Stablecoins have already gained legal status in the United States and Hong Kong. This allows for more efficient capital flows globally, and gray areas are bound to exist if not regulated – similar to how the US manages opioid addiction.
Stablecoins are crypto assets pegged to fiat currencies (such as the US dollar or Hong Kong dollar) or precious metals, designed to maintain their value stability. They are primarily divided into three categories: fiat-backed (such as USDT, USDC), commodity-backed (like stablecoins backed by gold reserves), and algorithmic (which do not rely on physical reserves but instead use algorithms to maintain their peg)([zh.wikipedia.org][1])
🛠️ Why Should Legislation Support Stablecoins?
1. Enhance Payment Efficiency and Reduce Costs
Stablecoins can provide instant, low-cost cross-border payment services, particularly in areas where banks are not covered. Their settlement speed is fast, fees are low, and they offer significant value for international trade and remittances ([ft.com][2]).
2. Strengthening the Internationalization of the US Dollar / Currency
From an American perspective, the rise of stablecoins can increase demand for short-term assets like U.S. Treasuries, thereby solidifying the dollar’s position and simultaneously driving financial innovation. The EU is also taking advantage of this opportunity to accelerate the launch of a digital euro.
3. Addressing Regulatory Gaps and Mitigating Risks
Historically, stablecoins have largely operated in the “shadow financial” system, lacking transparency and plagued by market irregularities, even involving risks such as money laundering and fraud. The U.S. proposed STABLE Act and GENIUS Act require clear regulation, disclosure of reserves, and capital/liquidation rules to ensure financial security and investor protection ([morganlewis.com][3]).
Hong Kong, meanwhile, has begun implementing the “Stablecoins Ordinance” from August 2025, requiring stablecoin issuers to obtain a license from the Hong Kong Monetary Authority (HKMA) and meet standards for reserves, redemptions, and anti-money laundering (AML/CFT), as well as prohibiting unlicensed institutions from advertising promotions ([morganlewis.com][4]).
How Do Stablecoin Companies Make Money?
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Interest Income on Reserve Assets For example, Circle’s USDC reserves are largely held in short-term US Treasury bonds, benefiting from current interest rates. In 2023, profits increased significantly, and approximately $5 billion in profit was projected for 2025 (ft.com) . Tether’s report showed earnings of $5.2 billion in the first half of 2024.
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Transaction Fees and Developer Tool Revenue In addition to minting/redemption fees, stablecoin platforms generate stable revenue by providing APIs, SDKs, settlement tools, etc., for DeFi, wallets, and corporate clients (marketwatch.com)
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Financial Expansion Services Some stablecoin issuers profit through additional products (such as interest redemption, investment features, corporate settlements, etc.), but this may lead to regulatory restrictions on “interest-bearing stablecoins.”
✅ Summary
- Stablecoins are payment tools designed to mitigate the volatility of cryptocurrencies, maintaining value through reserves or algorithms.
- Regulatory legislation aims to promote compliance, protect consumers, maintain financial stability, and foster innovation and international competitiveness.
- Revenue models primarily derive from interest on reserve assets, fees, and value-added services.
Looking ahead, if regulated effectively, stablecoins could play a significant role in global payment systems and compete with Central Bank Digital Currencies (CBDCs).