Stablecoins: Types and Regulation

By September 2026 the stablecoin is a licensable product in eight jurisdictions at once; four of them set the pattern the rest follow.

• The EU has applied MiCA to issuers since 30 June 2024.
• Hong Kong brought its Stablecoins Ordinance into force on 1 August 2025 and granted the first licences on 10 April 2026.
• The United States enacted the GENIUS Act on 18 July 2025 and is working through its rulemaking.
• The United Kingdom published the FCA's final rules on 30 June 2026.

The requirements converge on three points: full backing of the issued amount by liquid reserves, the holder's right to redeem at par, and a ban on the issuer paying interest.

The segment's scale as of mid-2026 is roughly $315 billion in total capitalization: USDT around $186 billion, USDC about $75 billion, with two issuers holding more than 80% of the market (CoinLaw estimate on exchange and on-chain data, as of 21.06.2026). Practically the entire volume is pegged to the dollar.

For a private capital holder the change is practical: the token now has an identified issuer, a defined claim, and a jurisdiction where that claim is enforced. At the same time the perimeters of admission have diverged — a token licensed in one jurisdiction does not necessarily trade in another. How crypto assets sit inside personal structures is covered in crypto for private wealth.

Reserves, Redemption and Issuer

A stablecoin is a crypto asset whose value is pegged to an external reference, usually a single official currency. What matters legally is the mechanics of holding that peg: what backs the token, who owns the reserves, and what claim the holder has against the issuer. By backing, the segment splits into three designs. Fiat-backed tokens hold reserves one-to-one in cash and short-term government bonds — this covers USDT, USDC and every licensed issuance. Crypto-backed tokens are issued against over-collateralized deposits of other crypto assets. Algorithmic designs held parity without full backing; the collapse of TerraUSD in May 2022 closed that design off from the regulated field, and Hong Kong and the US expressly excluded it from their regimes.

Regulators separate several forms of on-chain money that look identical to the user.

The distinction drives both supervision and the scope of holder protection.

The split explains why a bank offering a client a tokenized deposit stays inside banking regulation and falls outside the GENIUS Act; a comparison of all four forms sits in the digital dollar in four legal forms.

Europe: MiCA in application

The MiCA regulation split stablecoins into two categories. An e-money token (EMT) is pegged to a single official currency; only a credit institution or a licensed electronic money institution may issue it, the holder redeems at par at any time, and reserves must at least cover the amount issued. An asset-referenced token (ART) is pegged to a basket of currencies, commodities or crypto assets and is regulated more strictly. Paying interest to holders is prohibited for both categories and for crypto-asset service providers.

Supervision is tiered: an ordinary issuer sits with the national regulator of its home Member State, significant ARTs pass under the EBA's direct supervision, and significant EMTs are supervised by the EBA jointly with the national regulator (Article 117).

Application shows in the registers. As of 25 August 2026, 23 issuers hold EMT authorization and 43 white papers have been notified (CASP Tracker aggregate across the national registers and the ESMA register, as of 25.08.2026): Circle with USDC and EURC in France, Société Générale-Forge, Paxos Issuance Europe in Finland, Banking Circle in Luxembourg, Quantoz in the Netherlands, StablR in Malta, Monerium in Iceland. Tether has no authorization and USDT has no notified white paper — European venues ended spot trading of the token for EEA users by 31 March 2025 under the ESMA deadline. The transitional window for crypto-asset service providers closed on 1 July 2026, and operating without authorization leads to delisting from regulated EU venues.

United States: the Act is law, the final rules are not

The GENIUS Act (P.L. 119-27) was signed on 18 July 2025 and became the first federal regime for payment stablecoins. Its requirements bite on the earlier of two dates — 18 January 2027, or 120 days after the primary federal regulators issue final rules. As of 26 August 2026 there are no final rules: the OCC published its proposal on 2 March 2026, the FDIC on 10 April 2026, and the US Treasury on 18 August 2026 with comments open until 19 October. The planning date remains 18 January 2027.

Who may issue

The circle of issuers is drawn as three categories of permitted payment stablecoin issuers: subsidiaries of insured depository institutions, federal qualified issuers supervised by the OCC, and state-qualified issuers with up to $10 billion outstanding — above that threshold an issuer moves under federal supervision. Reserves back the issuance one-to-one in cash, short-term Treasuries, repo and money market funds, with monthly disclosure of reserve composition. Paying holders interest or yield in any form is prohibited (sec. 4(a)).

A separate date is 18 July 2028: from then digital asset service providers may not offer or sell in the US tokens of issuers without permitted issuer status. Issuers come under the Bank Secrecy Act with the full AML and sanctions compliance set, may not create the impression that the token is government-insured or serves as legal tender, and on the issuer's bankruptcy holder claims rank first. A foreign issuer is admitted to the US market where the Treasury determines its home regime comparable, it registers with the OCC, and it holds reserves at US financial institutions.

