Regulators Reshape Finance as Stablecoins Go Mainstream

The U.S. and European Union are accelerating the integration of cryptocurrencies into the mainstream financial ecosystem through a series of regulatory developments aimed at clarifying the legal framework and expanding use cases. Recent legislative and technological advancements indicate a growing consensus on the role of stablecoins in facilitating payments, cross-border transactions, and enterprise-scale financial operations.

The U.S. Congress passed the Guiding and Establishing National Innovation for U.S. Stablecoins Act (GENIUS Act) in July 2025, marking a pivotal regulatory shift. The law establishes the first federal licensing regime for dollar-pegged stablecoins, requiring full-reserve backing in cash and short-term U.S. Treasuries. It designates the Office of the Comptroller of the Currency (OCC) as the primary regulator for nonbank issuers and classifies licensed stablecoins as non-securities under federal law. The act also prohibits stablecoin issuers from offering interest on holdings, although market innovations like "rewards" programs are emerging as alternative models.

Concurrently, major fintech companies are advancing the infrastructure for stablecoin usage. Stripe, in partnership with Paradigm, launched Tempo, a payments-focused blockchain network optimized for stablecoin transactions in early September 2025. Tempo is positioned to support payroll, remittances, marketplace payouts, and machine-to-machine payments, aiming to streamline enterprise financial operations. This development aligns with broader market trends, as McKinsey estimates that real-world stablecoin activity has reached $20 to $30 billion per day and could scale to $250 billion annually within three years.

The regulatory clarity provided by the GENIUS Act is fostering new financial dynamics. By requiring stablecoin reserves to be held in highly liquid assets, the law enhances the safety and transparency of these digital tokens. However, it also limits revenue models for issuers, who must rely on reserve yields and compliance costs rather than direct interest payments. With three-month Treasury bill yields near 4%, a stablecoin float of $2 trillion by 2028 could generate $80 billion in annual gross yield, although net margins for issuers would depend on how much of this yield is allocated to compliance, operations, and user incentives.

The expansion of stablecoin adoption is also prompting traditional financial institutions to adapt. Visa and Mastercard have integrated stablecoin settlement capabilities into their networks, with Visa adding support for EURC and new blockchain chains in July 2025 and Mastercard expanding USDC and EURC settlement access across EEMEA in August. These moves signal a shift in how major card networks view digital assets, as stablecoins increasingly compete with traditional payment methods in terms of cost and speed. For instance, sub-penny transfers on chains like Solana offer benchmarks that challenge legacy systems, and open-ledger fees cluster near the low single-basis-point range.

The evolving regulatory environment is also drawing attention from global policymakers. The European Central Bank (ECB) has emphasized the need for safeguards on foreign stablecoins, underscoring the geopolitical dimensions of stablecoin adoption. With the stablecoin market cap now surpassing $285 billion and daily utility expanding through card network settlements and on-chain payroll pilots, stablecoins are no longer confined to speculative trading but are gaining traction in real-world financial applications. This shift is reshaping the financial infrastructure, with implications for how institutions manage liquidity, compliance, and cross-border transactions.

As the U.S. and EU continue to refine their regulatory approaches, key developments to watch include the production rollouts of stablecoin settlement by Visa and Mastercard, the launch of Tempo-driven merchant and payroll flows, and Treasury’s guidance on implementing the GENIUS Act. If current trends persist, stablecoins could achieve $250 billion in daily settlement volume by 2028, positioning them as a formidable alternative to traditional payment systems and reshaping the global financial landscape.