Two paths diverged? How the US and EU treat stablecoins
Last time, we explored the similarities and differences between the GENIUS Act’s approach to stablecoins and the latest proposals in the UK. We showed that there were areas of broad alignment, but also some areas of clear difference. The reason for this is the different ambitions each country has for the growth of their stablecoin (and broader digital asset) sectors, set against two very different regulatory systems. In this post we will compare the US framework with the EU’s regulation around stablecoins, which can be found in its Markets in Cryptoassets Regulation (known as MiCA).
MiCA covers more than just stablecoins and provides comprehensive crypto-asset regulation for Europe, including regulation of intermediaries (known as crypto-asset service providers or CASPs). The US does not yet have a comprehensive federal regulatory regime for crypto-assets or the associated intermediaries. In Congress, the House of Representative has passed the CLARITY Act, which would provide such a regime. However, the Senate has yet to pass legislation on the topic, although the Senate Banking Committee has provided a discussion draft and request for information. The relevant regulators, the Commodity Futures Trading Commission and the Securities and Exchange Commission, have each started the information gathering process that is a precursor to rule making. We have submitted proposed frameworks for rulemakings by the CFTC and the SEC to cover intermediaries’ activities with respect to crypto-assets, specifically protocol tokens.
Verdict: For now, Europe is somewhat ahead of the US in terms of comprehensive intermediary regulation.
We expect stablecoins to have implications for payments, banking and commerce more generally, so it seems appropriate that they have their own set of regulations, as is the case in both the US and the EU. As a quick reminder, on 18 July 2025, President Trump signed the GENIUS Act into law, establishing the first US federal framework for so-called “payment stablecoins” (which include pretty much any existing stablecoin). In the EU, however, MiCA’s stablecoin provisions came into force across all 27 EU member states much earlier, in June 2024. It creates a bespoke regime for stablecoins, which it separates into two types: e-money tokens (EMTs) and asset-referenced tokens (ARTs) depending on what basket of assets the token refers to.
Although the two regimes were developed in very different political and economic circumstances, there are - just like with the UK - certain areas of core overlap. But there are also, of course, some notable differences. Let’s unpack it.
Scene Setting
Both regimes regulate the issuance of stablecoins as well as the issuers and intermediaries who support them. They start from slightly different definitions: in the US, “payment stablecoins” broadly include any fiat-denominated token used for payments, while in the EU, the split is explicit between EMTs (tokens referencing a single fiat currency) and ARTs (tokens referencing multiple currencies or non-fiat assets).
Stablecoins linked to other assets are left to other, as yet undefined regulation in the US, but captured as ARTs in the EU. In both frameworks, 1:1 backing of fiat-denominated coins is a core principle, with detailed reserve, disclosure, and redemption requirements.
Verdict: For now, Europe is ahead of the US by recognizing other types of stablecoins beyond fiat-linked.
Keeping It In Reserve
In the EU, MiCA requires that EMTs be fully backed by assets denominated in the same currency as the reference, held in custody with an authorized credit institution or central bank. Eligible assets are limited to:
Cash deposits. These must be at least 30% of reserves held as commercial bank deposits (or 60% if the stablecoin is deemed ‘significant’);
Government securities with minimal market and credit risk; and
Other highly liquid instruments approved by the EBA.
ARTs have similar prudential and governance requirements varied just to reflect that they reference value other than a non-single, non-fiat currency (though to date no ARTs appear to have been issued in the EU).
In the US, an issuer’s stablecoins must be backed one-to-one by eligible instruments, such as:
US currency, demand deposits or deposits held at Federal Reserve Banks;
Treasury bills or bonds with a maturity of 93 days or less;
Repo funding secured by T-bills cleared at a registered CCA;
Securities issued by registered money market funds;
Other liquid federal government assets approved by regulators; and
Tokenized versions of eligible instruments.
Both jurisdictions prohibit commingling of reserve assets with operational funds.
Verdict: Broadly aligned, though the EU mandates more commercial bank deposit-backing and have provision for stablecoins beyond fiat-linked.
A Shot At Redemption
In the EU, EMT issuers must grant holders the right of redemption at par value, at any time, in fiat currency. Redemption must occur “promptly,” and for free, though MiCA allows some operational flexibility (no fixed T+1 requirement, unlike the UK). For ARTs, redemption rights exist but are subject to additional conditions given the potential volatility of the reference basket.