The first issuers

Specific institutions are already on that route: Stripe's stablecoin unit won conditional OCC approval for a national trust, SoFi launched SoFiUSD in May 2026 and became the first US national bank with its own stablecoin on a banking platform, and Sony's trust bank received preliminary approval for an OCC national trust charter in July. The implementation calendar and the analysis of the provisions sit in the GENIUS Act article.

Hong Kong: licences granted

The Stablecoins Ordinance (Cap. 656) has been in force since 1 August 2025. An HKMA licence is mandatory for the issuer of a token pegged to the Hong Kong dollar wherever it is issued, and for any issuance in Hong Kong itself; minimum paid-up capital is HKD 25 million; algorithmic designs are excluded from the regime.

On 10 April 2026 the HKMA granted the first two licences — to Anchorpoint Financial, a joint venture of Standard Chartered, Animoca and HKT, and to The Hongkong and Shanghai Banking Corporation. The HKMA itself maintains the register of licensed issuers, and the licensees stated they would launch within a few months of the grant. The perimeter of the regime, the reserve requirements and the distribution rules are unpacked in the analysis of the Stablecoins Ordinance.

United Kingdom: rules adopted, regime live in 2027

The FCA published final rules for issuing qualifying stablecoins on 30 June 2026 — PS26/10, following consultation CP25/14, within a package of five policy statements resting on the FSMA 2000 (Cryptoassets) Regulations 2026 of 4 February 2026.

• The backing asset pool is held on statutory trust for holders under CASS 16.
• Redemption is executed by T+1, with the clock starting when the issuer receives the redeemed token in its wallet — that is, after KYC is already complete.
• The issuer may not pay holders interest or other yield from the backing assets, while third-party rewards are permitted.
• Up to 20% of the pool may sit with intragroup custodians.

On 22 June 2026 the Bank of England published a policy statement and a draft Code of Practice for systemic sterling stablecoins. The individual holding limits from the November 2025 consultation were replaced by a temporary issuance guardrail — £40 billion per systemic stablecoin; up to 70% of reserves may sit in short-term gilts, with the remainder on deposit at the central bank. The Code is to be finalized by the end of 2026, with the regime operating from 2027. How client money protection works for UK crypto firms is described in the safeguarding regime.

Singapore and the rest of Asia

MAS finalized its framework for single-currency stablecoins on 15 August 2023, but as of 26 August 2026 it has not been implemented: amendments to the Payment Services Act 2019 have not been passed, there is no mandatory SCS issuer licence, and the regime remains stated regulatory policy. Circulation of tokens nonetheless falls under the MAS approach to payment services through the digital payment token services licence. Japan, South Korea and the UAE follow their own tracks — the summary sits in the review of Asian regimes.

The Singapore framework closes the Asian tracks a holder can act on today; eight perimeters in total now license the product.

Eight regimes on one map

Five of the eight already license issuance in force — the EU, Hong Kong, Japan, the UAE and the AIFC in Kazakhstan. The US and the UK have their rules and not their start dates. Singapore has a framework and no law. What separates them is not philosophy but four numbers: the capital an issuer must find, what the reserve may hold and who keeps it, how fast redemption must settle, and who may be sold the token. The prudential cut first.

Read down the capital column and the regimes sort into three tiers. Hong Kong and the UAE ask for a hard number up front — HKD 25m, AED 15m plus half a per cent of the float — and get few applicants. The EU and the UK ask for a small floor and a percentage that grows with the book: €350,000 or £350,000 is the entrance, 2% of average outstanding e-money or 1% of average issuance is the actual bill. The US asks for nothing in the statute and everything in the OCC's proposal — twelve months of running costs held in liquid assets on top of the reserve is a heavier constraint than any of the fixed floors.

The redemption column is where a holder's money actually lives. Hong Kong and the UAE settle on the next business day, the UK on T+1, New York on T+2, Singapore within five business days. The EU alone writes no deadline at all and writes an unconditional right instead — at par, at any time, with no fee — which is stronger in normal conditions and weaker under stress, because the recovery plan may impose liquidity fees, daily caps and suspension.

Then market access and the state of play.

The interest ban is the one line that holds in all eight, and it is the line that decides what a stablecoin can be. It is not a drafting accident repeated eight times: a token that paid a return would be a deposit or a fund unit, and every one of these jurisdictions has a separate rulebook for those. So a regulated stablecoin is a settlement instrument by construction, and any yield on a token balance comes from something other than the token — a lending arrangement, a platform promotion, a different product entirely.

Retail access is where the eight genuinely part. Hong Kong is the only one that limits which tokens may reach a retail buyer, and the limit bites: USDT and USDC may be offered there to professional investors only. The UAE reaches a similar result from the other end — a foreign payment token is lawful in the Emirates for buying virtual assets and not for paying for goods. The EU passports and nobody else does: an authorisation in Malta or Lithuania sells across the EEA, while a Hong Kong, UK, UAE or AIFC licence stops at the border.

