Author: Guo Liqin, Researcher of Caijing
Editor: Zhu Tao
Since late May, with the key progress in stablecoin legislation in the United States and Hong Kong, China, the global financial market has set off a new wave of craze for cryptocurrencies represented by stablecoins.
Supporters believe that this is an important step for cryptocurrency to be integrated into the global mainstream financial market, and that blockchain technology will reshape the traditional financial payment system; while skeptics believe that the security challenges it brings should be weighed against the cost reduction and efficiency increase brought by cryptocurrency. The game between the various parties will gradually move from behind the scenes to the foreground as the US legislative process progresses.
On the evening of May 19th, local time , the U.S. Senate held a key procedural vote on the stablecoin regulation bill, which was passed with 66 votes in favor and 32 votes against. The bill is officially called the "Guidance and Establishment of the United States Stablecoin National Innovation Act" (hereinafter referred to as the "GENIUS Act"), which will regulate U.S. stablecoin issuers at the federal level.
Later, David O. Sacks, the White House's director of cryptocurrency and artificial intelligence, further released positive expectations, saying that the GENIUS Act will be passed with "strong bipartisan support" and boost market demand for U.S. Treasuries. Sacks sees the bill as a national economic strategy that will enhance the dollar's network dominance.
On March 7, 2025, David Sacks, the White House's director of cryptocurrency and artificial intelligence, spoke to the media about digital currency and the executive order on the U.S. digital asset reserve. Photo/Visual China
The "stablecoin" in the bill is a cryptocurrency anchored to stable assets (such as the US dollar, gold, etc.), which aims to reduce price fluctuations and provide a stable value storage and transaction medium. Looking back, the birth of stablecoins was to cope with the extreme volatility of cryptocurrencies such as Bitcoin and Ethereum. The most well-known stablecoins are USDT issued by Tether and USDC issued by Circle, both of which are anchored to the US dollar at a 1:1 ratio. The two together account for about 90% of the global stablecoin market value. According to reports from multiple institutions, the total market value of global stablecoins has increased by more than 22 times in the past five years to nearly US$250 billion at present.
On May 21, the Legislative Council of the Hong Kong Special Administrative Region of China officially passed the Stablecoin Ordinance Bill, becoming the first comprehensive regulation of stablecoins in the Asia-Pacific region. On May 30, the Hong Kong Special Administrative Region Government published the Stablecoin Ordinance in the Gazette, which means that the Stablecoin Ordinance officially came into effect and became a law.
The financial market was the first to welcome the boom. On May 22, Bitcoin rose above the $110,000 mark, breaking the record high set when Trump took office on January 20. On June 2, in the Hong Kong stock market, stablecoin concept stocks rose collectively, among which Lianlian Digital once rose by 80%, Yika once rose by nearly 50%, and OKEx once rose by more than 45%. On June 3, the concept of digital currency in A-shares was repeatedly active.
On June 5, local time , USDC issuer Circle was listed on the New York Stock Exchange with the stock code "CRCL". This is the first IPO in the field of stablecoins. The opening price on the first day soared 122.58% to $69, and the highest intraday price reached $103, with the maximum increase of 234.68%. Due to the excessive volatility of the price increase, Circle triggered a temporary circuit breaker during the trading session. The stock price finally closed at $83.23, a single-day increase of 168.5%, and the total market value exceeded $18 billion.
But more than three weeks have passed since the last push for stablecoin legislation in the United States , and the relevant parties are still in the game. Skeptics continue to criticize the conflict of interest caused by the Trump family's entry into the stablecoin market. Other accusations include corruption, money laundering, fraud scandals, and the "transparency" of stablecoins themselves. The latest development is that Senate Majority Leader John Thune plans to launch a new round of critical procedural votes on the bill as early as June 11 local time .
1. Legislative progress is slower than expected
Although Trump has shown support for the cryptocurrency industry since his second term, he still needs to compromise with Congress on the legislative process.
