This report does not constitute a rating action.
The debate about stablecoin regulation in the U.S. is progressing. Three proposals are currently under consideration. A regulatory framework could increase stablecoin adoption in the U.S. and help close the gap with Europe, where the Markets in Crypto-Assets Regulation came into force on June 30, 2024.
What's Happening
Each of the three proposals sets relatively strict requirements. Stablecoin issuers must:
- Maintain sufficient reserves. This means stablecoins must be backed by high-quality assets--including cash--insured deposits, treasuries with a maturity of less than three months, repurchase agreements (repos) that have a maturity of less than seven days and are backed by treasury bills with a maturity of less than three months, reverse repos, or central bank reserves;
- Segregate between the underlying assets of the stablecoin and their assets;
- Disclose the redemption policy and publish the monthly composition of the reserves, which are to be examined by a registered public accounting firm;
- Maintain a certain capital level and ensure appropriate liquidity; and
- Meet certain standards when managing risks related to interest rates, operations, compliance, and information technology.
The proposals differ on whether and when an issuer is regulated at the federal level, versus the state level. One proposal stipulates that the Office of the Comptroller of the Currency should supervise stablecoins with underlying assets of at least $10 billion if the issuer is not a bank. Smaller stablecoins may opt for state regulation if it is very similar to the proposed federal regulation. However, this would be subject to approval by the treasury secretary. Other proposals require the treasury secretary and other regulators to conduct a study on endogenously collateralized stablecoins (ECS) and demand a two-year moratorium for the issuance of ECS.
Why It Matters
In our view, the lack of regulation is one of the main impediments to stablecoin adoption in the U.S. The market capitalization of stablecoins has increased to $230 billion as of Feb. 15, 2025, up from about $160 billion six months ago. We think stablecoins will play an increasingly important role in on-chain transactions, to protect savings from local monetary instability in emerging markets, or to receive remittances. USD-pegged coins continue to dominate the stablecoin industry. Although tokenized money market funds with stablecoin subscription and redemption mechanisms have emerged recently, the lack of regulation and supervision in the U.S. has prevented a broader institutional adoption of stablecoins, for example for financial transactions or digital bond issuances.
What Comes Next
We expect an increase in stablecoin adoption once a regulation is in place. We also forecast that some users are likely to transition progressively from unregulated to regulated stablecoins, which could change the current industry landscape. Once it is completed, the study on ECS could further tighten regulations on the use of ECS. In our view, the role of stablecoins will continue to evolve and could eventually lead to more integration between traditional finance and decentralized finance, for example in the case of cross-border payments, the tokenization of real-world assets (RWA), or the issuance of digital bonds. In our view, the lack of a consensus about the tools that should be used to bring money natively on-chain is among the main factors that hinder the development of digital bonds and RWA tokenization.
Related Research
- Stablecoin Regulation Gains Global Momentum, Feb. 10, 2025
- Investors' Risk Awareness Increases As Stablecoins Gather Momentum, Jan. 30, 2025
- Analytical Approach: Stablecoin Stability Assessments, Nov. 28, 2023
| Primary Contact: | Mohamed Damak, Dubai 97143727153; mohamed.damak@spglobal.com |
| Secondary Contacts: | Andrew O'Neill, CFA, London 44-20-7176-3578; andrew.oneill@spglobal.com |
| Lisa R Schroeer, Charlottesville 434-529-2862; lisa.schroeer@spglobal.com | |
| Florent Stiel, Paris 33-14-420-6690; florent.stiel@spglobal.com | |
| Rebecca Mun, London 44-20-7176-3613; rebecca.mun@spglobal.com |
No content (including ratings, credit-related analyses and data, valuations, model, software, or other application or output therefrom) or any part thereof (Content) may be modified, reverse engineered, reproduced, or distributed in any form by any means, or stored in a database or retrieval system, without the prior written permission of Standard & Poor’s Financial Services LLC or its affiliates (collectively, S&P). The Content shall not be used for any unlawful or unauthorized purposes. S&P and any third-party providers, as well as their directors, officers, shareholders, employees, or agents (collectively S&P Parties) do not guarantee the accuracy, completeness, timeliness, or availability of the Content. S&P Parties are not responsible for any errors or omissions (negligent or otherwise), regardless of the cause, for the results obtained from the use of the Content, or for the security or maintenance of any data input by the user. The Content is provided on an “as is” basis. S&P PARTIES DISCLAIM ANY AND ALL EXPRESS OR IMPLIED WARRANTIES, INCLUDING, BUT NOT LIMITED TO, ANY WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR USE, FREEDOM FROM BUGS, SOFTWARE ERRORS OR DEFECTS, THAT THE CONTENT’S FUNCTIONING WILL BE UNINTERRUPTED, OR THAT THE CONTENT WILL OPERATE WITH ANY SOFTWARE OR HARDWARE CONFIGURATION. In no event shall S&P Parties be liable to any party for any direct, indirect, incidental, exemplary, compensatory, punitive, special or consequential damages, costs, expenses, legal fees, or losses (including, without limitation, lost income or lost profits and opportunity costs or losses caused by negligence) in connection with any use of the Content even if advised of the possibility of such damages.
Credit-related and other analyses, including ratings, and statements in the Content are statements of opinion as of the date they are expressed and not statements of fact. S&P’s opinions, analyses, and rating acknowledgment decisions (described below) are not recommendations to purchase, hold, or sell any securities or to make any investment decisions, and do not address the suitability of any security. S&P assumes no obligation to update the Content following publication in any form or format. The Content should not be relied on and is not a substitute for the skill, judgment, and experience of the user, its management, employees, advisors, and/or clients when making investment and other business decisions. S&P does not act as a fiduciary or an investment advisor except where registered as such. While S&P has obtained information from sources it believes to be reliable, S&P does not perform an audit and undertakes no duty of due diligence or independent verification of any information it receives. Rating-related publications may be published for a variety of reasons that are not necessarily dependent on action by rating committees, including, but not limited to, the publication of a periodic update on a credit rating and related analyses.
To the extent that regulatory authorities allow a rating agency to acknowledge in one jurisdiction a rating issued in another jurisdiction for certain regulatory purposes, S&P reserves the right to assign, withdraw, or suspend such acknowledgement at any time and in its sole discretion. S&P Parties disclaim any duty whatsoever arising out of the assignment, withdrawal, or suspension of an acknowledgment as well as any liability for any damage alleged to have been suffered on account thereof.
S&P keeps certain activities of its business units separate from each other in order to preserve the independence and objectivity of their respective activities. As a result, certain business units of S&P may have information that is not available to other S&P business units. S&P has established policies and procedures to maintain the confidentiality of certain nonpublic information received in connection with each analytical process.
S&P may receive compensation for its ratings and certain analyses, normally from issuers or underwriters of securities or from obligors. S&P reserves the right to disseminate its opinions and analyses. S&P's public ratings and analyses are made available on its Web sites, www.spglobal.com/ratings (free of charge), and www.ratingsdirect.com (subscription), and may be distributed through other means, including via S&P publications and third-party redistributors. Additional information about our ratings fees is available at www.spglobal.com/usratingsfees.