Stablecoin Laws Lack Unity, Affecting Adoption

Stablecoins have been regulated in different ways across the globe, raising concerns about their viability and possibly putting up barriers for newcomers. 

Europe’s framework, Markets in Crypto-Assets (MiCA), varies significantly from the US’s GENIUS Act. Both are distinct from Hong Kong’s own stablecoin rules, which were finalized just two weeks ago.

These three regulatory frameworks have provided clear standards for stablecoins. Reserve requirements, issuer licensing and permit schemes now have cut-and-dry conditions, which have undoubtedly made it easier for stablecoins to flourish.

But their differences are distinct enough to cause concern. According to Krishna Subramanyan, CEO of banking liaison firm Bruc Bond, stablecoins currently “run the risk of becoming jurisdiction-bound, limited in usability and trust outside specific regions.”

“Competing models” of stablecoin law can impact viability

MiCA, GENIUS and Hong Kong’s Stablecoin Ordinance all offer diverging models for regulating stablecoins. 

Udaibir Saran Das, a Bretton Woods Committee member and visiting professor at the National Council of Economic Research, explained their differences to Cointelegraph. Essentially:

These diverging laws mean that “issuers must build parallel compliance structures for each jurisdiction. This includes separate legal entities, audits and governance models, adding cost and operational friction,” Das explained.

“The operational friction comes from divergent reserve requirements, custody arrangements and Hong Kong’s holder-level Know Your Customer that forces wallet providers to rebuild their infrastructure. These frameworks represent competing models of monetary control,” he said. 

All these legal entities and reporting regimes are costly, and smaller stablecoin companies will find it harder to pay compliance costs, particularly if they operate across multiple regions. This could push smaller fish out of markets or force them to become part of an acquisition deal by larger firms. 

According to Subramanyan, this “compliance asymmetry” could concentrate market power and limit innovation. She said, “Over time, regulatory fragmentation won’t just raise costs but will define who can scale and who cannot.”

Das said that without mutual recognition of different stablecoin laws, the operational complexity of meeting multiple…