According to Sun Yuanzhao, a scholar in the United States, Trump's call for accelerated legislation may actually affect Republican lawmakers, because if they do not comply, they will likely be seen as "betrayers." However, since the Republicans currently have only a slight majority in both houses, the bill must also gain the support of some Democratic lawmakers if it is to be passed.
The U.S. Congress often needs to go through a long political struggle to pass a new law. In terms of procedures, it must go through multiple consultations and compromises during the deliberations of the Senate and the House of Representatives. The stronger the bipartisan consensus, the easier it is to pass the law. Previously, the market widely believed that stablecoin legislation with more bipartisan support would be the first to achieve a breakthrough.
Cryptocurrencies generally include five types: stablecoins, central bank digital currencies, financial products and tokenized real-world assets ( RWA), tokens not backed by off-chain assets (Bitcoin, Ethereum), and meme coins (Trumpcoin, Dogecoin). During the last U.S. Congress, since most stablecoins were anchored to U.S. dollar assets, which helped the U.S. dollar maintain its position as the world's dominant currency, relevant legislation received more support from both parties. From a market perspective, stablecoins have also received widespread attention in cross-border payments, cryptocurrency transactions, transfers between digital asset exchanges, and value storage in countries where the use of the U.S. dollar may be restricted.
The GENIUS Act was initiated by a bipartisan group including Senators Bill Hagerty and Tim Scott on February 4, 2025. The bill determines federal or state regulators based on the scale of stablecoin issuance and generally adopts bank-like regulatory requirements for issuers.
The key points of the early version of the bill include: 1. Defining payment stablecoins as a digital asset (not a "security") used for payment or settlement that is anchored to a fixed monetary value; 2. Establishing clear procedures for institutions seeking licenses to issue stablecoins; 3. Implementing reserve requirements for stablecoin issuers, with the total value of reserves at least equal to the amount of stablecoins in circulation, and issuers issuing monthly certifications performed by independent auditors to confirm the adequacy of reserves; 4. For issuers of stablecoins issuing more than $10 billion, adopt the regulatory framework of the Federal Reserve (Fed) for depository institutions and the framework of the Office of the Comptroller of the Currency (OCC) for non-bank issuers; 5. Allowing states to regulate issuers with a market value of less than $10 billion, and providing an exemption process for issuers exceeding this threshold to continue to be regulated at the state level, etc.
So far, the GENIUS Act has passed two key procedural votes with bipartisan support.
On March 13, local time , the U.S. Senate Banking Committee quickly passed the GENIUS Act with a vote of 18 to 6, which was the first step for the bill to become law ( see: U.S. cryptocurrency legislation has made a breakthrough, how much role did Trump play? ) . The current members of the U.S. Senate Banking Committee include 13 Republicans and 10 Democrats. In this vote, in addition to all Republican members, 5 Democratic members also voted in favor of the bill.
The bill passed the Senate procedural vote on May 19, which was the second step. After that, it will go through many processes such as a full Senate vote and House of Representatives deliberation before Trump officially signs it into law. Although this progress has caused an uproar in the cryptocurrency market and mainstream financial markets, three weeks have passed and the bill has not yet entered the next step, which also shows that the final passage is still full of variables.
After the GENIUS Act passed the Senate procedural vote, the outside world once believed that the bill would be able to enter and pass the Senate within a week, and even enter Trump's signature phase a few weeks later. For example, one of the main supporters of the bill, Republican Senator Cynthia Lummis, once said that passing the bill before May 26 (Memorial Day in the United States) was a "fair goal."
Sun Yuanzhao believes that the slower-than-expected pace of stablecoin legislation first means that there are many levels of "bargaining" behind it. In his view, the next critical time point for legislative breakthroughs may be before July 4 (US Independence Day) and before August. At the White House Cryptocurrency Summit on March 7, Trump urged lawmakers to pass stablecoin legislation before the August recess to provide regulatory certainty for the dollar-backed stablecoin and digital asset markets.
