Original Article Title: "Cobo Stablecoin Weekly Report NO.21 | New Battlefield of Stablecoins: Global Regulatory Race, Industry Distribution Showdown"

This week, the stablecoin competition has presented two clear battlefronts: a regulatory race between nations and a struggle for distribution rights within the industry.

Globally, stablecoins are being integrated into financial infrastructure: China, Japan, and South Korea are accelerating the integration of their respective currencies with stablecoins, U.S. regulations are directly shifting towards empowerment, Federal Reserve Governor Waller specifically mentioned "stablecoins, smart contracts, AI" as the three pillars of payment innovation, and warned that banks resisting these changes will be marginalized. Meanwhile, another Federal Reserve Governor, Bowman, called for reducing barriers related to "reputation risk," even suggesting that central bank staff should personally experience holding stablecoins, signaling that stablecoins have been incorporated into the U.S. dollar's strategic toolkit.

On the industry front, the focus is shifting from issuance to distribution. Circle is facing pressure from channel costs, while Ripple, Bullish, and MetaMask's practices have shown two paths: direct institutional connections and white-label distribution. The distribution network is becoming a decisive factor in the second half of the stablecoin game.

Market Overview and Growth Highlights

The total market capitalization of stablecoins has reached $277.866 billion (approximately $277.8 billion), with a weekly increase of $2.771 billion (approximately $2.8 billion). In terms of market share, USDT continues to maintain its leading position, accounting for 60.19%; USDC ranks second, with a market cap of $67.456 billion (approximately $67.5 billion), representing 24.28%.

Blockchain Network Distribution of Top Three Stablecoin Market Values:

· Ethereum: $144.578 billion

· Tron: $82.416 billion

· BSC: $11.836 billion

Top 3 Fastest Growing Networks of the Week:

· Movement: +79.71% (USDA accounts for 64.46%)

· Ink: +27.52% (USDT accounts for 92.95%)

· Algorand: +14.28% (USDC accounts for 96.63%)

Data source: DefiLlama

Sino-U.S. Race: Stablecoins Have Become a Strategic Pivot of the Global Financial Order

Stablecoins are evolving from a fringe product in the crypto market to a strategic hub in international finance. This week, the synchronized acceleration of China and the U.S. clearly revealed this trend: the Chinese State Council is reviewing a new roadmap for the internationalization of the renminbi, with stablecoins listed as a core lever to address the U.S. dollar's leading position in this field. Hong Kong has already implemented regulatory regulations, Shanghai is establishing a digital renminbi international operations center, and senior officials may push for the use of the renminbi stablecoin for cross-border settlement within the framework of the Shanghai Cooperation Organization. These actions stem from the real pressure of the renminbi's global payment share falling to 2.88% under SWIFT, while the dollar's share is as high as 47.19%, and exporters' reliance on the dollar stablecoin is growing. Against this backdrop, the renminbi stablecoin is seen as a complementary tool to enhance cross-border payment competitiveness, and the exploration by major Asian economies such as Japan and South Korea also indicates that stablecoins are gradually being incorporated into regional financial infrastructure design.

The United States is also undergoing a profound regulatory transformation. Federal Reserve Board of Governors members Christopher Waller and Michelle Bowman have stated their positions: Waller bluntly stated at the Wyoming Blockchain Conference that stablecoins, smart contracts, and artificial intelligence are the three pillars of future payment innovation and emphasized the strategic value of stablecoins in improving payment efficiency and consolidating the dollar's international status. He warned that banks that resist new technologies will be marginalized. Bowman further suggested reducing regulatory barriers caused by "reputation risk" and even allowing central bank personnel to hold crypto assets to gain practical experience.

This aligns with the compliance pathway established by the GENIUS Act, demonstrating that the United States is reshaping its institutional advantage through regulatory openness. The minutes of the FOMC meeting in July raised stablecoins as a systemic issue for the first time, recognizing both their value in payments and demand for government bonds, and being cautious about their potential impact on the liability side of banks and monetary policy transmission. This aligns closely with the banking sector's concerns about deposit outflows, indicating that stablecoins have moved from an industry lobbying issue to a central bank's strategic risk consideration. In the future, the Federal Reserve will likely strengthen transparency and risk monitoring while recognizing the efficiency and competitive value of stablecoins, aiming to rebuild a new balance between financial innovation and system stability.

Against this background, the prospects for the scale of stablecoins will be reevaluated. Standard Chartered expects the global stablecoin market value to increase to $20 trillion by 2028, and if the renminbi stablecoin can enter the international clearing network, it will become a key extension of renminbi internationalization. It can be foreseen that China and the U.S. are shaping the future digital currency order through different paths: the United States maintains its institutional advantage through legislation and regulatory friendliness, while China promotes breakthroughs through policy driving and regional pilots. The strategic intersection of the two foretells that stablecoins will transcend the realm of crypto tools and become a core variable in reshaping international financial governance and monetary flow patterns.

The Second Half of Stablecoins: The Distribution Battle

With the gradual implementation of regulatory frameworks (such as the U.S. GENIUS Act and Hong Kong's Stablecoin Regulations), standardization in the issuance phase is nearing completion, and the focus of industry competition is shifting to "distribution." Distribution is not only the interface between the issuer and the users but also the most expensive and negotiable part of the process. Whether relying on exchanges, payment networks, or DeFi incentives, achieving scalable distribution incurs high channel costs.

