For decades, the dollar’s global supremacy has been built on the “Bretton Woods System - Petrodollar - U.S. Debt + Swift System.” However, as we enter the Web3 era, decentralized finance technologies are beginning to challenge traditional payment and settlement systems, with dollar-pegged stablecoins emerging as new tools for extending the dollar’s reach internationally.

In this landscape, stablecoins have evolved beyond mere compliance issues within the crypto space; they might represent the digital continuation of “dollar dominance” in the Web3 era.

On March 26, 2025, the U.S. Congress introduced the “STABLE Act” (Stablecoin Transparency and Accountability for a Better Ledger Economy Act), which for the first time systematically sets the standards for issuance, regulation, and circulation of U.S. dollar stablecoins. As of now, the bill has cleared the House Financial Services Committee as of April 2 and awaits further approval from the House and Senate to become law. This move not only addresses the long-standing regulatory gap in the stablecoin market but could also be a pivotal step towards building the “institutional infrastructure” for the next-generation U.S. dollar payment network.

What issues does this new legislation aim to tackle? How does it differ from MiCA, and does this reflect a strategic U.S. institutional approach? Is it paving the way for Web3 dollar dominance?

These topics will be explored by Lawyer Mankun in this article.

What kind of U.S. dollar stablecoin does the STABLE Act aim to establish?

The bill seeks to establish a clear compliance framework specifically for “payment stablecoins.” Here are the five key points:

1. Defining the regulatory focus on “payment stablecoins”

The STABLE Act first clarifies the main regulatory targets: U.S. dollar-pegged stablecoins that are issued to the public and can be directly used for payments and settlements. Essentially, the regulation focuses on those crypto assets used as on-chain “dollar substitutes,” rather than all tokens claiming a dollar peg.

To mitigate risk, the bill excludes certain high-risk or unstable token models. For instance, algorithmic stablecoins, partially backed stablecoins, or “pseudo-stablecoins” with speculative traits and complex mechanisms are not covered by this bill. Only those stablecoins that are fully backed 1:1 by U.S. dollar assets, transparent in their reserve structures, and used in everyday transactions are considered “payment stablecoins” and subject to this regulation.

Thus, the STABLE Act is less about the “technical carrier” of stablecoins and more about whether they are building a “dollar on-chain payment network.” It seeks to regulate the issuance and operation of the “digital dollar,” not all tokens with USD in their name.

2.Establishing a “redemption rights” mechanism with 1:1 dollar backing

Beyond regulatory entry and issuer qualifications, the STABLE Act emphasizes the “redemption rights” for stablecoin holders, ensuring the public can redeem stablecoins for U.S. dollars at a 1:1 ratio, with issuers obligated to honor this at all times. This is designed to prevent stablecoins from becoming “pseudo-anchored assets” or “closed-loop system tokens.”

Additionally, to guard against liquidity crises or runs, the bill specifies clear asset reserve and liquidity management requirements. Issuers must hold high-quality, liquid U.S. dollar assets (like treasury bonds, cash, central bank deposits) in a 1:1 ratio and be subject to ongoing Federal Reserve scrutiny. This means issuers cannot “invest user funds in high-risk assets” or rely on algorithms or derivative structures to maintain the peg.

Compared to early stablecoin models with “partial reserves” and “unclear disclosures,” the STABLE Act incorporates “1:1 redeemability” into federal law, setting higher standards for the credibility of “digital dollar alternatives” in the U.S. This addresses public worries about stablecoins “losing their peg” or “failing” and aims to establish a framework of institutional guarantees and legal trust for U.S. dollar stablecoins, supporting their long-term role in global financial systems.

This not only responds to the public’s concerns about the “unanchoring” and “explosion” of stablecoins, but also aims to create an anchor system of institutional guarantee + legal trust for the US dollar stablecoin to support its long-term use in the global clearing network.

3. Enhancing oversight of funds and reserves to prevent “idle trust”

Building on the requirement that “stablecoins must be 1:1 redeemable,” the STABLE Act clearly defines the types of reserve assets, management methods, and auditing mechanisms to control risks from the outset and avoid the dangers of “apparent pegging but actual idling.” Specifically, the Act mandates that all payment stablecoin issuers:

• Maintain equivalent amounts of “high-quality liquid assets,” such as cash, short-term U.S. Treasuries, and Federal Reserve account deposits, to meet redemption demands;
• Are prohibited from using reserve assets for lending, investment, or other purposes to prevent systemic risks from “seeking returns with reserve funds”;
• Undergo regular independent audits and fulfill reporting obligations, including transparency in reserves, risk exposure reports, and asset portfolio explanations, ensuring both the public and regulators are informed about the assets backing stablecoins;
• Store reserve assets separately in FDIC-insured banks or other compliant custodial accounts to prevent them from being mixed with the issuer’s funds.

This setup ensures that the “peg” is real, verifiable, and fully backed, rather than just “claimed pegging with floating on-chain profits.” Historically, the stablecoin market has faced credit crises due to false reserves, fund misuse, or inadequate disclosures. The STABLE Act aims to plug these risk gaps institutionally, reinforcing the “institutional backing” of the dollar peg. Furthermore, the Act gives the Federal Reserve, Treasury, and designated regulators long-term oversight of reserve management, including freezing non-compliant accounts, suspending issuance rights, and enforcing redemptions, creating a comprehensive credit loop for stablecoins.

