According to a recent report by blockchain security auditor CertiK, the United States’ new stablecoin regulatory framework is setting the stage for a split in global liquidity flows, particularly when compared to the European Union’s Markets in Crypto-Assets (MiCA) regime. This regulatory shift, led by the GENIUS Act, is expected to create distinct liquidity pools in the US and EU, potentially leading to significant challenges in cross-border transactions.
US Stablecoin Framework Marks Regulatory Milestone
The report highlights that the US has entered a new phase of regulatory clarity regarding digital assets. Federal legislation and administrative reforms are now in place to regulate how digital assets are issued, traded, and custodied. Central to this transformation is the GENIUS Act, signed into law by US President Donald Trump. This law establishes the first federal framework for payment stablecoins, imposing strict reserve requirements, banning yield-bearing stablecoins, and formally integrating stablecoin issuers into the US financial system.
However, the CertiK report warns that this move accelerates the divide between the US and EU stablecoin markets. The US framework, which strengthens the dominance of the US dollar, has led to the creation of a separate liquidity pool. As a result, liquidity will likely become increasingly segmented by jurisdiction, potentially leading to cross-border settlement frictions and creating opportunities for stablecoin arbitrage.
MiCA vs. GENIUS Act: Divergence in Stablecoin Regulation
While the EU’s MiCA regime shares some similarities with the US GENIUS Act such as requiring full redemption at par and banning yield-bearing stablecoins it introduces its own set of risks. MiCA mandates that a significant portion of an issuer’s reserves must be held in EU-based banks, which could create systemic risks due to the fractional reserve banking system. Critics argue that MiCA may also lead to increased industry consolidation, raising barriers to entry for smaller issuers.
Both regulatory frameworks prioritize financial stability, but neither aims to preserve the global fungibility of stablecoins. Instead, the US framework reinforces dollar liquidity, positioning stablecoins as a tool to maintain the US dollar’s global dominance. This shift marks a significant divergence in how stablecoins will operate across different regions, reshaping the global digital asset landscape.