Circle is a typical case. To reach users, it must rely on channels like Coinbase, resulting in significant liquidity but also requiring substantial revenue sharing. In Q2 2025, Circle generated approximately $625 million from USDC reserve interest income, with more than half of that amount paid to Coinbase. With the entry of distributors like Binance, this structural reliance will only intensify, putting pressure on Circle's net revenue margin.

However, this week saw two cases demonstrating an alternative approach. Ripple embedded RLUSD directly into Gemini's working capital, while Bullish completed a $1.15 billion IPO, with over 50% of the fundraising done in stablecoin form. This kind of "top-down" institutional distribution bypasses retail channels, placing stablecoins directly into corporate finance and the capital markets. This enhances distribution efficiency and creates long-term value scenarios—closer to deep integration of stablecoins into the mainstream financial system than merely relying on payment or transaction circulation.

As distribution capability becomes a core competitive advantage, platforms that control users and channels naturally extend to the issuance side. An example is the mUSD launched by MetaMask, which, through a partnership with Stripe's Bridge, outsources issuance, reserve management, and compliance, while focusing on branding and user engagement. Users can not only deposit, exchange, and cross-chain with mUSD but also spend globally at merchants using the MetaMask Card. Wallets have evolved from traffic gateways to "branded issuers," with Bridge playing the role of a "white-label issuer" in this scenario.

This model has the potential to reshape the stablecoin landscape, with a few licensed and tech-savvy companies responsible for issuance and compliance, while more brand- and user relationship-focused platforms achieve "Stablecoin as a Service" (STaaS) through outsourcing. The future market may move from dominance by a few giants to the coexistence of many medium-sized stablecoins. True differentiation will come from distribution networks and brand value, rather than just the reserve assets themselves.

Market Adoption

Gemini and Ripple enter into a credit partnership, with settlements exceeding the initial limit to be made in RLUSD stablecoin

Key Highlights

· Cryptocurrency exchange Gemini disclosed in its IPO prospectus that it has signed a $75 million credit line agreement with Ripple Labs, expandable to $150 million under certain conditions;

· Once borrowing exceeds the initial $75 million, Gemini can request loans in Ripple's USD stablecoin RLUSD form, making RLUSD a settlement option for major U.S. exchanges;

· The credit agreement was signed on July 10 and is primarily used to finance credit card receivables, and as of August 15, Gemini had not yet utilized this credit line.

Why It Matters

· This agreement marks a significant shift for stablecoins from a payment medium to credit infrastructure. Ripple, through its partnership with the soon-to-IPO mainstream exchange, not only embeds RLUSD into Gemini's core operations but also creates high-frequency, high-value use cases for its stablecoin, directly challenging USDT and USDC's market dominance. With the acceleration of mainstream adoption in the crypto industry following the signing of the GENIUS Act by Trump, this strategic collaboration between financial institutions demonstrates the unique advantages of stablecoins as a credit tool: instantaneity, programmability, and global reach, injecting innovation into traditional finance. Despite Gemini's net loss of $2.825 billion in the first half of the year, this partnership showcases how stablecoins are becoming a key infrastructure bridging traditional finance with the crypto ecosystem.

Cryptocurrency Exchange Bullish Raises $1.15 Billion in IPO, Over 50% Settled in Stablecoins

Key Highlights

· Cryptocurrency exchange Bullish completed its IPO on August 14, with over 50% of the funding settled in stablecoin form, raising a total of $1.15 billion;

· This IPO used 8 different stablecoins for settlement, primarily minted on the Solana network and custody by Coinbase, enabling multi-currency, multi-regional fundraising;

· In this IPO, traditional investment bank Jefferies transformed into a "crypto delivery agent," coordinating stablecoin minting and delivery, collaborating with stablecoin issuers like Circle and Paxos to complete the transactions.

Why It Matters

· This marks stablecoins as a key part of the capital market infrastructure, directly challenging the traditional T+2 settlement model. Bullish IPO integrates various parties such as a high-performance public chain, compliant exchange, and stablecoin issuer, showcasing the collaborative power of the crypto ecosystem. With acts like the GENIUS Act providing regulatory groundwork for stablecoins, this innovative fundraising model signals a redefinition of traditional financial intermediary roles, potentially accelerating the migration of core capital market functions onto the blockchain.

MetaMask Extension Integrates TRON Blockchain, Accelerating Cross-Chain Development Strategy

Key Takeaways

· The world's largest self-custodial wallet, MetaMask, has announced a strategic partnership with the TRON DAO, enabling users to directly access and engage with the TRON ecosystem;

· This move follows MetaMask's previous integrations with Solana and Sei, with the team also announcing plans to add Bitcoin support in Q3 2025;

· TRON, as a major stablecoin payment chain, processes nearly 9 million transactions daily, settling over $22 billion in value, making it the largest blockchain network by USDT trading volume globally.

Why It Matters

· This signifies MetaMask's transition from an Ethereum-native wallet to a true "Web3 gateway," enhancing user experience and market competitiveness by supporting both EVM and non-EVM chains. TRON's widespread adoption across Asia, South America, Africa, and Europe presents global user growth opportunities for MetaMask. The collaboration between both parties will strengthen blockchain ecosystem interoperability and drive real-world application use cases. With MetaMask currently having over 100 million monthly active users and considering the launch of a native token, the TRON integration is a key step in its cross-chain strategy, further solidifying its leadership position in the Web3 wallet market.

