Stablecoin Scrutiny: From Tether’s Launch to MiCA’s Dawn, Regulators Are Watching

by Roman B.

June 12, 2025

Reading Time: 5 mins read

Table of Contents

The world of stablecoins, those digital assets pegged to stable references like fiat currencies, has seen a meteoric rise in both volume and market capitalization. This explosive growth has not gone unnoticed by global regulators, leading to increased scrutiny and a push for comprehensive regulatory frameworks.

The Rise and the Red Flags: A Timeline of Stablecoin Evolution and Regulation

The journey of stablecoins from niche crypto assets to a multi-billion dollar market has been marked by significant milestones and critical incidents that have shaped regulatory responses worldwide.

Stablecoin Scrutiny: From Tether's Launch to MiCA's Dawn, Regulators Are Watching — Source: S&P Global Ratings

Early Days and Initial Traction: The story begins in October 2014, with the launch of Tether (USDT), which quickly became the first widely adopted stablecoin. For years, the market capitalization remained relatively low, hovering below the $10 billion mark.

The Facebook Effect and Mounting Pressure: A significant turning point came in June 2019, when Facebook announced its Libra project. This move, envisioned as a global digital currency, immediately prompted “global regulatory scrutiny of stablecoins”. Suddenly, stablecoins were on the radar of central banks and financial authorities worldwide, leading to a noticeable increase in market capitalization around this period.

Accelerated Growth and Regulatory Responses: As the market capitalization continued its upward trajectory, particularly from late 2020, so did the regulatory actions:

October 2020: China banned private stablecoins, a move that also accelerated the development of its own digital renminbi.
December 2020: The European Union began to propose its own comprehensive framework with the MiCA (Markets in Crypto-Assets) regulation.
May 2022: The dramatic collapse of TerraUSD (UST) served as a stark reminder of the risks associated with algorithmic stablecoins, leading to “renewed regulatory urgency for stablecoins” globally. This event is clearly visible on the chart as a sharp, albeit temporary, dip in the overall stablecoin market capitalization, followed by continued growth.
June 2022: The New York Department of Financial Services released “industry guidance on U.S. dollar-backed stablecoins,” signaling a more direct approach from American regulators.
July 2022: Singapore proposed its own regulatory framework for stablecoins.
October 2022: Singapore published “final guidelines for single-currency pegged stablecoins”.

Formal Adoption and Future Outlook: The regulatory landscape continued to solidify into 2023 and beyond:

January 2023: Hong Kong outlined its plans to regulate stablecoins.
March 2023: The de-pegging of USDC on the secondary market during the Silicon Valley Bank failure highlighted the “exposure to the banking system,” adding another layer of complexity to stablecoin regulation.
April 2023: The European Parliament formally adopted MiCA, marking a significant step towards comprehensive crypto regulation in the EU.
November 2023: U.K. regulators proposed a regulatory framework for flat-backed stablecoins.
June 2024: The MiCA rules are set to come into effect, fundamentally reshaping the regulatory environment for stablecoins within the EU.
December 2024: Hong Kong continued its regulatory push with a Stablecoins Bill introduced into the Legislative Council.

Stablecoin Regulation in 2025: A Global Push for Clarity and Oversight

The year 2025 is shaping up to be a pivotal period for stablecoin regulation worldwide, as governments and financial authorities intensify their efforts to bring clarity and oversight to this rapidly growing sector. Major legislative movements are underway in the US and Hong Kong, with broader global trends focusing on robust frameworks for digital currencies.

Key Regulatory Developments in 2025

United States:

Senate Stablecoin Bill (GENIUS Act of 2025): As of June 2025, the U.S. Senate is reportedly nearing a final vote on the GENIUS Act of 2025, a proposed bill aimed at regulating stablecoins. This legislation is designed to establish a comprehensive regulatory regime for payment stablecoins, providing clear definitions and setting forth requirements for their issuance and supervision. The primary objective is to offer much-needed legal clarity, which could pave the way for increased institutional investment and broader adoption of stablecoins within the traditional financial system.
A key provision of the bill is expected to clarify that payment stablecoins are not considered securities and are not subject to federal deposit insurance.

Hong Kong:

Stablecoins Bill: Hong Kong’s Legislative Council passed its Stablecoins Bill in May 2025. This landmark legislation introduces a comprehensive licensing regime and regulatory framework for “specified stablecoins,” which are those referencing one or more official currencies or other values determined by the Hong Kong Monetary Authority (HKMA). The bill is anticipated to come into full effect later in 2025, likely by August 1, 2025.
The regulation aims to enhance consumer protection, promote financial stability, and safeguard the integrity of the financial system while simultaneously fostering innovation. Stablecoin issuers will be required to obtain licenses from the HKMA, maintain full asset backing, ensure transparency, and implement robust risk management protocols.

General Global Trends in 2025

Increased Regulatory Clarity: 2025 is widely seen as the year when many countries and jurisdictions are expected to finalize, or at least significantly advance, their regulatory frameworks for stablecoins. This global push is intended to foster greater stability and confidence in the sector.
Emphasis on Reserves and Transparency: A central tenet of emerging stablecoin regulations is the requirement for full backing of stablecoins with high-quality, liquid assets, coupled with transparent reporting on these reserves. This aims to prevent scenarios of de-pegging and ensure the stability of stablecoin value.
Combating Illicit Use: Regulatory bodies are also intensifying their focus on strengthening anti-money laundering (AML) and counter-terrorist financing (CTF) measures specifically related to stablecoin transactions.
Role of Banks and Traditional Finance: With growing regulatory clarity, traditional banks and financial institutions are anticipated to have a clearer pathway to engage with stablecoins. This could unlock new use cases, particularly in areas like cross-border payments, and lead to wider mainstream adoption.

In essence, 2025 marks a significant shift for stablecoins, moving them from a relatively unregulated “Wild West” into an increasingly structured and supervised financial environment. This evolution is designed to enhance investor protection and promote overall financial stability.

The chart above clearly illustrates that despite these regulatory challenges and market incidents, the market capitalization of stablecoins has continued its “explosive growth,” reaching well over $100 billion by mid-2022 and continuing its upward trajectory into 2024 and 2025.

Stablecoins market cap — As of June 2025, the market capitalization of stablecoins exceeded $262 billion. Source: TradingView

This ongoing expansion, coupled with the increasing complexity of the market, ensures that regulatory scrutiny will remain a paramount concern for the foreseeable future.

Author
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Roman B.

I have 6 years of writing experience on several leading websites dealing with cryptocurrencies and other investments. I have been in the Web3 sector for a similar amount of time and have collaborated on several projects from NFT to P2E. My previous experiences: Business2Community.com, TradingPlatforms.com and now Cryptonews.com.