II. Gambling and Controversy Behind Legislation
In fact, the two votes that the bill has passed also went through behind-the-scenes communication and bargaining.
On May 8, several Democratic senators blocked the GENIUS Act from moving forward due to concerns that there might be a conflict of interest between Trump's cryptocurrency business and the anti-money laundering provisions of the bill. At the time, the proposal, which required 60 procedural votes, received only 48 votes due to opposition from all Democrats and three Republicans. After the bill encountered resistance, Republicans and Democrats continued negotiations and eventually issued a new draft amendment over the weekend, which received enough support from Democrats and then pushed the bill forward on May 19.
The revised GENIUS Act responds to many previous hot topics, including increasing demand for short-term U.S. Treasury bonds, strengthening the dollar's status as a global reserve currency, and revising anti-money laundering regulations to prevent technology giants from issuing stablecoins in violation of regulations. However, there are still controversies.
Deutsche Bank recently sent a research report to Caijing.com, saying that, first of all, the GENIUS Act strengthens the dominance of the U.S. dollar, stipulating that all stablecoins must be 1:1 anchored to high-quality, low-risk liquid assets (U.S. Treasury bonds due within 93 days, insured bank deposits or physical U.S. dollar cash), and issuers must disclose currency reserves on a monthly basis. The Act codifies the standards that have been widely adopted by the industry, such as Tether, to support the short-term U.S. Treasury market and promote the global liquidity of the U.S. dollar.
Secondly, the revised bill prohibits technology companies such as Meta and Apple from issuing stablecoins unless they meet strict conditions such as financial risks and user data privacy, reflecting deep concerns that technology giants may use their data monopoly to control financial infrastructure. This also means that the US government wants to maintain the hegemony of the US dollar while curbing the potential threat of private technology giants to monetary sovereignty.
In addition, the bill strengthens the supervision of stablecoin issuers outside the United States, targeting industry leaders. The bill authorizes the U.S. Secretary of the Treasury and the newly established "Stablecoin Certification Review Committee" to jointly supervise overseas issuers. This move plugs the original legal loophole - previously, the United States allowed offshore issuers to continue operating by restricting stablecoin transfers when required by law enforcement agencies. This means that offshore institutions such as Tether must comply with exactly the same regulatory standards as domestic stablecoin providers in the United States.
However, there are still some unresolved controversies in the revised bill. The aforementioned report shows that, on the one hand, the bill explicitly prohibits regulated stablecoins from paying income or interest . This restriction may prompt funds to flow from stablecoins to tokenized money market funds (an interest-bearing instrument linked to underlying assets). Despite the legislative ban, market innovation continues to emerge. Interest-bearing stablecoins issued by institutions including Spark Protocol and Figure Markets are developing rapidly, and as of May 21, they have occupied 2.8% of the $247 billion stablecoin market (a size of $5.9 billion).
On the other hand, although the bill has been revised to strengthen anti-money laundering and national security provisions, it has not resolved the conflict of interest controversy brought by Trump that previously blocked the bill. Democrats continue to criticize the conflict of interest issues involving Trump and his family in the bill. Trump's financial dealings with multiple crypto projects - including the USD1 stablecoin issued by World Free Finance, which is controlled by his family, and a number of "net celebrity coins" - have raised concerns that this legislation may deliver economic benefits to politicians.
After the vote, Democratic Senator Elizabeth Warren condemned the bill for "facilitating Trump's corruption." She pointed out that the USD1 stablecoin could become a shadow banking tool for "anonymous foreign middlemen" to transfer funds to Trump and his affiliates. Since its launch on March 25, the market value of USD1 has soared from $128 million on April 28 to $2 billion in May, ranking seventh in the stablecoin market value ranking. The $2 billion cooperation agreement reached between its issuer "World Free Finance" and the UAE MGX Fund on May 1 directly boosted the surge in the stablecoin.
In Sun Yuanzhao's view, another reason that affected the progress of the GENIUS Act was that the higher priority federal government budget (One Big Beautiful Bill Act) took up more legislative resources. "Budget, tax law and immigration law, these three things are enough to make all legislators anxious."
