The Fed Ready to Finalize Stablecoin Regulation, Marking a New Chapter for Digital Assets in the U.S.

The Federal Reserve has finally issued an official statement regarding stablecoin regulation. Fed Chair Jerome Powell emphasized that the United States is now closer than ever to establishing a comprehensive legal framework for stablecoins, signaling the beginning of a new era in integrating digital assets into the traditional financial system.

Stablecoin Regulation Nears Completion

In his latest remarks, Powell stated that the development of stablecoin regulation has entered its final stages. The framework includes full 1:1 reserve requirements and unified oversight between federal and state regulators. Powell stressed that the regulation is designed to strengthen consumer protection, preserve financial stability, and provide operational certainty for stablecoin issuers.

The GENIUS Act as a Key Pillar

One of the critical foundations of this regulatory framework is the GENIUS Act, a law passed by the Senate in June 2025. The Act requires:

• Stablecoins to be fully backed 1:1 by cash or short-term U.S. Treasury securities,

• Monthly audits and public reserve disclosures to ensure transparency,

• Strict compliance with Anti-Money Laundering (AML) and Know Your Customer (KYC) rules,

• A ban on paying interest to stablecoin holders.

Impact on the Financial Industry

The clarity of this regulation opens the door for major institutions such as JPMorgan, Visa, and Stripe to legally enter the stablecoin sector. On the other hand, stablecoin issuers like Circle and Tether are expected to expand their holdings of short-term Treasuries—currently estimated at around $200 billion—making them some of the largest buyers of U.S. government debt instruments.

Voices from Regulators and Market Players

Fed Chair Jerome Powell stated, “The United States is making meaningful progress in establishing a transparent regulatory framework for stablecoins, with full 1:1 reserve requirements.”
Meanwhile, Yie-Hsin Hung of State Street Global Advisors added, “Roughly 80% of the stablecoin market is already invested in Treasury bills and repos. Under the new regulation, they will become some of the largest buyers of U.S. government debt.”

Implementation Challenges and Risks

Despite the positive regulatory outlook, several challenges remain:

• Coordination between federal and state regulators must run smoothly to avoid regulatory overlap.

• The ban on interest-bearing stablecoins forces issuers to adjust their business models, likely shifting toward tokenized assets as a new revenue stream.

• Additionally, sudden capital outflows from stablecoins could trigger volatility in the Treasury market in the event of a large-scale sell-off.

A Regulated Stablecoin Era Is Approaching

The Federal Reserve, together with U.S. legislative authorities, is now in the final stages of establishing a regulated and integrated stablecoin ecosystem. The GENIUS Act provides a robust legal framework, while the readiness of financial institutions to participate demonstrates that stablecoin adoption is entering a mature phase.

However, the implementation must be executed cautiously to ensure a balance between financial technology innovation and the stability of the global financial system.