The Trump Administration and Stablecoins
At this article, PQA Labs will deep-dive about stablecoins ‘s most updated regulation and compliance at United States and understanding the legal and execution summary on it.
Previously we reviewed the market capital and use case in the past few years which tells us the necessary to complete compliance on the crypto market by EU.
We will learn more about United States existing regulation and compliance on crypto and stablecoins. We also will summarize the possibility changed after Donald Trump won the election of US presidents.
Crypto and Stablecoins market Capital in United States.
According to the 2024 Geography of Crypto Report released by Chainalysis shown, The United States’ cryptocurrency markets are the largest and most influential in the world, standing out globally by a large margin.
According to the report shown, U.S. markets are significant relationship with the bull and bear markets by compared with global markets. When cryptocurrency prices rise the U.S. market shows larger increases in growth than the global market, on the other hand when the crypto market price drop the, the larger decrease in growth.
After comparing the bitcoin market, it showed the movement is along with BTC returns by below chart.
According to European central bank claimed, Almost 99% stablecoin capital ‘s ecosystem are pegged by US dollars. The largest market stablecoins, USD Tether and USD Coin, have a combined market capitalisation of about USD 120 billion.
Although, United States is the largest crypto market, but it seems still have not fully regulation and compliance on the market like MiCA. In fact, there have been calls for clearer federal regulations governing stablecoins. In late 2021, the President’s Working Group on Financial Markets released a report suggesting that stablecoin issuers should be subject to bank-like regulation, emphasizing the need for stablecoins to have transparency and sufficient reserves. And the U.S. Treasury Department began examining stablecoin regulations, proposing standards for firms that issue stablecoins and calling for more stringent oversight. This includes requiring issuers to maintain sufficient reserves.
Summary of the report:
- To address risks to stablecoin users and guard against stablecoin runs, legislation should require stablecoin issuers to be insured depository institutions.
- To address concerns about payment system risk, in addition to the requirements for stablecoin issuers, legislation should require custodial wallet providers to be subject to appropriate federal oversight. Congress should also provide the federal supervisor of a stablecoin issuer with the authority to require any entity that performs activities that are critical to the functioning of the stablecoin arrangement to meet appropriate risk-management standards.
- To address additional concerns about systemic risk and concentration of economic power, legislation should require stablecoin issuers to comply with activities restrictions that limit affiliation with commercial entities. Supervisors should have authority to implement standards to promote interoperability among stablecoins. In addition, Congress may wish to consider other standards for custodial wallet providers, such as limits on affiliation with commercial entities or on use of users’ transaction data.
In June 2022, New York’s Department of Financial Services (NYDFS) released guidance on issuing U.S. dollar–backed stablecoins. The guidance applies to USD pegged stablecoin issuers licensed under a BitLicense or chartered as limited-purpose trust companies under New York banking law. The guidance creates “recommendations or principles” related to redeemability, reserves, and attestation (confirmation of accounting statements). Stablecoin issuers must hold at least a 1:1 ratio of reserves segregated from other assets, and the reserves must be highly liquid.
As of late 2023, new proposals are being drafted for Congress to consider, aiming to establish a federal regulatory framework for stablecoins, which would ideally involve defining what constitutes a stablecoin and who can issue them.
Summary of new proposals:
The updated bill clearly points out stablecoins would be governed by state and federal banking regulators and would mainly be issued by depository institutions. For the institutions who want to issue stablecoins are required the limited permission from OCC.
Highlight:
Algorithmic stablecoins would be not allow to names as stablecoins and it would suspended two-year creation of new algorithmic stablecoins are regulated by the CFTC.
In May 2024, US legislation is progressing to provide increased regulatory clarity for many digital assets, the Financial Innovation and Technology for the 21st Century Act in its current form excludes certain stablecoins from regulation by the SEC, “except for fraud and certain activities by registered firms”, and is specifically excluded from regulation by the CFTC.
The November 2024 US elections resulted in a resounding win for the Republican Party, which will be taking over the White House and Congress from January 20, and which expected Trump administration will be execute. He also promised to suspend sales of U.S. government bitcoin holdings and to fire current Securities and Exchange Commission (SEC) Chairman Gary Gensler on day one of his administration.
“Among the people that some are speculating could take Gensler’s place is Dan Gallagher, Reuters reported. He previously worked as an SEC commissioner and is currently the chief legal, compliance and corporate affairs officer of Robinhood Markets. Gallagher has criticized Gensler’s SEC and asked for changes to the way the agency approaches crypto regulation.
In September, Gallagher spoke before Congress during a hearing titled “Dazed and Confused: Breaking Down the SEC’s Politicized Approach to Digital Assets.” During his prepared remarks Gallagher called out Gensler and said the SEC has fostered “innovation-killing federal regulatory uncertainty.”
As of 2025, the regulatory landscape for cryptocurrencies and stablecoins in the United States is undergoing significant evolution. Here’s an overview of the current state and anticipated changes:
1. Regulatory Framework Development
1.1) Stablecoin Regulation: In 2025, the U.S. is expected to implement a clearer regulatory framework for stablecoins. This will likely include requirements for full fiat backing and regular audits, aiming to enhance transparency and ensure consumer protection.
1.2) Federal vs. State Regulations: Currently, there is no comprehensive federal regulatory framework governing digital assets. Instead, various states have adopted their own regulations, creating a patchwork system that companies must navigate. Efforts are underway to harmonize these regulations, which may lead to a more unified approach by the end of 2025.
2. Role of Financial Institutions
Financial institutions, including banks and even central banks, are anticipated to play a significant role in the legitimization of cryptocurrencies. This may mean greater acceptance of digital assets in traditional financial systems and increased collaboration between fintech firms and established banks.
3. Compliance Requirements
Enhanced compliance measures are expected to emerge, focusing on anti-money laundering (AML) and know-your-customer (KYC) regulations for cryptocurrency exchanges and wallet providers. These requirements may result in more stringent operational frameworks for businesses involved in cryptocurrency transactions.
4. Impact on Global Markets
The regulatory clarity anticipated for stablecoins is likely to catalyze their adoption across both fintech and traditional banking sectors in the U.S. This could reinforce the dominance of the U.S. dollar in global markets, especially as more stablecoin projects seek to establish a trusted presence.
5. Continuous Evolution
As the regulatory landscape matures, continuous updates and adaptations will be necessary. Stakeholders, including businesses and regulators, will need to monitor ongoing developments in both domestic and international cryptocurrency regulations to ensure compliance and strategic alignment.
As 2025 unfolds, staying informed about these developments will be crucial for businesses and individuals participating in the cryptocurrency market.