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Weekly Global Stablecoin & CBDC Update
The Hong Kong Monetary Authority (HKMA) announced it has granted the first stablecoin issuer licences under the Stablecoins Ordinance to Anchorpoint Financial Limited and The Hongkong and Shanghai Banking Corporation Limited, with the licences effective immediately. The firms were selected from a field of 36 applicants based on risk management capabilities, credible use cases, and development plans that met the new regulatory requirements. Both plan to launch Hong Kong dollar referenced stablecoins for local and cross border payments, tokenised asset settlement, and other innovative uses, following several months of preparatory work. The regime requires full reserve backing, user protection, and stringent risk controls, and signals Hong Kong’s decision to prioritize bank issued stablecoins over a retail central bank digital currency model for now. HKMA will maintain a public register of licensed stablecoin issuers and has warned investors to use only regulated channels.
Key Takeaways:
- Hong Kong Monetary Authority granted the first stablecoin issuer licences to HSBC and Anchorpoint under the Stablecoins Ordinance.
- Two licensees were chosen from 36 applications after demonstrating strong risk management and compliant business plans.
- Licensees intend to introduce Hong Kong dollar referenced stablecoins for local payments, cross border transfers, and tokenised asset trading.
- Regulatory framework mandates full reserve backing, robust user protection, anti money laundering controls, and ongoing risk management.
- HKMA is maintaining a public Register of Licensed Stablecoin Issuers and has issued fraud warnings about unregulated products.
Why It Matters:
- The move validates the emergence of bank issued, fiat backed stablecoins as core infrastructure in a major international financial centre.
- The licensing decision signals accelerating institutional adoption of regulated digital payment instruments in Asia.
- Traditional banks are moving from experimentation to licensed issuance, narrowing the gap between legacy finance and on chain assets.
- Integration of HKD stablecoins into existing banking and payment networks links digital tokens directly to established financial rails.
- Hong Kong’s framework could become a reference model for other jurisdictions seeking to supervise stablecoin issuers without launching retail CBDCs.
The US Treasury’s Financial Crimes Enforcement Network (FinCEN) and Office of Foreign Assets Control (OFAC) jointly issued a notice of proposed rulemaking that would treat permitted payment stablecoin issuers (PPSIs) as financial institutions under the Bank Secrecy Act and require them to implement full anti money laundering and sanctions compliance programs. The proposal mandates written AML programs with risk assessments, designated compliance officers, recordkeeping, suspicious activity reporting, and technical capabilities to block, freeze, or reject impermissible transactions in both primary and secondary markets. PPSIs would also need effective economic sanctions programs, including sanctions list screening and reporting to OFAC. The rule is one of several measures implementing the GENIUS Act, following earlier OCC, FDIC, NCUA, and Treasury actions that set prudential, licensing, and state equivalence standards for payment stablecoin issuers. Comments are due within 60 days, with enforcement slated to begin no later than January 18, 2027.
Key Takeaways:
- Treasury’s proposal designates all permitted payment stablecoin issuers as financial institutions for Bank Secrecy Act purposes.
- PPSIs must establish written AML programs, retain records, file suspicious activity reports, and conduct customer due diligence.
- Proposed rules require technical capabilities to block, freeze, burn, or prevent transfers in response to lawful orders and sanctions obligations.
- FinCEN and OFAC estimate tens of thousands of prior SARs and sanctions reports have already referenced stablecoins, underscoring existing risk.
- The AML and sanctions framework is the sixth rulemaking under the GENIUS Act, complementing OCC, FDIC, NCUA, and Treasury state equivalence initiatives.
Why It Matters:
- The proposal confirms that large scale stablecoin issuers will be regulated like other financial institutions rather than operating in a lighter compliance regime.
- Expanding full AML and sanctions coverage to PPSIs reinforces the trend toward bringing stablecoins inside the perimeter of traditional financial regulation.
- Banks and other institutions considering PPSI subsidiaries gain clearer expectations about compliance investments and supervisory oversight.
- Requirements to block and trace transactions help align on chain stablecoin flows with legacy correspondent banking controls and enforcement tools.
