Overview
I. Introduction
It’s nearly axiomatic by now that the Trump administration and the 119th Congress will attempt to facilitate a more fertile environment for the cryptocurrency industry than previous administrations. On January 23, 2025, the president issued an Executive Order (EO) requiring financial regulators and other agencies, including the new "Crypto Czar," to form the President's Working Group on Digital Asset Markets (the Working Group).1 The EO tasks the Working Group with formulating "a Federal regulatory framework governing the issuance and operation of digital assets, including stablecoins, in the United States."2
A new approach has also emerged at US financial regulatory agencies. The Securities and Exchange Commission (SEC) has formed a Crypto Task Force, heralding "SEC Crypto 2.0" and promising "clear regulatory lines . . . realistic paths to registration . . . sensible disclosure frameworks," and "judicious" deployment of enforcement resources.3 The Crypto Task Force will host a series of roundtables to discuss key areas of interest in the regulation of crypto assets. The "Spring Sprint Toward Crypto Clarity" series began on March 21 with a roundtable, "How We Got Here and How We Get Out – Defining Security Status."
The Commodity Futures Trading Commission (CFTC) has also held meetings, including its CEO forum and meetings with industry participants, to discuss furthering the goals of the digital asset industry under Acting Chairman Caroline D. Pham. Acting Chairman Pham has previously stated that "it is imperative that regulators fully understand and holistically address these significant shifts that are underpinned by cryptocurrency in market structure through a carefully considered and forward-looking approach that appropriately balances robust protections and guardrails while enabling innovations and technological advancements that promote economic growth and access to markets."4
President Trump’s nominee for Chairman of the CFTC, Brian Quintenz, is currently the Global Head of Policy for a16z crypto, a venture capital fund focused on crypto and web3. Upon his nomination, Quintenz posted on X (formerly Twitter) that "The CFTC is also well poised to ensure the USA leads the world in blockchain technology and innovation."5
On Capitol Hill, the new Chairman of the House Financial Services Committee, French Hill, has called for the United States to be a "leader in the digital asset market,"6 and Senate Committee on Banking, Housing, and Urban Affairs Chairman Tim Scott has advocated for bringing "clarity, choice, and opportunity" to the digital asset sector.7
Most recently, the Office of the Comptroller of the Currency (OCC) issued Interpretive Letter 1183, which rescinds Interpretive Letter 1179's requirement that banks receive written non-objection from OCC prior to engaging in certain stablecoin activities.8
As we describe below, Stablecoin legislation is moving through Congress quickly, and the industry expects it to be adopted this year, permitting certain kinds of payment stablecoins to be used in payments throughout the US. As a result, fintechs and financial institutions might wonder whether now is the time to explore expanding their offerings to include services using stablecoins. This article offers a roadmap of considerations for a fintech or financial institution that is considering taking that step. Note that these recommendations are not just applicable to die-hard crypto users; large financial institutions, credit card companies, and payment companies are exploring how they can use stablecoins and blockchain technology to enhance their offerings.9
II. What are Stablecoins?
Stablecoins are cryptocurrencies whose value is intended to be pegged to a reference currency. Some of the most popular stablecoins (more than 98 percent, according to one estimate10) are pegged to the US dollar. Such coins are redeemable for dollars on a 1:1 basis, and their issuers maintain reserves in liquid investments to preserve their ability to offer redemptions on demand.
The ability to provide redemptions at par is critical for stablecoins' use cases, and critics have targeted various stablecoins' "depegging" from their reference assets.11 Some of the most popular stablecoins, including USDC, offer representations about the composition of their reserves to answer those critiques.12 Note that disclosures about reserves are a crucial consideration when evaluating various stablecoins that are available. For example, the New York Attorney General and the CFTC have both fined Tether for misrepresentations about the status of its reserves.13