Velera Launches Digital Asset Lab, Betting on Stablecoins as a Growth Point for Credit Unions

Key Takeaways

· Credit union service organization Velera has launched a digital asset lab aimed at helping credit unions seize opportunities in the stablecoin and digital asset space;

· The lab will focus on developing joint ventures to address issues such as distributed ledger infrastructure, blockchain network interoperability, and core banking system integration;

· The first platform partner is the digital asset bank network Metallicus, and the two will jointly explore how to use a multi-functional blockchain infrastructure to provide secure and compliant solutions for US credit unions.

Why It Matters

· Traditional financial institutions are rapidly entering the stablecoin space to avoid repeating the mistakes of the fintech era where start-ups dominated the market. As stablecoins and tokenized assets become mainstream, controlling their custody services is akin to holding the vault key to a new global currency. By strategically positioning themselves in the custody business, banks and credit unions can establish toll booths in the trillion-dollar blockchain transaction space while influencing the design of the new financial infrastructure. This move demonstrates the financial industry's recognition of stablecoin potential shifting from speculative assets to payment and store of value tools, accelerating stablecoin integration into the traditional financial system.

Whop Launches PSP Payment Aggregation Platform, Reducing Fees to 2.7%, Supporting Global Bank and Stablecoin Settlement

Key Highlights

· Whop announces its independence from Stripe, building a payment orchestration system to access multiple PSPs (such as Adyen, Checkout.com), implement transaction smart routing for improved authorization rates, and reduce fees to 2.7% + 30 cents;

· Whop's GMV has reached a $1.2 billion annualized run rate, serving 28,000 creators, spanning 170+ countries, supporting cryptocurrency settlements such as Bitcoin and stablecoins, allowing sales to start without cumbersome KYC;

· Whop has completed Series A and B funding totaling $80 million, with a valuation of $800 million, investors include Peter Thiel and Insight Partners, transitioning from a digital product marketplace to a full-stack payment infrastructure provider.

Why It Matters

· Whop's payment system independence marks the acceleration of the "decoupling" trend in payment infrastructure. By constructing a payment orchestration layer, Whop can intelligently select the optimal payment route based on transaction type, country, and currency, breaking free from reliance on a single provider. Cryptocurrency payment options and simplified KYC processes offer a workaround for underserved banking regions, significantly lowering the barrier for global merchants to participate in the digital economy.

Regulatory Compliance

US to Establish Unified Stablecoin Regulatory Framework, GENIUS Act Empowers Review Committee to Assess State Rules

Key Takeaways

· The US Stablecoin Certification Review Committee has begun assessing whether each state's stablecoin framework is "substantially similar" to the federal issuance system, with the committee led by the Treasury Secretary and including the Fed Chair and FDIC Chair;

· The committee must have unanimous approval to endorse each state's regulatory framework, which is a key step in streamlining state stablecoin regulation under the GENIUS Act;

· Gavin Meyers, Financial Services Regulatory Partner at Pierson Ferdinand LLP, stated that the act is expected to reduce the current state-by-state regulatory patchwork;

Why It Matters

· The US is conducting a federal-level review of each state's stablecoin rules to establish a nationwide uniform regulatory standard. This development will provide stablecoin issuers with a clear path to compliance, reduce regulatory costs of operating in multiple states, and mitigate regulatory arbitrage risks. With the rapid growth of the global stablecoin market, this US regulatory coordination mechanism sets an example for building a global stablecoin regulatory framework, further driving the compliant use of stablecoins in payments, cross-border trade, and other areas.

Tether and Circle Executives to Meet South Korean Banking Titans, Stablecoin Development Gains Momentum

Key Takeaways

· According to South Korean media reports, stablecoin issuers Circle and Tether executives will separately meet with top executives of New-Han Financial Group CEO Kim Yook-Dong and Hana Financial Group CEO Ham Young-Ju, among other major South Korean bankers this week;

· The discussions will cover the distribution and potential use of the US dollar stablecoin in South Korea, as well as the possibility of issuing a Korean won-backed local stablecoin;

· Despite differing stances on stablecoin regulation between the ruling and opposition parties in South Korea, Korean internet giant Kakao has trademarked a Korean won stablecoin, and the Bank of Korea is also considering linking deposit tokens to public blockchains.

Why It Matters

· This development signifies that global stablecoin giants are actively expanding into the Asian market, especially in South Korea, a market historically strict on foreign financial institutions. South Korea plans to introduce a stablecoin legal framework in October this year, and cooperation between major financial institutions and stablecoin issuers will accelerate the development of the South Korean stablecoin ecosystem. Rajiv Sawhney, Director of International Investment Portfolio Management at Wave Digital Assets International, stated that a joint venture or collaboration between Circle or Tether and South Korean banks will help them maintain market share in issuing Korean won stablecoins among local fintech companies in South Korea. This trend reflects the globalization of stablecoins as cross-border payment tools and increasing acceptance of stablecoin technology by traditional financial institutions.

