Stablecoins

Stablecoins maintain stable value by referencing a single fiat currency, a basket of currencies, commodities, or other assets. Regulatory frameworks distinguish between these categories: the EU's MiCAR separates asset-referenced tokens (ARTs) from e-money tokens (EMTs), with each subject to different prudential and governance requirements; the US GENIUS Act targets payment stablecoins specifically, requiring 1:1 reserve backing in liquid assets and a full BSA/AML programme.

Reserve requirements are central to stablecoin regulation across all major jurisdictions. Issuers must hold qualifying liquid assets — typically central bank reserves, government securities, or insured deposits — in proportion to tokens in circulation, publish regular third-party attestations, and grant holders unconditional redemption rights. Governance requirements mandate clear internal controls, risk management frameworks, and oversight of reserve custodians.

For firms with cross-border operations, stablecoin issuance may trigger obligations under multiple frameworks simultaneously. A USD-denominated stablecoin distributed to EU persons may trigger MiCAR EMT authorisation; the same stablecoin distributed to US persons may require PPSI registration under the GENIUS Act. Regulatory architecture decisions — domicile, custody arrangements, and distribution channels — must account for this dual-compliance risk from the outset.