III. Why Use Stablecoins?
Stablecoins offer an efficiency advantage over today's payment networks. On-chain transactions settle in seconds or minutes, while a cross-border payment using traditional payment networks provided by credit card companies and banks can take days to settle.14 The programmability of stablecoins also allows for automation of payments that may have previously required a greater administrative burden.15 Faster payments enabled by stablecoins may enable fintechs and financial services firms to differentiate themselves from peers.16
Stablecoins also provide a competitive alternative to other payment systems that may have higher fees. Transferring stablecoins is not free; any on-chain transaction of cryptocurrencies will likely incur some sort of transaction fee (referred to as "gas fees" on the Ethereum blockchain); these fees incentivize the blockchain network participants to participate in securing and updating the blockchain. A 2022 survey found that 77 percent of merchants that accepted cryptocurrencies did so because of lower transaction fees;17 the availability of a low-cost alternative to traditional card networks may pressure those networks to reduce their fees to remain competitive.18 Stablecoins can also compete with traditional remittance services on price and speed as an option for dollar-denominated cross-border remittances.19 On-chain transactions settle as frequently as new blocks are added to the blockchain, and transaction fees could be less than those charged by remittance services.20
Stablecoins may also offer ways to reach consumers who, for various reasons (e.g., distrust of financial institutions, lack of geographic access to a bank, or insufficient funds to maintain a minimum deposit for a bank account), lack access to the traditional financial system.21 Stablecoins are transferable using a phone and an Internet connection, and a user can hold them with no minimum balance requirement. Therefore, although the "banking-the-unbanked" premise is contested, it remains plausible that offering a stablecoin option to consumers could broaden a fintech or financial services company's reach to previously un- or underserved customers, in addition to cryptocurrency-enthusiast customers who would embrace a firms' offering of a cryptocurrency option.
Stablecoins offer an alternative store of value that is, by design, not as volatile as other non-stablecoin cryptocurrencies such as Bitcoin or Ether and can be viable alternatives to inflation-prone currencies.22 Therefore, they are a more viable substitute for money and a competitor to local currencies in some countries. For example, a study by one blockchain analytics firm observed growing use of stablecoins on local exchanges in Brazil and interest in dollar-pegged stablecoins in Argentina, where inflation has eroded the value of the Argentine peso.23 Similarly, the same firm reported that in Sub-Saharan Africa, stablecoins account for approximately 43 percent of the region's total cryptocurrency transaction value.24 Stablecoins offer "dollars" to merchants in Sub-Saharan African countries facing a shortage of foreign exchange in addition to a hedge against a local currency's decline in value.25
Finally, entities that launch their own stablecoins can invest reserves in income-producing, highly-liquid assets, which offer an alternative stream of income.
IV. Who Uses Stablecoins, and How?
A wide variety of entities have adopted stablecoins, either by launching their own or by implementing technology necessary to allow payment using existing stablecoins. PayPal has launched its PYUSD coin (pegged to the US dollar),26 and the Coinbase partnered with Regal Cinemas to provide a ten percent discount to moviegoers who paid on-chain with USDC at Regal Cinemas locations.27 Other household-name businesses have allowed consumers to pay using cryptocurrencies.28
Firms that are interested in enabling payment via stablecoins as easily as possible should probably opt for established stablecoins with independently-audited fiat reserves. Other options include crypto-backed stablecoins (reserves held as cryptocurrencies) and algorithmic stablecoins, which rely on smart contracts to maintain a steady price.29
Existing fintech service providers are already enabling stablecoin use; Stripe now offers payments via USDC and Pax Dollar and takes a 1.5 percent transaction fee.30 As more providers offer stablecoin payment solutions, the transaction fees for doing so will likely fall because the barrier to offering a competing product is so low, and providers will not have to pay card networks and issuing banks.31 In the near term, adopting stablecoins using products like those offered by Stripe is probably the easiest way for new users to enable this capability.