4. Implementing a “registration system,” bringing all issuers under regulation

The STABLE Act opts for a unified registration system rather than “license classification management,” meaning all entities wishing to issue payment stablecoins, whether banks or not, must register with the Federal Reserve and undergo federal regulatory scrutiny. The Act outlines two legal paths for issuers: federally or state-regulated depository institutions (Insured Depository Institutions) can apply directly to issue payment stablecoins, while non-depository institutions (Nondepository Trust Institutions) can also register as issuers if they meet the Federal Reserve’s prudential standards. The Act emphasizes that the Federal Reserve can approve, refuse, or revoke registrations based on systemic risk concerns. It also grants the Fed ongoing oversight over issuers’ reserve structures, solvency, capital ratios, and risk management policies. This means all future U.S. dollar payment stablecoin issuances must be part of the federal regulatory framework, eliminating the possibility of bypassing scrutiny through “state-only registration” or “technology neutrality.” Compared to previous more flexible proposals (like the GENIUS Act, which allowed state-regulated startups), the STABLE Act shows stronger regulatory consistency and federal leadership, aiming to establish legal boundaries for U.S. dollar stablecoins with a “national registration regulatory system.”

5. Establishing a Federal Licensing System with Diverse Regulatory Paths

The STABLE Act creates a federal licensing system for stablecoin issuers, offering various compliance options for different types of issuers. This approach maintains the U.S. financial regulation’s “federal-state dual-track” structure while providing flexibility in compliance requirements.

The Act outlines three paths for issuing “payment stablecoins”:

• First, become a federally recognized payment stablecoin issuer, overseen and licensed by federal banking regulators like the OCC and FDIC;
• Second, issue stablecoins as a licensed savings or commercial bank, benefiting from higher trust but adhering to traditional banking capital and risk controls;
• Third, operate under state licenses but comply with federal “registration and supervision,” meeting unified standards for reserves, transparency, and anti-money laundering.

This design encourages stablecoin issuers to register legally and be part of the regulatory framework, without mandating full bank integration, balancing risk control with innovation.

The STABLE Act also gives the Federal Reserve and Treasury broader powers to impose additional requirements on stablecoin issuance and trading based on systemic risk or policy needs.

In essence, this system builds a multi-layered, flexible regulatory framework for stablecoins in the U.S., enhancing resilience and providing a standardized foundation for stablecoins to expand globally.

Unlike MiCA, the U.S. has chosen a different path

In the global race for stablecoin regulation, the EU leads with a comprehensive framework. Its MiCA Act, effective in 2023, regulates all asset-pegged crypto tokens through “EMT” and “ART” categories, focusing on macro-prudence and financial stability to create a “firewall” during digital financial changes.

The U.S. STABLE Act, however, takes a different approach: not regulating all stablecoins broadly, nor building an exhaustive system from financial risks, but focusing on “payment stablecoins” to create a next-gen payment network on the dollar chain.

The logic behind this selective legislation is straightforward—the dollar doesn’t need to dominate all stablecoin areas; it only needs to secure key scenarios: cross-border payments, on-chain transactions, and global dollar flow.

Thus, the STABLE Act doesn’t aim to set up a MiCA-like comprehensive asset system but focuses on 1:1 dollar backing, real payment capabilities, and widespread public use of “on-chain dollars.”

In terms of design, the two approaches differ significantly:

• Regulatory scope: MiCA aims to cover all stablecoin models, including high-risk asset-referenced ones, while the U.S. STABLE Act narrows its focus to assets used for payments that embody “dollar functionality.”
• Regulatory goals: The EU stresses financial order and consumer protection, while the U.S. aims to legally define assets that can act as “on-chain dollars,” building a legal framework for dollar payment infrastructure.
• Issuers: MiCA mandates issuance by regulated electronic money or trust companies, limiting entry to financial institutions, whereas the STABLE Act allows non-bank entities to issue stablecoins after compliance checks, supporting Web3 innovation.
• Reserve mechanisms: The U.S. demands 100% dollar cash or short-term Treasuries, excluding leverage or illiquid assets; the EU permits various assets, like bank deposits and bonds, showing different regulatory strictness.
• Adaptation to Web3 startups: MiCA’s reliance on traditional financial licenses creates barriers for crypto startups, while the U.S. STABLE Act, though strict, allows room for innovation, encouraging “on-chain dollar” growth through compliance.

In essence, the U.S. has not opted for a “comprehensive regulation” approach but instead is selecting “qualified dollar payment assets” through compliance licensing. This reflects not only the U.S.’s evolving acceptance of Web3 technology but also acts as a “digital extension” of its global currency strategy.

This is why the STABLE Act is seen as more than just a financial regulatory tool; it’s the beginning of institutionalizing the digital dollar system.

Summary by Lawyer Mankiw

The real strategic intent behind the STABLE Act might be to “make the dollar the benchmark unit for global Web3.”

The U.S. government is trying to construct a “next-generation digital dollar network” that can be programmatically recognized, audited, and integrated through stablecoins, aiming to establish the foundational protocol for Web3 payments.

While it may not be perfect, it is crucial at this time.

Notably, on the international stage, the IMF’s seventh edition of the Balance of Payments Manual (BPM7), released in 2024, included stablecoins in the international asset statistics system for the first time, highlighting their new role in cross-border payments and global financial flows. This development not only provides “global institutional legitimacy” for the sovereign compliance of stablecoins but also offers institutional backing and external validation for the U.S. in building a stablecoin regulatory framework and reinforcing the dollar’s anchoring role.

Globally, the institutional acceptance of stablecoins is becoming the prelude to sovereign competition in the digital currency era.

As observed by Lawyer Mankiw: The compliance narrative of Web3 ultimately boils down to a race in institutional development, with dollar stablecoins representing the most practically significant battleground in this race.

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