US Crypto Market Structure Bill Faces Key Vote, Rep. Scott Says Outcome Hangs in Balance

Key Takeaways

· Senate Banking Committee Chair Tim Scott has stated that the upcoming Crypto Market Structure Bill may receive even less Democratic support than the previously passed stablecoin GENIUS Act, with the most optimistic estimate being only 12-18 Democratic supporters;

· Scott openly pointed out Senator Elizabeth Warren as a key force hindering Democratic members from backing the bill, warning that the legislation would not only impact cryptocurrencies but also disrupt the entire US financial regulatory system;

· Given the current Senate seat distribution, the bill would require at least 7 Democrats to join all 53 Republicans for it to pass, facing a similar challenge as the already passed CLARITY Act in the House.

Why It Matters

This Crypto Market Structure Bill has a more profound impact than the signed GENIUS Stablecoin Act, creating a legal space for the cryptocurrency industry by amending New Deal-era financial regulations. Warren's strong opposition has clouded the outlook for the bill, claiming it would provide a "highway" for traditional securities to "escape SEC oversight," fundamentally upending nearly a century of capital market regulatory framework. This legislative battle is not only about the future of the crypto industry but also involves a fundamental debate on the US financial regulatory system, serving as another crucial battleground for the Trump administration's push for crypto-friendly policies.

Robinhood Ventures into Sports Prediction Market, Partners with Kalshi to Cover NFL and NCAA Events

Key Takeaways

· Robinhood has announced a partnership with Kalshi through its derivatives arm to launch a US professional and college football prediction market, allowing users to trade bets on game outcomes;

· The new service will debut ahead of the 2026 NFL and NCAA seasons, covering all NFL regular games and football matches of the NCAA's Power Five conferences and independent schools;

· After previously pausing the Super Bowl prediction market due to a CFTC warning, Robinhood intentionally avoided direct references to the NFL or NCAA this time, emphasizing that the service is "not endorsed by any professional or college sports association."

Why It Matters

· This marks the prediction market's transition from the crypto-native space to mainstream financial services, reflecting the trend of "financialization of content." The annual betting volume in the U.S. sports betting market exceeds $120 billion, making it a key market that fintech companies are vying for. The current core legal issue lies in the prediction market being caught in a regulatory conflict between federal regulation (CFTC) and state-level gambling regulations. Platforms like Kalshi, holding CFTC licenses, can assert federal preemption to bypass state restrictions. Despite Nevada and New Jersey losing early litigation, a recent Maryland case victory suggests the legal dispute is not yet settled. This regulatory arbitrage space will impact the development path of the crypto prediction market.

Global Banking Organizations Call for Amendment to Basel Cryptocurrency Capital Standards

Key Takeaways

· Several global financial industry associations have jointly written to the Basel Committee on Banking Supervision (BCBS) requesting a reconsideration of the cryptocurrency asset risk exposure standard (SCO60) scheduled to take effect in January 2026;

· Banking organizations believe that the current standard's capital treatment of cryptocurrency assets is overly conservative and punitive, not commensurate with the actual risk, making banks' participation in the crypto market economically infeasible;

· The financial industry emphasizes that its direct involvement can provide consumer protection and risk management, and attaches a report highlighting the "transformative potential" of distributed ledger technology in the capital markets.

Why It Matters

· With the Trump administration pushing for legislation favorable to the crypto industry, global banks are actively positioning themselves in custody, trading, and stablecoin issuance businesses, making crypto assets an integral part of traditional finance. The banking sector's proactive lobbying for rule changes indicates a shift from passively accepting regulation to actively seeking to participate in the crypto market under profitable conditions. The BCBS standard was formulated during the market turmoil of 2022 and is not aligned with the current industry development. This regulatory tug-of-war will significantly impact the integration process between crypto and traditional finance, revealing the ongoing game of regulation, risk, and business interests.

Wyoming Launches First State Government-Supported Multi-Chain Stablecoin FRNT

Key Takeaways

· The Wyoming Stablecoin Committee has officially introduced the first state government-endorsed stablecoin, the Frontier Stable Token (FRNT), making Wyoming the first U.S. state to issue a blockchain-based, fiat-pegged token;

· FRNT will be issued on 7 major blockchains simultaneously: Arbitrum, Avalanche, Base, Ethereum, Optimism, Polygon, and Solana, maintaining interoperability through LayerZero;

· The stablecoin will be backed by cash and short-term US Treasury overcollateralization, holding at least a 102% reserve to ensure stability, and will first be available for purchase through Kraken (Solana) and Rain's Visa-integrated card platform (Avalanche).

Why It Matters

· Wyoming has long been a frontrunner in crypto regulation, and this stablecoin issuance follows closely after Trump's signing of the Federal Stablecoin Act, further solidifying the state's position as a leader in digital financial innovation. With the total supply of USD stablecoins already at $265 billion, the regulatory-friendly stablecoin issued by the state government will provide more options for retail and enterprise users while attracting more blockchain-related activities to the regional economy. This also sets a template for other state and local governments to issue stablecoins, potentially sparking broader government-backed digital currency experiments.