Firms can think broadly about circumstances where stablecoin integration might add value, beyond a point-of-sale context. For example, payroll platform Remote has enabled payment of contract workers using stablecoins, which may be an appealing option to firms with employees distributed across the globe, particularly in those areas previously described where stablecoins are an appealing alternative to local currency.32
V. Key Considerations When Implementing Stablecoins
Adopters of stablecoins will need to make an initial decision of whether to implement via a service provider like Stripe or to use a cryptocurrency wallet to make payments themselves. The former may offer a more user-friendly and smoother transaction, but will likely take a fee. Use of the latter option will require follow-on decisions, including selecting a wallet, making decisions about the level of security desired, and finding an exchange that can provide the "on-" and "off-ramps" that allow users to transfer fiat currency into stablecoins. It may also subject adopters to greater regulatory oversight and compliance obligations.33
Use of a cryptocurrency wallet has security implications: a "hot" wallet that is essentially a computer program can allow the user to transact easily, but can be less secure than a hardware "cold" wallet that is not connected to the Internet (using a cold wallet for routine transactions may introduce frictions to those regular operations, however). Because cryptocurrency transactions are essentially irreversible, cybersecurity is vital: businesses that opt to custody their own stablecoins (rather than keeping them in a custodial wallet) must scrupulously protect the private key(s) associated with their wallet(s).
Finally, there are various ramp options for converting fiat currency to stablecoins.34 Considerations when selecting a ramp include any fees charged, the range of assets or different stablecoins available, and usability.
VI. Risks of Stablecoins
It remains important to remember that this is a new, constantly evolving industry and regulatory environment. House Financial Services Chairman Hill and Senate Banking Chairman Scott have both already proposed stablecoin legislation, setting the stage for meaningful legislative progress in this area. Although most signs point to shifts in government attitudes about crypto that will be positive for the crypto industry, in some instances, the regulatory landscape remains unclear, particularly as to the division of labor between state and federal regulators.
On March 13, 2025, the Senate Banking Committee approved the Guiding and Establishing National Innovation for US Stablecoins (GENIUS) Act by a bipartisan vote of 18 to 6.35 The bill now awaits floor consideration by the Senate, and its bipartisan support suggests that it is well-positioned for approval.36 The bill would create a licensing process for three types of stablecoin issuers: nonbank issuers subject to approval and regulation by the OCC, subsidiaries of insured depository institutions subject to approval and regulation by the Federal Reserve Board, and state-qualified issuers approved and regulated by a state regulator. Issuers would be required to hold reserves on a 1-to-1 basis and only as federally-insured demand deposits, as coins or currency, or in instruments such as Treasury bills, notes, and bonds, certain types of repurchase agreements, money market funds, and central bank reserve deposits. Under the GENIUS Act, issuers would be prohibited from pledging or reusing reserves except for specific purposes.
State regulators would be permitted under the GENIUS Act to certify that their regulatory regimes are substantially similar to the federal regime, which would allow stablecoins with total outstanding issuance below $10 billion to be regulated under the state framework. Payment stablecoins would also be excluded from federal regulatory regimes applicable to securities, commodities, and investment firms.
Over on the House side, House Financial Services Committee Chairman French Hill has held a hearing examining a draft of the Stablecoin Transparency and Accountability for a Better Ledger Economy Act of 2025 (STABLE Act).37 There are some similarities between the STABLE and GENIUS Acts: both require stablecoin issuers to be licensed, to maintain reserves on at least a 1-to-1 basis, and both limit issuers' composition of reserves. There are also some notable differences between the two bills: the House's STABLE Act has stronger language requiring federal stablecoin regulators to differentiate among issuers based on capital structure, riskiness, and complexity, it does not impose the GENIUS Act's $10 billion size limit on issuers that may opt for a state-level regulatory regime, and the STABLE Act would ban "endogenously collateralized stablecoins"38 for two years, whereas the GENIUS Act tasks the Secretary of the Treasury with studying those types of coins. The interest in this topic in both chambers of Congress, coupled with President Trump's desire to sign legislation on stablecoins before Congress's August recess, strongly suggests that before the year is over, some form of stablecoin legislation will be enacted in the United States.39
Internationally, the European Union's Markets in Crypto-Assets Regulation (MiCA) regime went into full effect in 2024, providing a regulatory regime for stablecoins. It requires that stablecoin issuers do so with approval, and also creates obligations regarding stablecoin reserves and redemption rights.40
The introduction of greater certainty to the stablecoin sector will likely lead to more confidence in the current stablecoins available and, possibly, broader adoption of stablecoins by new users. Steptoe is well-positioned to provide tailored and nuanced advice to fintechs and financial institutions seeking to explore incorporating stablecoins into their offerings.