Two asymmetries are worth holding on to. The EU is the only regime that regulates by currency rather than by issuer — the Article 23 cap follows a dollar or franc peg and leaves the złoty and the krona alone — which makes a non-euro token structurally harder to scale in Europe than an equally large euro one. And Hong Kong is the only regime whose regulator openly rations licences: the HKMA has said the total will stay very limited, so an applicant can satisfy every criterion in the Ordinance and still be refused because the market is judged full enough.

Private capital: settlement, treasury, custody

The practical value shows where a bank payment is slow or expensive. A cross-border transfer arrives in minutes and costs a network fee, deal settlement closes outside banking hours, and a holding company's treasury keeps operating cash in the token and pays contractors across dozens of countries. Routing between tokens and fiat accounts is handled by providers — BVNK, Zerohash, Conduit; the interbank settlement infrastructure is being built by Partior and Fnality — how such systems choose their settlement asset is unpacked in wholesale DLT settlement. Transfers between providers fall under the travel rule, and correspondent banks' requirements on segregation of client funds are described in safeguarding at correspondents. Start with the purpose: settle in an existing token or arrange a new branded issuance. Singapore Gulf Bank has integrated USDC minting and redemption with bank accounts, providing access to an existing settlement asset. A branded issuance also requires comparison of the issuer, reserve, redemption rights and distribution markets. British Atlantic Bank uses USDC/USDT for settlement of USD credit drawdowns and also offers to arrange a partner-branded stablecoin. The latter brings together an appointed issuer, segregated fiat reserves, minting after receipt of money and redemption at par; the issuer, token and permitted markets are established for each launch. Setup costs $50,000, followed by $3,000 monthly and 0.10% of minting or redemption value, with a minimum fee of $100 per operation. These are distinct choices for using an existing settlement asset or organising issuance around the partner’s service.

Custody determines the scope of the holder's rights. A token on an exchange or with a broker is recorded in an omnibus pool, and on the venue's bankruptcy the client's claim becomes unsecured. A licensed custodian delivers segregation and contractual title. Own keys remove counterparty risk and shift the risk of losing access onto the holder, which matters separately for inheritance. The right of redemption at par runs against the issuer and depends on completing KYC with that issuer.

The token's sanctions resilience is limited by its own design. Every licensed issuer must have a freeze function, and it is used: Tether states that as of 23 April 2026 it had blocked more than $4.4 billion in total, including over $2.1 billion at the request of US authorities, working with more than 340 agencies in 65 countries across more than 2,300 cases. A stablecoin speeds up settlement and keeps the holder inside the sanctions and tax perimeter.

Which token a family treasury holds

A regime is chosen by an issuer; a holder chooses a token. The eight names below carry almost the whole balance of private treasury positions, and they differ on the four things that decide a treasury's outcome: who owes the claim, who verifies the reserve, whether the holder can redeem directly rather than through a venue, and what that redemption costs.

Three patterns come out of the table. The first is that the regime, not the brand, sets the redemption economics: a MiCA EMT cannot charge a redemption fee at all, while the largest token by capitalisation charges a minimum of US$1,000 and will not deal below US$100,000. The second is that only one issuer publishes a fee schedule. For the regulated names the answer to what redemption costs is either nothing, by law, or not published — which means the number sits in the onboarding agreement and has to be read there rather than inferred from the ticker.

The third is that audit quality does not track size. Quarterly reports from a certifier few have heard of sit behind the largest float; monthly attestation by a US-licensed CPA within thirty days of month end is the New York standard and is met by tokens a hundredth of that size. MiCA, for its part, requires no monthly attestation of a non-significant EMT at all — so a European token can be the most tightly regulated on reserve composition and the least frequently verified in public.

Profile to token

Two numbers make the trade-off concrete. Take a family office holding US$5 million of working cash on chain. Redeeming the whole position with Tether costs the greater of US$1,000 or 0.1% — that is US$5,000, plus the one-off US$150 verification charge. The same US$5 million redeemed against Circle's EU issuer costs nothing, because MiCA forbids the fee. On a treasury that rotates the position four times a year the difference is US$20,000 of pure friction, invisible on screen because both tokens trade at a dollar.

The second number is larger and applies to every token in the table. None of them pays a coupon, because all eight regimes forbid it. Twelve months of a US$5 million token balance foregoes roughly US$200,000 at a 4% money market rate. That is the real price of the interest ban, and the reason a treasury holds the token across settlement windows rather than as a store of value — the yield-bearing forms are money market funds and tokenised deposits, compared side by side in the digital dollar in four legal forms.

Risks

Tax and transparency

For tax purposes a stablecoin is treated as an ordinary crypto asset. Selling, exchanging or settling in a token creates a taxable event in many jurisdictions even when the price has not moved, so transactions have to be tracked and documented line by line. Data on crypto accounts falls inside the automatic exchange perimeter: the CARF standard for crypto assets and the European DAC8 build on the logic of CRS. Where the token is held affects both the tax nexus and how the asset passes by inheritance. The competition between dollar tokens and central bank digital currency projects is covered in the CBDC landscape.