Stablecoins are gaining legal recognition, marking a significant turning point for the Crypto Assets industry.

US regulators are about to grant stablecoins legal status, which is seen by industry insiders as a significant breakthrough for the Crypto Assets industry. Some analysts believe this could become a milestone event in the Crypto Assets sector, marking the birth of the first encryption product with broad usability and clear regulatory status.

Overview of the New Bill

The "Guidance and Establishment of the American Stablecoin National Innovation Act" establishes the first federal regulatory framework for payment stablecoins. This bipartisan-supported bill aims to inject confidence and clarity into the over $260 billion stablecoin market.

Key Points of the Bill

• Asset backing: The issuer is required to fully support the stablecoin with high-quality liquid assets on a 1:1 basis.
• Payment Purpose: Prohibit the payment of interest to holders, ensuring that stablecoin is only used as a digital cash equivalent.
• Bankruptcy Protection: stablecoin holders have priority claims on reserve assets.
• Transparency: Issuers must regularly disclose reserve status and undergo audits.
• Compliance Requirements: Strict anti-money laundering and customer identity verification measures.
• Regulatory framework: Federal and state regulatory agencies oversee jointly, with the Treasury Department as the primary regulator.
• Issuance qualifications: Banks and fintech companies can issue, but publicly listed companies primarily engaged in technology, social media, or e-commerce cannot.

The bill combines the credibility of the US dollar with modern public blockchain networks, laying the foundation for the widespread use of stablecoin in the commercial and financial sectors.

Impact on Major Stablecoins

The impact of the new legislation on USDC may not be significant. Although the legislation requires stablecoins to be fully backed by dollar assets, the current asset composition of USDT does not fully meet this requirement, but this is not a fatal blow to USDT. The legislation allows offshore issuers to enter the US market through compliance comparison tests, and USDT has multiple ways to achieve compliance.

In the future, the competition in the stablecoin market may focus more on value-added services surrounding stablecoins, such as innovative applications like payroll payments supported by smart contracts.

In emerging markets, stablecoins themselves have the function of value storage, which can help users combat high inflation. USDT dominates these markets and is expected to maintain its advantage.

Impact on Financial Technology Companies

In the coming years, major fintech companies are expected to launch their own stablecoins. These companies have a large user base, global infrastructure, and strong balance sheets, and stablecoins can provide them with a 24/7 global payment channel, reduce costs, and create new revenue streams.

Challenges to Traditional Financial Institutions

Traditional banks face the dilemma of insufficient innovation and may gradually lose competitiveness in the coming years. Meanwhile, innovative fintech companies will thrive.

For traditional payment giants like Visa and Mastercard, the low-cost and fast settlement characteristics of stablecoins pose a significant threat. These companies need to transform into multi-rail infrastructure providers and develop new value-added services to remain competitive.

Impact on the Status of the US Dollar

Stablecoins actually help to reinforce the global dominance of the US dollar. A large number of stablecoin issuers purchase US Treasury bonds, expanding the global network effect of the dollar and diversifying the holding base of US debt. Offshore-issued stablecoins are particularly important as they provide financial services to the unbanked population while bringing in new buyers of US Treasury bonds.

Investment Advice

• Ethereum and Solana, as the main carriers of stablecoins, are relatively safe long-term investment choices.
• Some exchange stocks such as Coinbase and Robinhood are also worth paying attention to.
• High-risk, high-reward options include some innovative projects such as Ethena and Sky.

Overall, the supply of stablecoins, on-chain transaction speed, and price volatility are all on the rise, and this sector is entering a rapid development phase.