- The rule moves the US closer to a comprehensive, multi agency framework for payment stablecoins ahead of the GENIUS Act’s July 2026 implementation deadline.
The IMF published a 31-page working paper by Bo Li, Tommaso Mancini-Griffoli, Marcello Miccoli, Brandon Joel Tan, and Longmei Zhang that builds a formal theoretical model to resolve the central tension in stablecoin regulation: requiring issuers to hold safe assets reduces run risk but suppresses stablecoin supply below socially optimal levels by cutting into issuer profitability. Using the Diamond and Dybvig (1983) bank run framework, the paper demonstrates that unregulated issuers hold excessively risky assets to maximize profits, elevating systemic run risk at the expense of household welfare. The authors show that a social planner achieves a superior outcome only by combining two complementary instruments: a mandate to back stablecoins with high-quality liquid assets such as central bank reserves, and a supplementary issuer revenue source such as reserve remuneration or regulated payment data monetization. The paper draws supporting parallels from China’s e-money system and engages explicitly with the GENIUS Act and MiCA.
Key Takeaways:
- IMF authors use the Diamond-Dybvig bank run model to prove that unregulated stablecoin issuers systematically hold excess risky assets, raising run probability beyond what is socially optimal.
- Mandating safe asset backing such as central bank reserves reduces run risk but reduces issuer profitability and stablecoin supply below the social optimum in isolation.
- Combining a safe asset requirement with supplementary issuer revenue, either reserve remuneration or regulated data monetization, restores both stability and optimal issuance.
- China’s e-money experience is cited as empirical support for the dual-instrument finding, where reserve remuneration has historically been used to align private and social incentives.
- The paper explicitly engages with the US GENIUS Act and the EU’s MiCA regulation as real-world policy contexts for its theoretical recommendations.
Why It Matters:
- An IMF working paper carrying this specific policy recommendation will directly inform how regulators calibrate reserve requirements and yield provisions in GENIUS Act implementation rules and any future MiCA amendments.
- The finding that safe-backing mandates alone are insufficient challenges a common assumption in current legislative debates, particularly GENIUS Act provisions that prohibit stablecoin yields without offering compensating mechanisms.
- By formalizing the case for reserve remuneration, the paper provides theoretical backing for the White House Council of Economic Advisers’ position that yield prohibition imposes net welfare costs.
- The China e-money comparison signals that the IMF views CBDCs and regulated stablecoins as part of the same policy design space, with lessons transferable across jurisdictions.
- A peer-reviewed IMF framework on stablecoin stability design sets a global baseline for how other central banks, including those in emerging markets, will approach their own stablecoin oversight regimes.
Tiger Research published a detailed analysis of the stablecoin issuance market, showing that USDT and USDC together hold over 85% of a market whose capitalization grew from approximately $55 billion in net new supply in 2024 to $101 billion in 2025, with projections to exceed $600 billion by 2030 under a 15% annual growth scenario. The report profiles four issuers that have each carved out structurally distinct positions rather than competing on the dominant reserve-interest model. Tether, holding roughly 62% market share, engaged a Big Four accounting firm in March 2026 for a full USDT audit, triggering a roughly 20% drop in Circle’s share price. StraitsX’s XSGD monthly transfer volume is approximately 2.5x its $15.8 million market cap, with Visa card-linked stablecoin payment volume growing 40x year over year and cards issued growing 83x. M0’s current circulating supply stands at approximately $276 million, while KRWQ targets the offshore Korean won non-deliverable forward market ahead of domestic regulatory entry.
Key Takeaways:
- Tether holds approximately 62% of the stablecoin market and engaged a Big Four firm in March 2026 for a full USDT reserve audit, separate from its ongoing BDO quarterly attestations.
- Circle’s share price fell approximately 20% following news of Tether’s Big Four audit engagement, reflecting market re-pricing of Tether’s long-standing transparency disadvantage.
- StraitsX’s Visa card-linked stablecoin payment volume grew 40x and cards issued grew 83x over the past year, validating a fee-over-reserve revenue model.