Zhu Keling, head of DeHeng Law Firm's Silicon Valley office, believes that unless the United States can pass a "big and beautiful" bill in the next one to two months , it is unlikely that stablecoin laws will be passed this year.
On May 22, the U.S. House of Representatives passed the "Big, Beautiful" bill by a narrow margin of one vote. The bill contains multiple provisions and is over 1,000 pages long. The bill will extend the corporate and individual tax cuts passed by Trump in 2017 during his first presidency, provide new tax breaks for tips, car loans, etc., increase defense spending, and provide more funds to combat illegal immigration.
In addition to the Senate, the House of Representatives also has several similar draft bills to be passed, the most well-known of which is the revised STABLE Act. During the last Congress, there was strong bipartisan support for a specific regulatory framework for stablecoins, namely the STABLE Act. French Hill, chairman of the House Financial Services Committee, released a revised version of the bill in February. On March 11, the House of Representatives held a hearing to initially discuss the integration of several drafts.
According to Margo Tank, a fintech lawyer at DLA Piper, and five other lawyers, both the GENIUS Act and the STABLE Act are intended to establish a legal framework for stablecoins. They clarify the requirements for federal (or state) licensing and supervision, including transparency and 1:1 reserve standards, redemption and consumer protection requirements, and compliance requirements such as anti-money laundering.
In order for the bills to become law, "they need to pass their respective chambers, be reconciled if the House and Senate pass different versions, and then be signed by the president," the lawyers said .
3. Is innovation unstoppable?
With the development of cryptocurrencies, there has been great controversy around the world on how to effectively regulate cryptocurrencies, including stablecoins. The core of the issue lies in how much compliance cost should be paid to promote such innovations.
Another challenge faced by global regulators is that once cryptocurrency regulation is strengthened, the related industrial chain will shift to countries and regions with a more relaxed regulatory environment.
The United States and Hong Kong, China have taken the first step in "promoting innovation"-oriented regulation.
In David Sacks' view, stablecoins provide a new, more efficient, cheaper and smoother payment system - opening up new payment rails for the U.S. economy and expanding the dollar's dominance in new areas.
Xiao Feng, Chairman and CEO of HashKey Group and Chairman of Wanxiang Blockchain, believes that whether it is the "Stablecoin Ordinance" in Hong Kong, China or the breakthrough of the "GENIUS Act" in the United States, it essentially means that both places have recognized the concept of "currency tokenization based on blockchain distributed ledgers."
In Xiao Feng's view, the US dollar stablecoin is the core interest of the US government. By passing legislation to make the US dollar stablecoin operate legally, the government intends to actively seize the emerging field of cryptocurrency and expand existing international application scenarios of the US dollar such as the "petrodollar."
The scale of stablecoins is indeed not to be underestimated. According to statistics from Changjiang Securities, as of May 1, 2025, the total scale of stablecoins is about 227.37 billion US dollars, a year-on-year increase of 46.5%, a rapid growth rate. As of early May, the 30-day rolling transaction volume of stablecoins has reached 2 trillion US dollars, which has exceeded traditional payment channels such as Visa and Paypal.
The transformation of the industry has already begun. Bank of America Securities pointed out in a recent research report that as the development of stablecoins becomes clearer, blockchain technology will reshape the payment ecosystem, and the traditional "five-party payment model" (merchants, acquiring institutions, card issuers, card organizations and cardholders) will face shocks.
Bank of America Securities said that banks with blockchain technology capabilities can process transactions directly, and the economic value of traditional payment service providers will be weakened by blockchain infrastructure. The largest banks in the United States are exploring the issuance of joint stablecoins, and JPMorgan Chase has been operating the blockchain-based digital payment infrastructure "Kinexys" for many years. As one of the largest custodian banks, Bank of New York Mellon recently launched a digital asset data insight product to publish on-chain and off-chain data to the blockchain.
