems, and preserving America's own competitiveness.

Can the United States maintain the dollar's status through stablecoins?

Experts analyze that the influence of the US dollar globally is based on the international economic order established after World War II. The current government's measures indicate its disapproval of the US trade deficit and its desire to maintain a surplus or balance. This means that less US dollars will flow into the international market through trade, which may impose certain constraints on the global use of the dollar.

Whether a currency or payment method gains favor depends not only on the cost of use but also closely on the credibility represented by the currency behind it.

Experts believe that whether the United States can take on necessary responsibilities globally, fulfill its commitments, and maintain the stability of the global trade economy—rather than intervening in international economic and trade relations through sanctions, suppression, and long-arm jurisdiction—is crucial for the development of stablecoins. If these conditions cannot be met, merely changing the dollar into another form of expression, without altering the way the dollar's value is determined, means that both the dollar and the corresponding stablecoin may find it difficult to gain global and broader support in the future.

The bill has sparked controversy in the United States.

Analysis suggests that once this bill becomes law, it will pave the way for U.S. banks to issue digital assets independently. Some executives from large banks have shown great interest in developing digital asset businesses, but there are also bank executives who caution that the actual demand for digital currencies is still unclear.

The bill has also faced questioning and opposition from some members of both parties. Some Democrats believe that the bill does not provide adequate protections for consumers, national security, or financial stability. Opposing Republicans argue that the bill does not follow an executive order signed in January this year, which includes a prohibition on the implementation of central bank digital currency.