- M0 provides shared issuance infrastructure to builders including MetaMask, Exodus, Noble, Usual, and KAST, with a circulating supply of approximately $276 million and a Minter rate of 3.33% as of March 2026.
- Net annual stablecoin supply expansion nearly doubled from $55 billion in 2024 to $101 billion in 2025, with the market projected to exceed $600 billion by 2030 under a conservative 15% growth scenario.
Why It Matters:
- Tether’s Big Four audit push signals a maturation of the stablecoin industry in which transparency and regulatory normalization, not just scale, are becoming competitive variables.
- StraitsX’s model demonstrates that non-dollar stablecoin issuers operating in regulated environments can build sustainable businesses based on payment velocity rather than reserve interest, a critical blueprint for regional currency stablecoins globally.
- M0’s shared infrastructure approach reflects a broader platform economy logic: as stablecoin demand fragments across use cases and geographies, neutral issuance rails that eliminate the cold-start problem will become structurally important.
- KRWQ’s offshore-first sequencing, targeting the multi-billion-dollar KRW non-deliverable forward market before domestic regulatory entry, may be replicated across other capital-controlled Asian currencies including the Indian rupee, Taiwan dollar, and Indonesian rupiah.
- The market’s divergence into at least four structurally distinct revenue models suggests that stablecoin competition in the GENIUS Act era will be fought across multiple axes simultaneously, not resolved by a single dominant design.
Federal Reserve Bank of Kansas City lead payments specialist Franklin Noll published a research briefing estimating the distribution of stablecoins by function as of November 2025, when total stablecoin market cap was $300.5 billion. Using DeFiLlama’s tracker for the top four stablecoins, which together represent over 90% of total supply, Noll estimates that 48.8% of all stablecoins sit in crypto-finance trading infrastructure: exchanges hold 26.4%, DeFi finance protocols 17.2%, and bridging infrastructure 5.1%. Applying Visa onchain analytics data showing $1.5 trillion in monthly adjusted total stablecoin transaction volume and Artemis data showing $10.2 billion in payments-specific volume for August 2025, Noll calculates that actual payment use consumes approximately $2 billion, or just 0.7% of stablecoin supply. He estimates 29.3% are used for high-value corporate transfers and the remaining 21.2% sit idle in rarely used wallets.
Key Takeaways:
- Payments account for only 0.7% of total stablecoin supply, or approximately $2 billion out of a $300.5 billion market as of November 2025.
- 48.8% of all stablecoins are used as crypto-finance trading assets, divided among exchanges at 26.4%, DeFi finance protocols at 17.2%, and bridging infrastructure at 5.1%.
- 29.3% of stablecoins are used for high-value non-payment transfers, primarily corporate treasury management and cross-border flows into and out of the crypto financial system.
- 21.2% of stablecoins are estimated to be idle in rarely used wallets, down from a 2024 Forbes estimate of 30%, reflecting growing active address counts.
- Over 5% of stablecoins are locked in bridging protocols, signaling material interoperability gaps that require stablecoins to be locked on one chain and minted on another to move value.
Why It Matters:
- The finding that payments represent less than 1% of stablecoin use directly challenges the dominant industry narrative used to justify the GENIUS Act and similar legislation, which frames stablecoins primarily as a payments innovation.
- The crypto-finance dominance finding, at nearly half of all supply, means stablecoin market health remains tightly coupled to crypto market cycles rather than operating as independent financial infrastructure.
- The large share locked in bridges exposes a systemic fragility: significant portions of supply depend on smart contract security and cross-chain mechanisms that carry concentrated failure risk.
- The high volume of transfers, at over 29% of supply, indicates that corporations and institutions are already using stablecoins for treasury and settlement at scale, a use case that is structurally distinct from retail payments and should inform regulatory perimeters differently.
- For CBDC designers, the briefing provides a data-backed baseline showing that any publicly issued digital currency aiming to displace or complement stablecoins in payments will need to address a market where payments are not yet the dominant use case.