1 Strengthening American Leadership in Digital Financial Technology, 90 Fed. Reg. 8647 (Jan. 23, 2025). https://www.federalregister.gov/documents/2025/01/31/2025-02123/strengthening-american-leadership-in-digital-financial-technology.
2 Id.
3 Press Release, SEC Crypto 2.0: Acting Chairman Uyeda Announces Formation of New Crypto Task Force, 2025-30, https://www.sec.gov/newsroom/press-releases/2025-30 (Jan. 21, 2025). See also Matthew Goldstein, Eric Lipton and David Yaffe-Bellany, S.E.C. Moves to Scale Back Its Crypto Enforcement Efforts, New York Times https://www.nytimes.com/2025/02/04/business/sec-crypto-task-force.html (Feb. 4, 2025).
4 Press Release 8961-24, Dissenting Statement of Commissioner Caroline D. Pham on DeFi Enforcement Action Involving Uniswap Protocol, https://www.cftc.gov/PressRoom/SpeechesTestimony/phamstatement090424 (Sep. 4, 2024)
5 Aaron Wood, Trump's CFTC Pick Brian Quintenz Gets Crypto’s Foot in the Revolving Door, Cointelegraph (Feb. 13, 2025) https://cointelegraph.com/news/trump-cftc-pick-brian-quintenz-crypto.
6 Release: Rep. Hill's Historic Fit21 Legislation to Regulate Digital Assets Passes the House, https://hill.house.gov/news/documentsingle.aspx?DocumentID=9315 (May 22, 2024)
7 Scott Applauds President Trump's Executive Order to Create Working Group on Digital Asset Markets (Jan. 23, 2025) https://www.banking.senate.gov/newsroom/majority/scott-applauds-president-trumps-executive-order-to-create-working-group-on-digital-asset-markets.
8 Office of the Comptroller of the Currency, Interpretive Letter 1183, OCC Letter Addressing Certain Crypto-Asset Activities (Mar. 7, 2025) https://occ.gov/news-issuances/news-releases/2025/nr-occ-2025-16.html.
9 See About Kinexys by J.P. Morgan, https://www.jpmorgan.com/kinexys/about (last visited Mar. 24, 2025); By Settling in USDC, Crypto.com is Setting a New Course, Visa & Crypto.com, https://usa.visa.com/content/dam/VCOM/regional/na/us/Solutions/documents/visa-crypto.com-usdc-case-study.pdf (last visited Mar. 24, 2024).
10 Stablecoins: A Pillar of the U.S. Dollar? OneSafe https://www.onesafe.io/blog/stablecoins-usd-dominance-global-finance-b501e (last updated Dec. 13, 2024).
11 See, Stablecoins have been unstable. Why? Moody's Investor Service (Oct. 18, 2023) https://www.moodys.com/web/en/us/about/insights/data-stories/stablecoins-instability.html; NZ Central Bank Head: 'Stablecoins Are Not Stable' PYMNTS (Feb. 12, 2024) https://www.pymnts.com/cryptocurrency/2024/nz-central-bank-head-stablecoins-are-not-stable/.
12 See Transparency, Tether, https://tether.to/ru/transparency/?tab=reports (last visited Feb. 3, 2025); Transparency & stability, Circle, https://www.circle.com/transparency (last visited Feb. 3, 2025).
13 Press Release, Consumer Alert: Attorney General James Ends Virtual Currency Trading Platform Bitfinex's Illegal Activities in New York, Feb. 23, 2021 https://ag.ny.gov/press-release/2021/attorney-general-james-ends-virtual-currency-trading-platform-bitfinexs-illegal; Press Release 8450-21, CFTC Orders Tether and Bitfinex to Pay Fines Totaling $42.5 Million, Oct. 15, 2021, https://www.cftc.gov/PressRoom/PressReleases/8450-21.
