17 November 2025 | By Marten Männis
Policy & Regulation
Has the Stablecoin Era Begun – GENIUS, MiCAR, and the New Global Payments Landscape
The appeal of stablecoins comes from its perceived price stability and lack of price fluctuation, prompting discussions on whether it can become a digital currency fit for everyday usage both for businesses and consumers. This promise of a stable, programmable, and efficient digital payment rail has set the stage for a global confrontation: private innovation versus public monetary sovereignty.
For European in-house counsel, this is no longer a theoretical debate, particularly as it comes at a time where the European Union is in the works for piloting the digital euro, which could become a functional competitor. The arrival of the EU’s Markets in Crypto-Assets Regulation (MiCAR) and the U.S. “GENIUS Act” transforms stablecoins from a niche, unregulated asset into a formally recognised pillar of a new financial infrastructure.
But these two regimes are not aligned. They represent two divergent philosophies, with one promoting a “digital dollar,” the other protecting the “digital euro.” For any firm operating across the Atlantic, understanding these differences is a core strategic, legal, and treasury function.
What is a Stablecoin, Legally?
Stablecoins, in short, are a type of cryptocurrency where the unit value is pegged to another underlying asset. MiCAR formally categorises them into E-Money Tokens (EMTs), pegged to a single fiat currency, and Asset-Referenced Tokens (ARTs), pegged to a basket of assets. The U.S. GENIUS Act focuses solely on “Payment Stablecoins,” which are analogous to EMTs.
The legal lynchpin is not the peg itself, but the redemption right. Both regimes mandate that issuers hold 1:1 reserves to ensure they can honor a holder’s right to redeem the token for its underlying currency at any time. This right is what legally separates a stablecoin from a speculative crypto-asset.
Critically, issuers under both schemes are prohibited from paying interest. This maintains a hard legal line: stablecoins are “payment instruments,” not “deposits” or “financial products” (like a Money Market Fund), which would trigger entirely different securities and banking laws.
Who Can Issue and Where?
While both regimes share the 100% reserve principle, their legal frameworks for market access are profoundly different.
Authorisation
MiCAR erects a “high wall” for market entry. To issue an EMT (the most common stablecoin type) in the EU, an entity must be an EU-authorized Credit Institution (Bank) or an E-Money Institution (EMI). This is a high-cost, high-compliance barrier that heavily favours established financial players.
The U.S. GENIUS Act, by contrast, creates a “dual-track” system. It allows both bank subsidiaries (chartered federally) and qualified non-bank issuers (licensed at the state level) to operate. This is a deliberate policy to foster innovation and competition, creating a far more open, and potentially more fragmented, issuer market.
Other countries, like the UK and Switzerland, are currently in the preliminary stages regarding issuing their own digitally backed currencies.
Cross-Border Access
MiCAR operates on a strict “territorial establishment model.” A US-based stablecoin issuer, even one fully compliant with the GENIUS Act, cannot market its services in the EU. Instead, it must establish a separate, fully licensed EU entity (as an EMI or bank) to access the EU market.
The GENIUS Act is more open, proposing a “conditional access model.” It creates a pathway to recognise and “passport” issuers from foreign regimes (like the EU) if their rules are deemed comparable. This means a MiCAR-compliant, Euro-backed EMT could one day be permitted in the US, while the reverse is not true without full establishment.
The Systemic Risks with bond-backed currencies
Both the GENIUS Act in the U.S. and MiCAR in the EU require issuers to hold 100% of the digital currency value in reserves, raising legitimate questions on how the setup would function within the current banking and financial services infrastructure. This reserve requirement, intended as a safeguard, creates new, large-scale macroeconomic risks, as it raises new concerns on how assets such as government-issued bonds will be sought after, particularly as the stablecoin market rises.
The Dutch central bank governor Olaf Sleijpen recently noted that, given that the market for stablecoins rises and the currency could become systemic, bonds will increasingly become the asset of choice for the issuers, as they also provide a stable annual yield. However, if stablecoins turn out to have less of a stability than they currently are portrayed as, this could introduce scenarios where there is an impetus to sell off bonds. For that purpose, Central Banks could have to rethink their monetary policy to take into account this potential fluctuation.
To bolster this point, the two regimes’ reserve rules differ critically. The GENIUS Act demands reserves be held in cash or short-term U.S. Treasuries, and forces banks to issue from a bankruptcy-remote subsidiary. This insulates the reserves from the bank’s own credit risk. MiCAR, conversely, mandates that a portion of EMT reserves (at least 30%) be held as deposits in EU credit institutions, which re-introduces bank credit risk into the system.
Another potential issue is the increase of public debt that countries would issue to meet such demand. By late 2024, the IMF reported that the two largest stablecoins combined – Tether and Circle – that also are dollar-backed, hold more U.S. Treasury Bills than Saudi Arabia or Germany and are reaching the levels of Norway. If the scheme were to become mass-adopted, it would enable states to massively increase the demand for bonds.
This transforms stablecoin issuers into “captive buyers” of sovereign debt. This in turn can give private, profit-driven companies massive influence over government bond markets. A simple decision by one large issuer to rebalance its portfolio could trigger the very bond-market volatility that central banks fear.
New Liabilities: AML and Market Abuse
Beyond the macroeconomic, these regulations introduce new, direct liabilities for corporations. Both regimes place the full weight of AML/CFT obligations on issuers and service providers. The GENIUS Act goes further, explicitly requiring issuers to have the technical ability to freeze and seize assets when legally required. This makes compliance an engineering challenge as much as a legal one.
Furthermore, MiCAR imports the full EU Market Abuse Regulation (MAR) framework and applies it to all crypto-assets. For a corporate treasury using stablecoins for B2B payments, this is a new frontier. Could knowledge of a large, impending stablecoin-based payment be considered “insider information”? This is a new and untested area of liability.
Dollar Hegemony vs. European Autonomy
The GENIUS Act is an explicit tool to promote the “digital dollar,” ensuring that the 21st century’s financial rails are built on US-dollar-denominated assets.
The EU’s response is a “twin defense”. The Digital Euro would potentially act as the public solution – a risk-free, sovereign-backed digital currency designed to be the primary anchor for the European economy. Furthermore the MiCAR’s Safeguards on capping non-Euro-denominated EMTs should be seen as a powerful tool to protect monetary sovereignty if a USD-backed stablecoin becomes too dominant within the EU.
Furthermore, for Brussels, this also comes at a time when broader discussions and frustrations on the VISA/Mastercard dominance in payment processing have taken root. MiCAR is designed to foster a fundamentally European ecosystem (EUR-EMTs, issued by EU EMIs) to build new, autonomous payment rails for IoT, B2B, and M2M payments, finally challenging this 40-year US dominance in payments.