US Treasury Seeks Public Comment on Digital Asset Anti-Money Laundering Measures

Key Takeaways

· The US Treasury Department issued a public notice on Monday seeking public input on "Innovative approaches to detecting illicit finance involving digital assets" to implement the requirements of the GENIUS Stablecoin Act signed by President Trump last month;

· The Treasury Department is requesting suggestions on the application of API interfaces, artificial intelligence, digital identity verification, and blockchain technology in the anti-money laundering field, with the deadline for comments set for October 17th;

· Treasury Secretary Scott Bessent stated that stablecoins will expand access to the dollar for billions globally, increase demand for US Treasury bonds, calling it a "win-win-win situation for users, issuers, and the US Treasury."

Why It Matters

· With the GENIUS Act establishing a federal regulatory framework for stablecoins, regulatory agencies are now turning to address anti-money laundering compliance challenges. Banking associations are concerned that restrictions on stablecoin interest payments under the law may be circumvented by exchanges and brokers, leading to a significant outflow of deposits into the stablecoin market. This consultation process will impact future stablecoin regulatory rule-making; the Treasury Department will submit the findings to Congress, potentially driving a new round of rule-making that will have a profound impact on stablecoin industry compliance requirements and development direction.

Tether Appoints Former White House Cryptocurrency Committee Executive Director Bo Hines as Strategic Advisor

Key Takeaways

· Tether has announced the appointment of former Trump administration White House Cryptocurrency Committee Executive Director Bo Hines as a digital asset and U.S. strategic advisor, effective immediately;

· Bo Hines will lead Tether's strategic planning for entering the U.S. market, establish relationships with policymakers and industry stakeholders, and reinforce Tether's investment commitment in the U.S.;

· As the White House Cryptocurrency Committee Executive Director, Hines previously led an inter-agency working group to develop a stablecoin regulatory framework and advance the secure integration of blockchain technology with the U.S. financial system.

Why It Matters

· This appointment marks the world's largest stablecoin issuer officially launching its U.S. market strategy, reflecting the increasingly common "revolving door" phenomenon between the crypto industry and political elites. With the Trump administration's supportive policy stance on crypto innovation, Tether recruiting a former White House official may help it achieve a more favorable regulatory environment in the U.S. Tether has stated it has already invested nearly $5 billion in the U.S. ecosystem, and this personnel appointment may indicate its intention to expand its presence in the U.S. infrastructure sector, further enhancing the stablecoin's influence in the global payment system.

The Federal Reserve Announces Termination of Novel Activities Supervision Program, Reverting to Regular Supervisory Processes

Key Takeaways

· The Federal Reserve had previously established the Novel Activities Supervision Program, focusing on regulating banks in emerging business areas such as crypto assets, distributed ledger technology (DLT), and complex tech collaborations with non-banks;

· The program covered four key areas: tech-driven collaborations with non-banks, activities related to crypto assets, DLT projects with potential systemic impact, and providing correspondent banking services to crypto and fintech firms;

· The Federal Reserve has now decided to terminate this special program and will oversee banks' emerging business activities through regular supervisory processes, emphasizing that it will not prohibit or impede banks from providing services based on the type of business.

Why It Matters

· This move marks a significant shift by the Federal Reserve in its approach to regulating crypto and fintech, moving from special regulation back to the mainstream regulatory system, which may reflect regulatory agencies' view that these businesses have matured. This step will simplify banks' compliance burden in participating in crypto and DLT innovation, potentially encouraging more traditional financial institutions to explore digital asset services, promoting financial innovation and inclusion while maintaining appropriate regulation of risks. This policy change may indicate that the U.S. regulatory environment is moving towards a more open but still cautious direction.

Zhaojin International Securities Officially Launches Virtual Asset Trading Service, Providing Bitcoin, Ethereum Trading, etc.

Key Highlights

· Zhaojin International Securities announced on August 18th that it has officially started to provide virtual asset trading services. Its mobile app has launched the virtual asset trading feature, offering round-the-clock trading services to eligible investors;

· Eligible investors can directly trade Bitcoin (BTC), Ethereum (ETH), and USDT through Zhaojin International Securities' virtual asset account;

· The company is the first Chinese-funded bank-backed securities firm in Hong Kong to obtain licenses for virtual asset trading services, and it will gradually expand the range and functionality of trading within a compliance framework in the future.

Why It Matters

· This marks a milestone for Chinese financial institutions officially entering the cryptocurrency asset field, reflecting Hong Kong's increasingly mature virtual asset regulatory framework. As the first licensed Chinese-funded bank-backed securities firm, Zhaojin International's entry will provide institutional investors with a more standardized and secure channel for cryptocurrency asset trading, potentially attracting more traditional financial capital into the digital asset market while strengthening Hong Kong's position as an Asian crypto financial center.

Korean Financial Regulatory Agency to Submit Stablecoin Regulation Bill in October

Key Highlights

· According to South Korean media outlet MoneyToday, the Financial Services Commission (FSC) of South Korea plans to submit a stablecoin regulation bill to the National Assembly in October, which will be part of South Korea's second digital asset legislative framework in development;

· This bill will establish requirements for stablecoin issuance, collateral management, and internal risk control systems, aligning with President-elect Yoon Suk-yeol's commitment to building a local currency-pegged stablecoin market;

· South Korea's four major banks (KB Kookmin, Shinhan, NH Nonghyup, and Hana Bank) plan to meet with Circle's President Heath Tarbert next week to discuss stablecoin-related matters.