Another important reason for the US parties to promote legislation is that the rapidly developing crypto assets (including stablecoins) and their related business activities are regulated in the US, but this regulation is inconsistent, which brings uncertainty to businesses and individuals in the ecosystem. For example, multiple regulatory agencies have different definitions of cryptocurrencies. The US Securities and Exchange Commission ( SEC) considers it as a security, the US Internal Revenue Service (IRS) considers it as property, and the Commodity Futures Trading Commission (CFTC) considers it as a commodity.
In the view of multinational consulting firm Grant Thornton, compared with stablecoins, market structure is another more complex area that cryptocurrency legislation needs to address. Such legislation needs to clearly define when cryptocurrencies and tokens without a fixed value should be regulated as securities by the SEC or as commodities by the CFTC. Bitcoin is the cryptocurrency with the largest market value to date. It is regulated as a commodity by the CFTC, but the regulator mainly regulates futures and derivatives and has limited direct power over the spot market.
During the last Congress, the U.S. House of Representatives drafted and passed the 21st Century Financial Innovation and Technology Act (FIT21), which became the current legislative template. Grant Thornton believes that the SEC’s cryptocurrency task force and Trump’s cryptocurrency task force may play a role in developing this legislation.
Wachtell Lipton, a US law firm, believes that even if the US Congress passes the relevant stablecoin bill, there are still challenges in coordinating decentralized technology with the centralized regulatory system , including decentralized finance ( DeFi ) replacing intermediary finance, tokenization of real assets, and the operation of distributed autonomous organizations (DAOs). Moreover, the consensus between the two parties is fragile - Illinois, following New York's example, launched a strict BitLicense (business license for cryptocurrency activities) system, and the Oregon Attorney General sued the world's largest cryptocurrency trading platform Coinbase Exchange to "fill the federal regulatory vacuum".
4. Still need to prove "honesty" and "security"
The cryptocurrency industry, which claims to have disruptive power over traditional finance but is rife with fraud and money laundering scandals, faces a real challenge in how to convince a wider range of stakeholders with its security, sustainability and compliance performance in the upcoming US legislative agenda.
On November 11, 2022, FTX, the world's second largest cryptocurrency exchange, declared bankruptcy due to a liquidity crisis. On December 12 of the same year, FTX CEO Sam Bankman-Fried was arrested in the Bahamas facing eight criminal charges. The charges included wire fraud, conspiracy to launder money, and violations of federal campaign laws.
Bankman -Fried's biggest fraud was mixing customer deposits on the FTX trading platform with the assets of Alameda Research, a fund he founded. Alameda Research misappropriated billions of dollars of customer funds from the FTX exchange. This directly led to FTX's insufficient reserve funds, unable to withstand customer cash-out requests, and eventually bankruptcy. On March 28, 2024, the court sentenced Bankman-Fried to 25 years in prison.
FTX's bankruptcy was once called the "Lehman moment" of cryptocurrency by then-U.S. Treasury Secretary Yellen. The entire cryptocurrency industry suffered a "cold winter" in 2022, and the industry crisis spread to almost all related institutions, markets or regions.
You know, FTX's valuation was over $30 billion at its peak in 2021. Bankman-Fried was once known as the "King of Cryptocurrency" and was selected into the 2022 list of "100 Most Influential People in the World" by Time magazine.
The listing of stablecoin issuer Circle also experienced twists and turns. In early 2022, Circle tried to go public through a special purpose acquisition company (SPAC), but it coincided with the above-mentioned cryptocurrency explosion incidents, and Bitcoin fell from $69,000 to $15,000. Circle's listing plan was eventually shelved.
At the end of 2023, Silicon Valley Bank was hit by a crisis, and the $3.3 billion that Circle had in the bank was frozen for a time, causing the stablecoin USDC it issued to be depegged, triggering panic redemptions in the market. Fortunately, USDC resumed its 1:1 anchor after the Federal Reserve intervened to rescue it.
