Stablecoins have quickly catapulted from the fringes of crypto into the core of U.S. financial policymaking. What began as a tool for on-chain liquidity is now being treated as critical monetary infrastructure that Washington can no longer ignore.
With Congress advancing legislation, the SEC narrowing its jurisdiction, and leading crypto firms pursuing bank charters to embed themselves in the regulated financial system, the shift is no longer theoretical—it’s institutional. These firms aren’t just reacting to regulation; they’re preparing to operate as full-fledged financial institutions, offering custody, payments, and stablecoin issuance under federal supervision.
This marks real progress. After years of ambiguity, stablecoin policy is finally moving toward clarity. But the work isn’t finished. While lawmakers are drawing a perimeter around who can issue and under what conditions, key questions remain about redemption rights, consumer protections, and what happens when things go wrong at the platform level.
This piece unpacks how U.S. stablecoin regulation is being built—layer by layer—what clarity these moves offer, and what risks remain unresolved beneath the surface.
Stablecoins as Financial Infrastructure: Banking and Regulatory Shifts
While the SEC narrowed its remit, banking agencies quietly rewrote the playbook. In early 2025, both the OCC and FDIC quietly rescinded prior requirements for supervised institutions to seek approval before engaging in crypto-related activities—including custody, reserve backing, and stablecoin issuance. That shift wasn’t just procedural—it was philosophical. Pre-approval gave way to risk management as the core supervisory standard.
By treating stablecoins as part of the banking stack, regulators are preemptively aligning with the legislative direction. The aim is twofold: integrate blockchain-based payments into regulated finance and mitigate systemic risk through embedded oversight.
But stablecoin adoption isn’t plug-and-play. The stablecoin stack includes fiat conversion, AML onboarding, infrastructure gateways, blockchain fees, offramps, and final settlement. While large institutions can internalize or outsource these layers, smaller banks will face structural choices: whether to build in-house capabilities, rely on vendors, or adopt shared platforms. These decisions will shape not just cost structures, but operational risk and compliance exposure.
While banking agencies are integrating stablecoins into the traditional financial stack, the SEC has focused on clarifying the boundaries of its own authority—prompting a parallel conversation about what stablecoins are, and crucially, what they are not.
Defining the Perimeter: The SEC’s Guidance and Congressional Action
In April 2025, the SEC’s Division of Corporation Finance issued a staff statement concluding that a narrow class of fiat-backed stablecoins—“Covered Stablecoins”—do not qualify as securities under federal law. The covered stablecoins are fully collateralized by U.S. dollars or liquid equivalents like Treasury bills or insured deposits, and are marketed strictly for payments, not profit.
The Staff applied to both Reves and Howey, but leaned on Reves, framing Covered Stablecoins as commercial notes with low investor expectations and built-in risk mitigation. Under Howey, the absence of yield, governance rights, or profit expectation excluded them from investment contract status.
This classification exempts issuers, intermediaries, and users from registration obligations—but only under tightly controlled conditions. It also signals a broader shift: a temporary retreat from enforcement, at least for stablecoins that fall within the covered template.
But that rulebook is narrow. This narrows the SEC’s reach in a meaningful but limited way. The guidance reduces enforcement risk for a narrow class of payment-focused stablecoins, but doesn’t offer broader regulatory certainty. In Footnote 4, the SEC explicitly stated it was not addressing "yield-bearing stablecoins"—those that offer interest, rewards, or income, including re-basing mechanisms that automatically adjust token supply. These remain outside the scope of current relief and may still fall under securities law scrutiny.
Moreover, the guidance does not extend to stablecoins issued by foreign entities, which often circulate in U.S. markets without equivalent transparency or redemption obligations. This creates a gap in regulatory coverage for widely used assets like Tether.
And even for Covered Stablecoins, the guidance assumes ideal reserve structures: fully backed, transparent, segregated, and accessible. In practice, these conditions are inconsistently met, especially when stablecoins are distributed through intermediaries.
For example, users who hold stablecoins through custodial platforms typically don’t have a direct legal relationship with the issuer. Instead, they rely on the platform’s ability to honor redemptions and maintain access to reserves. Even where platforms are well-capitalized and compliant, users often have limited visibility into reserve management and unclear recourse in the event of disruption.
Commissioner Crenshaw’s dissent cut to the core: in a market where most stablecoins are distributed via intermediaries, retail users are often two steps removed from the reserve, with no legal recourse in a redemption crisis. Post-FTX, assuming redemption always works is a policy flaw—not just a market risk. The SEC may have defined the edge of liability, but it hasn’t secured the plumbing beneath it.
While the SEC Staff may have narrowed its stance on certain stablecoins, it’s Congress that’s taking on the broader task of defining the regulatory architecture. The GENIUS and STABLE Acts are the most developed legislative efforts yet—aiming to replace interpretive guidance with a clear, statutory framework. Both signal a shift from reactive enforcement to proactive rulemaking, but the structure they propose still leaves key operational and market-level questions open.
Both proposals agree on the fundamentals: if you issue a fully reserved, par-redeemable stablecoin marketed for payments, you are not in the securities business. And you shouldn't be regulated as if you are. Oversight belongs with banking regulators—not the SEC. That shift would bring capital standards, AML compliance, and redemption obligations—not investor disclosures
Where they diverge is in structure.The GENIUS Act takes a centralized, tiered approach: large issuers come under federal scrutiny, while smaller ones can operate under aligned state regimes. The STABLE Act leans harder on state certification, allowing more room for jurisdictional experimentation with baseline standards.
The message is clear: the era of legal ambiguity is ending. The U.S. is moving toward a formal licensing path for stablecoin issuers—one that draws a hard line between regulated digital cash and everything else.
But neither bill addresses the full stack. Consumer protection remains underdeveloped. What happens when redemptions fail mid-custody? When users transact via intermediaries with unclear legal obligations? Traditional banking has chargebacks and depositor guarantees. The stablecoin stack doesn’t. Here the stablecoin stack does not—and legislative clarity hasn’t yet caught up to that reality.
With the perimeter now defined, the question turns to what lies within it—and whether the system is structurally sound enough to support mass adoption.
The Foundation Is Set. Now Comes the Stress Test.
The U.S. is finally establishing a regulatory framework for stablecoins—defining who can issue, what reserves must look like, and how oversight will be distributed. It’s a necessary foundation. But legal structure alone won’t make stablecoins reliable infrastructure.
That responsibility now shifts to the market. If stablecoins are to operate at scale—under stress, across platforms, and in everyday financial flows—the systems supporting them must evolve in parallel. That means real-time monitoring, liquidity safeguards, and redemption mechanisms designed to fail gracefully, not catastrophically.
The groundwork is being laid. But resilience will depend on whether industry actors keep building—not just to comply, but to withstand. That’s the difference between regulatory clarity and true financial stability.