Why It Matters

· This move signals that Asia's major economies are accelerating the establishment of a stablecoin regulatory framework, forming a global stablecoin regulatory network with countries like the United States and Japan. South Korea's promotion of its own currency stablecoin development reflects strategic considerations for digital financial sovereignty, aiming to address the challenge posed by Trump's strengthening of the global dominance of the US dollar through stablecoins. With the increasingly clear regulation of stablecoins in Asian markets, a more defined legal environment will be provided for cross-border payments and financial innovation, while also offering more certainty for institutional investor participation.

Japan Approves First Yen Stablecoin JPYC, Plans to Issue $7 Billion Over Three Years

Key Takeaways

· Japan's Financial Services Agency (FSA) is set to approve the first yen stablecoin issued by a fintech company, JPYC, as early as this autumn, with sales set to start within weeks after registration this month as a funds transfer business.

· JPYC will be fully backed by highly liquid assets such as deposits and government bonds, maintaining a 1:1 peg to the yen.

· The plan is to issue ¥1 trillion (approximately $6.8 billion) over three years, attracting interest from hedge funds, wealth management firms, and others, with use cases including carry trades, cross-border remittances, and DeFi.

Why It Matters

Japanese law defines stablecoins as "currency-pegged assets," setting them apart from traditional cryptocurrencies like Bitcoin and providing a clear legal basis for regulation and issuance. With Citigroup predicting the stablecoin market to grow to $37 trillion by 2030, the launch of the yen stablecoin sets a precedent for the entry of a non-US dollar currency like JPYC into the global stablecoin market, potentially reshaping the landscape of cross-border payments.

Coinbase, DCG, and Other Crypto Giants Form "American Innovation Project," an Educational Non-Profit Organization

Key Takeaways

· Crypto industry giants such as Coinbase, DCG, Kraken, and Paradigm have joined forces to establish the "American Innovation Project" (AIP), which operates in the form of a 501(c)(3) non-profit organization, enjoying tax-exempt status;

· Led by DCG's Senior Policy Vice President, Julie Stitzel, AIP will directly engage with members of Congress and their staff to provide education on cryptocurrency and decentralized technology, but is mandated by law not to "make influencing legislation its primary activity";

· Board members include Solana Foundation Chair Kristin Smith, Blockchain Association COO Allie Page, and Coinbase Policy Strategist Nick Carr, among other industry policy influencers.

Why It Matters

· This reflects a strategic shift in the crypto industry towards a more diversified approach to influencing policy. By opting for a 501(c)(3) non-profit model instead of a traditional lobbying organization, these companies have maintained political influence while avoiding certain legal restrictions and tax implications. The establishment of this organization comes at a time when the crypto regulatory environment is becoming increasingly complex, demonstrating that industry leaders are seeking to strike a balance between education and advocacy to create favorable conditions for shaping the future regulatory landscape.

Capital Deployment

Loop Crypto Completes $6 Million Funding Round, Stablecoin Payment Platform Sees 344% Transaction Volume Surge

Key Takeaways

· Loop Crypto has completed a new strategic funding round led by Fabric Ventures and VanEck, with Helius and Plug and Play joining for the first time, and existing investors like a16z crypto continuing their support, raising over $6 million in total;

· Data shows that Loop's platform saw a 344% year-over-year transaction volume growth in Q2 2025, with stablecoin transactions accounting for 98% of all transactions and 94% of payment volume, helping merchants reach customers in over 120 countries;

· The platform supports authorized hold payment methods, recurring payments, usage-based billing, and other traditional payment features, while offering advantages such as minute-level receipt, integration completion within days, and instant settlement in fiat/stablecoin.

Why It Matters

· Loop Crypto's funding and explosive growth validate that stablecoins are becoming the new global payment infrastructure. The platform not only serves direct merchants but also empowers billing platforms like OpenPay through APIs, creating a network effect in payments. Data shows that businesses accepting cryptocurrency payments cover twice as many countries as those accepting fiat payments alone, indicating that stablecoins are addressing global business pain points such as high forex fees, multiple payment processor integrations, and long settlement times. Ongoing investment by top-tier institutions reflects a strong market expectation for stablecoin payment growth, suggesting that crypto payment infrastructure is rapidly integrating into mainstream commercial systems.

PayPal and Coinbase Venture Arm Co-invest in Mesh, Surpassing $130M Total Funding

Key Highlights

· Cryptocurrency payment infrastructure company Mesh receives a new round of investment from PayPal Ventures, Coinbase Ventures, and other institutions, bringing its total funding to over $130 million;

· This funding round comes just 5 months after Mesh's $82 million Series B round led by Paradigm in March this year, with the specific amount undisclosed but at least $10 million, with some funds settled in the PYUSD stablecoin;

· Mesh's "SmartFunding Orchestration Engine" addresses asset mismatches in cryptocurrency payments, allowing users to pay with over 100 cryptocurrencies while merchants settle instantly in stablecoins or fiat.

Why It Matters

· Traditional payment giants and crypto firms are accelerating the integration of payment infrastructure. As the technology provider for PayPal's "Pay with Crypto" service, Mesh has integrated with major exchanges like Coinbase and Binance, serving hundreds of millions of users. Continued investment from several well-known institutions indicates optimism in the integration of crypto and traditional payment systems. Mesh is poised to play a role similar to Visa and Mastercard in building a global crypto payment network.