In his article "Stablecoins Are Not Stable: Lessons from the Collapse of Luna and UST" published in June 2022, Professor Cao Huining of Finance at the Cheung Kong Graduate School of Business believes that even stablecoins with fiat currencies as reserves lack transparency and may not actually have sufficient reserves. For example, USDT and USDC have not yet released a complete audit report. In addition, in his view, the price of stablecoins does not necessarily remain "stable", it is just a conventional name. Stablecoins with cryptocurrencies as reserves or supported by algorithms will be affected by cryptocurrency price fluctuations and are highly dependent on community operations, and the stability of the currency value is easily affected.
Xiao Feng believes that due to the lack of laws and regulations, stablecoin issuers are not clear about what rules to follow to improve their transparency. However, as the United States, Hong Kong, China and other places successively promulgate relevant laws on stablecoins, the transparency issue will naturally be resolved.
In response to social controversy, the U.S. STABLE Act and GENIUS Act define payment stablecoins as digital tokens anchored to a fixed currency value, rather than the algorithmic stablecoins that collapsed in 2022. In addition, the reserves supporting stablecoins must be separated from other company assets-a lesson learned from the mixing of FTX assets before the collapse.
It is also worth noting that Paul Krugman, the 2008 Nobel Prize winner in economics, wrote on May 9 that cryptocurrency is still a tool for crime. In his view, in the next voting process of the GENIUS Act, the Democratic Party should not endorse this scam, "but they are likely to do so."
The article pointed out that the corruption of Trumpism is looming over the crypto space. "Trump Coin" and "Melania Coin" have become naked bribery tools, as has the newly launched USD1 stablecoin by the Trump family's crypto company "World Free Finance". Cryptocurrency is pricing the US president, and buyers include not only foreign tycoons but also foreign governments. The article cited a survey saying that a few large investors have made a lot of money from "Trump Coin", but tens of thousands of small investors attracted by the president's name have lost all their money after taking over at a high price.
In Paul Krugman's view: no matter how the final text of the bill is whitewashed, it is encouraging corruption. Because the entire crypto industry is inherently corrupt, "money laundering and fraud are the whole meaning of its existence . "
As an important promoter of this round of cryptocurrency legislation in the United States, Trump was firmly opposed to cryptocurrency during his first term as president, criticizing its unstable value as "thin air."
But during his second presidential campaign, Trump discovered that cryptocurrency holders were an important voter force. He loudly supported "innovation and Bitcoin", claimed to make the United States the "global cryptocurrency capital", and announced that he would accept cryptocurrency donations to win the votes of this group .
Whether it is accelerating legislation or influencing the general election, it shows that the influence of cryptocurrency on the United States continues to grow.
Coinbase , a US listed company that provides digital currency exchange and wallet services, released a study on July 11, 2024 showing that cryptocurrency voters have a strong desire to vote, with almost nine out of ten registered voters planning to cast a key vote in the November election, a proportion four times that of ordinary voters. On the other hand, one-sixth of cryptocurrency holders are concentrated in seven key electoral states in the United States, with Generation Z and millennials accounting for 65% of the total number of registered voters with cryptocurrency, and about 40% of cryptocurrency holders living in swing states where election results are vulnerable.
In recent years, the cryptocurrency industry has invested heavily in Washington through lobbying and public relations marketing campaigns.
In previous elections, Wall Street and large companies have always been the main source of political donations in the United States. But in 2024, the cryptocurrency industry has also become an important new force. According to media statistics, the cryptocurrency industry raised more than $245 million in campaign funds from corporate and individual donations during this election cycle.
According to a report by nonprofit watchdog Public Citizen, cryptocurrency companies provided nearly half of all corporate campaign funding, far more than any other industry, including oil companies and banks, which have traditionally been big political donors.
In the 2020 US presidential election, Bankman-Fried, who was still in the limelight at the time, was one of the CEOs who donated the most to Biden, with a personal donation of $5.2 million, second only to Bloomberg founder Michael Bloomberg.