In the US, customers must have a clear, enforceable right to redeem stablecoins for fiat on demand. The GENIUS Act requires issuers to publish a redemption policy promising “timely redemption” with capped and disclosed fees.
Verdict: Aligned, though the EU requires redemption to be without fees.
What’s The Issue(ance)
Under MiCA, only authorized credit institutions (banks) or electronic money institutions may issue EMTs. ARTs can be issued by other regulated entities, but must meet additional governance and capital requirements. Importantly, MiCA applies uniformly across the EU, with no national discretion (so-called ‘EU passporting’).
Foreign issuers can issue EMTs or ARTs in the EU only if they establish an authorized entity within the Union. Foreign-issued stablecoin usage (for stablecoins that would be deemed EMTs under MiCA) are capped at 1 million transactions per day and 200 million EUR value for stablecoins not pegged to an EU-currency.
The GENIUS Act’s general rule is that only U.S.-regulated issuers can directly issue stablecoins to U.S. users, with a narrow exception for foreign issuers from “comparable” jurisdictions, provided they register with the OCC and maintain reserves in U.S. institutions.
Unlike Europe, which does not allow member states to regulate any type of crypto-asset, the GENIUS Act allows for stablecoin issuers to choose either federal or state regulation, so long as the dollar amount of stablecoins issued remains below $10 billion. The law sets the minimum standards for both federal and state regulation, but state regulators may impose greater standards and in any event have the ability to set the detailed requirements of the regulations. In Europe, those details are handled by MiCA.
Verdict: Not aligned. The US provides a possible route for foreign issuers (although future rules from the regulators might narrow the realistic opportunity for foreign issuers in the US). The EU requires a fully in-scope local entity for EU issuance or limits on usage. Additionally, the US allows for state regulation, while MiCA prohibits member states from regulating on matters that are within its scope.
No Interest In That
Both the GENIUS Act and MiCA prohibit stablecoin issuers from paying interest or yield directly tied to holding or using the token. MiCA is explicit that EMTs cannot generate returns, to preserve their similarity to e-money. ARTs are also prohibited from offering yield unless linked to other activities approved by regulators.
Verdict: Aligned.
What About Implementation?
In the EU, MiCA was written into law in 2023, with the stablecoin provisions (Titles III and IV) applying from June 2024. However, supervisory enforcement only builds up gradually:
By 2025, all EMT and ART issuers must be authorized.
Existing operators had a limited grandfathering period but must transition to full compliance by end-2025.
The EBA and ESMA are expected to refine technical standards through 2026.
The GENIUS Act becomes effective the earlier of January 18, 2027, or 120 days after implementing regulations are finalized. Proposed rules are due by mid-2026, with full compliance required by early 2027. By mid-2028, all payment stablecoins offered in the U.S. must be issued by permitted entities.
Verdict: Not yet aligned. The EU regime has already started, with stablecoin rules already live, whereas the US regime will not fully be in force until 2027–2028.
The View From The Nest
While both jurisdictions have moved to bring stablecoin activity within the regulatory perimeter, their paths diverge in meaningful ways. The EU’s MiCA regime cements a highly harmonized framework across 27 member states, with tighter prudential and governance requirements. This regime is also notably protective of EU monetary sovereignty and seeks to limit the ability of non-EU currencies to circulate inside the EU. This implies a fundamental global fragmentation of the stablecoin market.
The US approach is more focused on payment system stability and creating federal-state coherence around issuers, but leaves significant discretion for regulators in implementation. In terms of international stablecoin usage within the US, the GENIUS Act is (perhaps unsurprisingly given the global role of the US dollar) more relaxed.
Whether this divergence ultimately fosters beneficial jurisdictional competition, interoperability or simply friction and fragmentation will depend on how these rules are enforced, and how responsive the two jurisdictions are to a rapidly evolving market. There is still scope for both regimes to treat each other as equivalent for practical purposes and so create interoperability between the two jurisdictions. But it is just as possible that questions of monetary sovereignty and infrastructure independence will lead to persistent fragmentation between the two great Transatlantic markets.
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We intend to host some local invite-only events in various locations around the world in the coming months to learn more about how the experts are thinking about stablecoins and their impacts on payments, banking and the overall digital economy. We will share the key themes from each event with everyone.