14 See, e.g., Visa Expands Stablecoin Settlement Capabilities to Merchant Acquirers, Visa (Sep. 5, 2023) https://investor.visa.com/news/news-details/2023/Visa-Expands-Stablecoin-Settlement-Capabilities-to-Merchant-Acquirers/default.aspx.
15 See, e.g., Programmable Money: Opportunities & Benefits of Digital Dollar Stablecoins, Circle (Nov. 18, 2020) https://www.circle.com/blog/programmable-money-opportunities-benefits-of-digital-dollar-stablecoins; Mustafa Bedawala and Arjuna Wijeyekoon, A Deep Dive on Solana, a High Performance Blockchain Network, Visa https://usa.visa.com/solutions/crypto/deep-dive-on-solana.html (last visited Mar. 24, 2025); Tokenized, 8 Ways Banks Will Make Money from Stablecoins Ft. Nick Philpott, at 41:05 (Mar. 10, 2025) https://tokenized.simplecast.com/episodes/8-ways-banks-will-make-money-from-stablecoins-ft-nick-philpott.
16 See, e.g., Cheryl Winokur Munk, U.S. Real-Time Payments Are Set for a Boost. Here's Why, American Banker (Feb. 6, 2025) https://www.newsdesk.lexisnexis.com/ndClick/?t=4&p=SC9jaWQ9TVRBNE5EUXcmdWlkPU1UUXhPVEkz&a=55960453302&f=Print&s=14&ci=108440&i=335&si=72083&fmi=671944958&e=American+Banker&d=141927&h=1&mbc=Q1QzL2E9NTU5NjA0NTMzMDImcD0xNGUmdj0xJng9X3Z5OHF1ZDFuVEgxeFR4Y0FJTnJVUSZ1MT1ORCZ1Mj11cC11cm46dXNlcjpQQTk2OTUzOA&fi=1592009&ai=300568&ac=300568_1738934550000&ck=170b6514f73a9604.
17 Stripe Enables Merchants to Accept Stablecoin Payments for Online Transactions, PYMNTS (Oct. 10, 2024) https://www.pymnts.com/cryptocurrency/2024/stripe-enables-merchants-to-accept-stablecoin-payments-for-online-transactions/.
18 See generally Sam Broner, How Stablecoins Will Eat Payments, and What Happens Next, a16zcrypto Dec. 12, 2024 https://a16zcrypto.com/posts/article/how-stablecoins-will-eat-payments/.
19 Sub-Saharan Africa: Nigeria Takes #2 Spot in Global Adoption, South Africa Grows Crypto-TradFi Nexus, Chainalysis (Oct. 2, 2024) https://www.chainalysis.com/blog/subsaharan-africa-crypto-adoption-2024/ ("For individuals sending money to family members abroad or paying for expenses, stablecoins provide a faster, more affordable alternative to traditional remittance services.").
20 Broner, supra n.19.
21 See Kyle Calvert, Why Tether's USDT is the Digital Dollar for the Unbanked, DailyCoin (Jun. 16, 2024) https://dailycoin.com/why-tethers-usdt-is-the-digital-dollar-for-the-unbanked/; Serving the Unbanked with USDC, Circle https://www.circle.com/stories/serving-the-unbanked-with-usdc (lasted visited Feb. 5, 2025); but see Tonantzin Carmona, Debunking the narratives about cryptocurrency and financial inclusion, Oct. 26, 2022, https://www.brookings.edu/articles/debunking-the-narratives-about-cryptocurrency-and-financial-inclusion/.
22 Guneet Kar, ed. How Can Third-World Countries Counter Inflation Using Bitcoin? https://cointelegraph.com/learn/articles/how-can-third-world-countries-counter-inflation-using-bitcoin (last updated Feb. 19, 2024).
