Trump's flip, EU regs give stablecoin issuers hope

Chip Somodevilla/Bloomberg

While President Donald Trump's broad push for cryptocurrency has given stablecoin issuers reason to believe a payments market is on the way, a new rule from the European Union may go just as far in sparking adoption. 

The European Union's Markets in Crypto-Assets regulations launched on Dec. 30, though an earlier part of MiCA that requires stablecoin issuers to hold at least 60% of their reserve assets in European banks went into effect June 30. MiCA provides a regulatory baseline for stablecoin payments, while Trump shines a loud and bright light on the industry.

While Trump was vehemently opposed to cryptocurrency during his first term, he took a more conciliatory tone before the recent election, accompanied by donations from the crypto industry.

One of Trump's first moves following his inauguration was to create a crypto task force that would, among other things, develop a "comprehensive and clear" regulatory framework for crypto assets. Trump also last week called for his administration to evaluate a potential  "digital asset stockpile," a vague instruction that fell short of establishing a cryptocurrency reserve. 

Trump also banned a U.S. central bank digital currency via an executive order, halting work on a digital dollar, which bank lobbyists have opposed out of concern that a CBDC would threaten traditional bank deposits. Conservatives have also long opposed a CBDC, with some claiming a CBDC could be used to spy on people.

The lack of a U.S. CBDC could create more space for stablecoins, which can act as a decentralized private-sector equivalent.  Digital-asset developers are taking advantage of MiCA and Trump's public posture to renew their push to expand stablecoins, a form of cryptocurrency that is backed by reserves of traditional assets, such as U.S. dollars or euros. Stablecoins are designed to manage the volatility of other forms of cryptocurrency, and as such are considered an option for retail payments. 

MiCA gives the European market more guidance for stablecoins than what exists in the U.S., where a lack of stablecoin-specific regulations has held back the development of a payments market. The EU's MiCA represents an important shift in how stablecoins are treated and offers something the market has needed — clarity, said James Wester, an analyst from Javelin Strategy & Research. 

"Hopefully, MiCA, or something like it, will serve as a benchmark the U.S. regulators can use to create a clearer, better framework than what has existed to this point. Given the outsized influence the U.S. has in the crypto and digital asset space, a better framework would be good for the entire stablecoin space globally," Wester said.

America second?

While MiCA is a European regulation, at a recent Circle webinar the architects of MiCA suggested the rule was designed to address multinational stablecoin payments. 

"The next step for MiCA should be a connection between the European market and the U.S.," Stefan Berger said during the webinar. Berger is a center-right German member of the European Parliament who was one of MiCA's architects. Also speaking at the Circle webinar, Peter Kerstens, a member of the European Commission, said MiCA was developed with global stablecoins in mind, noting that most stablecoins are pegged to the U.S. dollar.

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"It's hard to imagine Trump not having an 'America First' strategy for stablecoins," said Dante Disparte, chief strategy officer and head of global policy at USDC issuer Circle, speaking at the webinar. "I'm optimistic that 2025 is the year we see regulatory and legal clarity from Congress. There are no more excuses with GOP control over the House, Senate and the presidency."

Indeed, one of the directives of the executive order on digital assets Trump signed on Thursday is "promoting and protecting the sovereignty of the United States dollar, including through actions to promote the development and growth of lawful and legitimate dollar-backed stablecoins worldwide."

There is also a potential threat to U.S. dollar-dominated stablecoins if the U.S. does not act to provide regulatory cover for stablecoin issuers. 

While most stablecoins are dollar-denominated today, some countries, particularly BRICS nations, will have an incentive to dilute U.S. dominance in global digital assets, said Tony DeSanctis, senior director at Cornerstone Advisors. A group of countries including Iran, Egypt, Saudi Arabia, Ethiopia and the United Arab Emirates have joined Brazil, Russia, India, China and South Africa to use stablecoins to support a "BRICS Bridge" to connect the payment systems in different countries that in some cases are rivals to the U.S., or outright enemies. 

"Regulatory clarity and support from the U.S. government would help secure primacy for the current USD-denominated stablecoins," DeSanctis said. 

Crypto allies

While Trump's personal actions in cryptocurrency have drawn mixed reactions and his call to consider a strategic reserve did not go far enough for some in the cryptocurrency industry, the new administration is generally seen as supportive of digital assets. 

"The incoming U.S. administration has signaled it could be a crypto-friendly one, which raises hope for clearer guidelines on stablecoin payments," said Bill Zielke, chief revenue officer at BitPay. "Regulatory clarity would provide comfort to businesses and individuals, reducing uncertainty and paving the way for broader adoption of stablecoins in everyday transactions."

While stablecoins may not dominate overall transaction counts, they often facilitate larger payments, Zielke said, noting that in 2024, stablecoins accounted for 30% of BitPay's merchant transaction volume, up from 25% in 2023. "With or without government intervention, stablecoins are reshaping how businesses and consumers interact with the financial system," he said. 

Trump's nomination of Paul Atkins to chair the Securities and Exchange Commission indicates that advocating for the crypto industry is a priority in his administration, said Raj Brahmbhatt, CEO and founder of Zeebu, a firm that sells blockchain technology that supports B2B payments.

Atkins is the CEO of Patomak Global Partners, a consulting firm that has worked with firms that are active in blockchain, bitcoin and stablecoin projects. The classification of stablecoins, specifically whether they are considered commodities, securities, or a new financial asset class, could eliminate much of the ambiguity that currently deters institutional players, Brahmbhatt said, adding that uniform licensing processes at the federal and state level would also reduce barriers for stablecoin issuers to operate across the U.S. market. 

"Stablecoins will increasingly become an accepted means of payments in the United States as a result of Trump's forthcoming efforts to pass market structure and other related bills," said Les Borsai, co-founder of Wave Digital Assets, a venture capital firm that specializes in early-stage digital-asset companies. 

Stablecoins have a market capitalization of about $226 billion, passing $200 billion for the first time in December. PayPal is among the mainstream payment companies that have issued their own stablecoin, and Visa and Mastercard have expressed support for processing stablecoin payments.  

Interest in stablecoins across many payment use cases is real and growing, mostly for corporate, treasury and cross-border applications, Javelin's Wester said.

"The use of stablecoins in developed markets, especially for things like retail payments, will require more development as ecosystems evolve and the value of the technology, effectively programmable money, is better understood. That will take time," Wester said.