Circle Acquires Consensus Engine Malachite to Support Upcoming Arc Stablecoin Blockchain

Key Highlights

· USDC stablecoin issuer Circle has acquired the consensus engine Malachite developed by Informal Systems, which will be used to support its newly announced Arc blockchain dedicated to stablecoin finance;

· The acquisition includes Malachite's underlying technology and intellectual property, with 9 Informal Systems employees joining the Circle team, but the specific transaction amount was not disclosed by either party;

· Built on the Tendermint consensus algorithm, Malachite is designed for the flexibility and correctness of decentralized systems and will remain under the Apache 2.0 open-source license.

Why It Matters

· This acquisition marks a significant step for USDC issuer Circle, with a total market capitalization of $65 billion, towards its own blockchain infrastructure, reflecting the stablecoin issuer's strategic shift from relying on third-party platforms to building a proprietary ecosystem. With the stablecoin market expected to grow to a trillion-dollar scale and reshape cross-border payments, Circle, through the Arc blockchain, can achieve greater autonomy, lower transaction costs, and higher scalability. This move could accelerate the mainstream adoption of stablecoins in the global financial system and drive further integration of traditional payments with blockchain technology.

New Product Spotlight

MetaMask Joins Stablecoin Competition, to Issue mUSD Stablecoin

Key Highlights

· MetaMask has confirmed plans to launch its proprietary USD stablecoin, mUSD, this year, initially issuing it on the Ethereum blockchain and Linea, a Layer 2 network developed by Consensys;

· mUSD will be issued by Bridge, a U.S.-licensed issuer under Stripe, based on the M0 platform's blockchain infrastructure, allowing users to spend globally at Mastercard merchants using the MetaMask Card;

· Bridge and M0 are collaborating to provide custom stablecoin solutions for enterprises, reducing development time from "over a year of complex integration" to "weeks," with MetaMask being the first case.

Why It Matters

· This move signifies the stablecoin market's transition from a mere trading tool to a core component of application ecosystems. With the GENIUS Act providing regulatory clarity, application-specific stablecoins are becoming a new trend, with MetaMask, as a mainstream crypto wallet with millions of users, entering the competition, significantly expanding the stablecoin's penetration in payment and daily use scenarios. Through the partnership model of Bridge and M0, more applications can launch their proprietary stablecoins without dealing with complex compliance and technical issues, accelerating the diversification and popularization of the stablecoin ecosystem, promoting the global adoption of digital dollars.

Circle Launches Cross-Chain USDC Settlement Service Gateway Supporting 7 Major Blockchains

Key Highlights

· Circle officially launches Gateway cross-chain service, enabling unified USDC balance access across multiple chains in <500 milliseconds, currently supporting Arbitrum, Avalanche, Base, Ethereum, Optimism, Polygon, and Unichain;

· Gateway serves multi-chain users without the need for idle funds, allowing exchanges to facilitate USDC withdrawals without bridging infrastructure, and enabling custody providers to offer seamless cross-chain access to clients;

· Several partners have already integrated, including Dfns, Enclave, etc., with future expansions planned for the ARC network and additional blockchains.

Why It Matters

· As a cross-chain liquidity aggregation solution, Circle Gateway overcomes traditional bridging delays and capital efficiency constraints, providing a more streamlined USDC usage experience for payment service providers, exchanges, and wallets. Through the unified balance system, users can achieve cross-chain asset transfers in milliseconds, potentially significantly reducing cross-chain costs, improving capital efficiency, driving USDC's dominance in the multi-chain ecosystem, and offering more seamless infrastructure support for DeFi and payment applications.

Reown Partners with Payy to Create Seamless On-Chain Privacy Banking Service, Simplifying Crypto Payment Experience

Key Highlights

· The "Financial Internet Connection Layer" Reown collaborates with on-chain privacy bank Payy to jointly address the technological friction of crypto payments;

· Reown will provide Payy with multi-chain support, smart wallet connectivity, and automatic token conversion features, allowing users to choose their preferred blockchain and directly pay with USDC;

· Payy, developed by Polybase Labs founded by former Apple iOS engineer Sid Gandhi, integrates stablecoins, privacy chains, and fiat on/off-ramp channels and has previously launched a privacy-protected encrypted Visa card (previously announced).

Why It Matters

· This partnership showcases the specialization trend within the crypto payment infrastructure. Reown focuses on providing payment orchestration services, while Payy focuses on private on-chain banking services. Such modular collaborations accelerate industry innovation, bringing the stablecoin payment experience closer to traditional financial convenience while retaining the privacy and security advantages of blockchain.

Visa and Wirex Enable Real-Time Settlement System for EURC Euro Stablecoin

Key Highlights

· Visa and crypto payment company Wirex have successfully enabled real-time settlement using the Circle-issued EURC Euro stablecoin in Europe, marking the first live application of EURC in a production environment;

· This deployment follows Visa's integration of EURC into its settlement platform last month, signaling a commercial breakthrough for non-dollar stablecoins within a major payment network;

· The move provides the European payments market with enhanced cross-border transaction processing capabilities, reducing settlement times and costs, and offering merchants a more convenient Euro-denominated payment option.