23 Latin America's Search for Economic Stability: The Rise of Stablecoins Amid Volatility, Chainalysis (Oct. 9, 2024) https://www.chainalysis.com/blog/2024-latin-america-crypto-adoption/.
24 Sub-Saharan Africa: Nigeria Takes #2 Spot in Global Adoption, South Africa Grows Crypto-TradFi Nexus, Chainalysis (Oct. 2, 2024) https://www.chainalysis.com/blog/subsaharan-africa-crypto-adoption-2024/.
25 Id.
26 What is PayPal USD (PYUSD)? PayPal https://www.paypal.com/us/cshelp/article/what-is-paypal-usd-pyusd-help1005 (last visited Feb. 5, 2025).
27 Chintan Turakhia, Pay Onchain at Regal Movie Theatres for the Holidays, Coinbase (Dec. 19, 2024) https://www.coinbase.com/blog/pay-onchain-at-regal-movie-theatres-for-the-holidays.
28 Elizabeth Napolitano, Chipotle Now Accepting Cryptocurrency Payments at US Locations, CoinDesk (last updated May 11, 2023) https://www.coindesk.com/business/2022/06/02/chipotle-now-accepting-cryptocurrency-payments-at-us-locations.
29 Stablecoins 101: Behind Crypto's Most Popular Asset, Chainalysis (Dec. 11, 2024) https://www.chainalysis.com/blog/stablecoins-most-popular-asset/#:~:text=Crypto%2Dbacked%20stablecoins%20are%20backed,volatility%20of%20their%20underlying%20assets..
30 Wesley Grant, Stripe's Stablecoin Integration Sees Blockbuster First Day, PaymentsJournal (Oct. 11, 2024) https://www.paymentsjournal.com/stripes-stablecoin-integration-sees-blockbuster-first-day/.
31 See Broner, supra n.19.
32 Remote and Stripe Offer Stablecoin Payments for Contract Workers, PYMNTS (Dec. 17, 2024) https://www.pymnts.com/cryptocurrency/2024/remote-and-stripe-offer-stablecoin-payments-for-contract-workers/.
33 See 10 Best Fiat to Stablecoin On-Ramp Companies, Mural, Oct. 2, 2024 https://www.muralpay.com/blog/best-fiat-to-stablecoin-on-ramp-companies.
34 Brady Dale, Stablecoin Bill Clears Senate Banking Committee, Axios (Mar. 13, 2025) https://www.axios.com/2025/03/13/stablecoin-bill-senate-genius-act.
35 Scott, Hagerty, Lummis, Gillibrand Introduce Legislation to Establish a Stablecoin Regulatory Framework (Feb. 4, 2025) https://www.banking.senate.gov/newsroom/majority/scott-hagerty-lummis-gillibrand-introduce-legislation-to-establish-a-stablecoin-regulatory-framework.
36 Financial Services Committee Examines Legislation to Create A Framework for Payment Stablecoins (Mar. 11, 2025) https://financialservices.house.gov/news/documentsingle.aspx?DocumentID=409502.
37 Defined as any digital asset "in which its originator has represented will be converted, redeemed, or repurchased for a fixed amount of monetary value; and that relies solely on the value of another digital asset created or maintained by the same originator to maintain the fixed price."
38 Vicky Ge Huang, Trump Says He Hopes to See Stablecoin Legislation Before August Recess, Wall Street Journal (Mar. 8, 2025) https://www.wsj.com/livecoverage/jobs-report-stock-market-today-dow-nasdaq-sp500-03-07-2025/card/trump-says-he-hopes-to-see-stablecoin-legislation-before-august-recess-qhlCtcR19pBBO36PDFm8.
39 Crypto Regulatory Affairs: MiCAs's Stablecoin Provisions Go Live, With Circle the First Issuer to Obtain Full Approval, Elliptic (Jul. 9, 2024) https://www.elliptic.co/blog/mica-stablecoin-provisions-live-with-circle-first-issuer-to-obtain-full-approval.