Why It Matters

This deployment signifies a substantive advancement in the global payment industry's de-dollarization trend. With a payment giant like Visa endorsing the EURC stablecoin, Euro stablecoins are poised for wider adoption in Europe and globally. This not only strengthens the Euro's competitiveness in digital payments but also provides European businesses with a localized alternative to dollar-pegged stablecoins, potentially driving the development and use of more regional stablecoins.

SoFi Teams Up with Lightspark to Launch Lightning Network-Based International Remittance Service

Key Highlights

· U.S. digital bank SoFi has announced a partnership with Bitcoin Lightning Network service provider Lightspark to launch a blockchain-based cross-border remittance service next year, becoming one of the first U.S. banks to offer such a service;

· The service will initially launch in Mexico and expand to other countries gradually, allowing users to make international transfers directly through the SoFi app at lower costs and faster speeds;

· During the remittance process, USD will be converted to Bitcoin, transmitted via the Lightning Network's most optimal route, then instantly exchanged to the local currency and deposited into the recipient's bank account, resembling Stripe's early payment architecture.

Why It Matters

· This marks a moment where traditional financial institutions are embracing crypto technology once again, particularly recognizing the practical application value of Bitcoin's Lightning Network in solving real-world payment issues. With mainstream financial institutions like Bank of America and JPMorgan exploring the use of blockchain technology in the realm of transfers, SoFi's move could lead a new wave of institutional adoption. Furthermore, this also represents a strategic move by SoFi back into the crypto space since its initial launch of crypto trading services in 2019, followed by a scaling back of operations due to regulatory pressures related to the FTX collapse, demonstrating institutional confidence in the future application of crypto assets and blockchain technology in payment scenarios.

Macro Trends

Global Major Banks Building Stablecoin Infrastructure, Targeting Crypto Asset Custody Market

Key Takeaways

· Financial institutions such as Franklin Templeton, BNY Mellon, Goldman Sachs, Citigroup, Deutsche Bank, and JPMorgan are actively constructing crypto asset custody infrastructure, seeing it as a strategic entry point into the digital asset space;

· The first U.S. state government-backed stablecoin issued by Wyoming has chosen Franklin Advisor to manage its reserve funds, showcasing the significant role of traditional financial institutions in the stablecoin custody arena;

· Custodial activities (asset security, recordkeeping, and reserve management) align closely with existing banking compliance frameworks, giving them a natural advantage in managing stablecoin reserves and tokenized assets.

Why It Matters

· With regulations gradually becoming clearer, major banks view custody as a long-term strategic move rather than a short-term profit opportunity, and controlling stablecoin reserves and tokenized asset flows could position them at the core of the future financial system. Stablecoin issuers like Tether and Circle managing over $100 billion in reserve funds, coupled with the newly signed GENIUS Act providing clearer rules for stablecoins, are prompting banks to seize this emerging market, avoiding a repeat of being overtaken by startups in the fintech era. For banks, custody represents a strategic opportunity to shape the new financial infrastructure.

Goldman Sachs Forecasts Stablecoin Market to Reach Trillions of Dollars

Key Takeaways

· In its latest research report, Goldman Sachs points out that the payment sector presents the most significant market opportunity for stablecoin expansion, with the future market size poised to reach trillions of dollars;

· Goldman Sachs expects that the USDC issued by Circle will grow by $77 billion by the end of 2027, benefiting from recent stablecoin legislation and the expansion of the crypto ecosystem;

· U.S. Treasury Secretary Scott Bessent has stated that the market size of USD-backed stablecoins could reach $20 trillion or more, expanding the global use of the dollar.

Why It Matters

· Goldman Sachs's prediction further validates the importance of stablecoins as emerging financial infrastructure. The current global stablecoin market size is $271 billion, with USDT still holding the dominant position. However, with the U.S. regulatory framework becoming clearer, Tether has indicated it is formulating a U.S. market strategy, while major U.S. banks like Bank of America also plan to issue their own U.S. dollar stablecoins. This indicates that the stablecoin ecosystem is entering an institutional competition stage and will shift from primarily serving crypto trading to broader payment applications, becoming a core battleground for digital currency competition.

Stablecoins Face Stricter KYC Challenges in Emerging Markets

Key Takeaways

· Stablecoins are transitioning from trading tools to everyday payment tools in emerging markets, with Nigeria completing approximately $3 billion in small-value transfers via stablecoins in the first quarter of 2024;

· Western Union is considering launching its own stablecoin to reduce cross-border transfer costs, and Canadian payment processor Nuvei has begun processing international payments through stablecoin channels;

· Stablecoins have a clear advantage in the $6.69 trillion global remittance market: 24/7 availability, settlement in minutes, and resistance to local currency fluctuations. However, the Financial Action Task Force (FATF) has warned that inconsistent compliance may lead to illicit fund flows.

Why It Matters

· Stablecoins are becoming the foundation of payment infrastructure in emerging markets, especially in high-inflation countries and cross-border payments. As mainstream financial institutions begin to adopt stablecoin technology, compliance requirements will be a key challenge to industry expansion. Regulatory authorities require stablecoin providers to adhere to the same KYC standards, sanction screening, and "Travel Rule" as traditional banks, which is both a sign of industry maturity and a decisive factor in whether stablecoins can become mainstream global payment methods. The differences in regulation between countries and the risk of sanction evasion will test the compliance capabilities of the stablecoin ecosystem.

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