WalletConnect and Ubyx jointly published a paper arguing that self-custodial wallets are fully compatible with existing anti-money laundering, sanctions, and tax compliance frameworks, provided regulators adopt technology-neutral, outcomes-based rules and concentrate obligations on intermediaries at the “edge” of the ecosystem rather than banning or mandating custodianization of self-custody. The paper details concrete compliance mechanisms including FATF Travel Rule data capture embedded within wallet transaction flows, cryptographic sign-in ownership proofs, programmable token-level controls, and blockchain analytics tools that allow virtual asset service providers to fulfill customer due diligence, travel rule, and reporting obligations without restricting self-custody. The authors argue that exclusionary rules would drive activity offshore, create a two-tier financial system, and simultaneously weaken supervisory visibility, whereas regulated interoperability preserves open-finance benefits while strengthening compliance outcomes. Unresolved questions on trusted execution environments, multi-party computation wallets, and cross-jurisdictional scope of edge enforcement obligations are noted.
Key Takeaways:
- The paper proposes concentrating AML and Travel Rule obligations on virtual asset service providers at the ecosystem “edge” rather than imposing wallet-level bans or mandatory custodianization.
- Cryptographic sign-in ownership proofs and programmable token-level controls are identified as technical mechanisms capable of meeting KYC and sanctions compliance without requiring intermediaries to hold private keys.
- Authors argue that banning self-custody would push non-compliant activity offshore, reducing the total pool of blockchain transactions visible to regulators and undermining supervisory effectiveness.
- The paper identifies three unresolved architectural questions: the regulatory status of trusted execution environments, multi-party computation wallets, and bank-deployed wallet structures.
- Consistent application of edge-enforcement obligations across jurisdictions is flagged as a critical gap, with divergent national rules creating arbitrage opportunities and compliance uncertainty.
Why It Matters:
- The framework directly challenges the approach taken in several draft regulations that treat self-custody wallets as inherently high-risk, instead proposing a compliance architecture built around intermediary obligations rather than wallet prohibitions.
- If adopted by regulators, outcomes-based rules for self-custody would preserve permissionless innovation at the wallet layer while maintaining systemic AML and sanctions controls, avoiding the chilling effect on financial inclusion documented in markets where restrictive rules have been enacted.
- The Travel Rule integration proposals are particularly significant for cross-border stablecoin payments, where the absence of standardized wallet-level Travel Rule compliance has been a persistent barrier to institutional adoption of non-custodial infrastructure.
- Programmable token-level compliance, if standardized, could allow CBDC designers and stablecoin issuers to embed regulatory controls at the asset layer rather than the intermediary layer, fundamentally changing the architecture of compliant digital money.
- The paper adds to a growing policy debate on where compliance obligations should sit in an account-free financial system, which will be central to the implementation rules flowing from the GENIUS Act and MiCA.
Al-Arafah Islami Bank has rolled out a suite of new digital payment services in Bangladesh, including a Digital Dan Box donation product, Bangla QR acquiring capabilities, and a broader “Digital and Cashless Campaign 2026,” according to a press release carried by The Business Standard. The bank said the initiative aims to support a nationwide shift toward a cashless ecosystem by enabling easy, fast, and secure QR-based payments and transparent digital donations. The services are built on API-driven technology and were launched ahead of a timeline set by Bangladesh Bank, with senior leadership emphasizing their role in financial inclusion and digital transformation. Customers will be able to make payments and donations using any banking or mobile financial service app, while merchants gain static and dynamic Bangla QR acceptance for instant transactions.
Key Takeaways:
- Al-Arafah Islami Bank introduced Digital Dan Box, Bangla QR acquiring, and a Digital and Cashless Campaign 2026 at its head office.
- The bank positions the QR-based donation box and payment system as tools for easy, secure, and transparent digital contributions and merchant payments.
- Management highlighted that the rollout occurred ahead of the schedule set by Bangladesh Bank, signaling proactive compliance with national digital payment goals.
- Customers can transact using any banking or mobile financial services app, increasing interoperability and user convenience.
- The bank links the initiative to broader financial inclusion efforts, aiming to extend digital banking access to underserved communities across Bangladesh.
Why It Matters:
- The launch illustrates how regional banks are using QR and API technologies to push toward cashless ecosystems in emerging markets.
- Expanding digital donation and payment channels supports a broader trend of integrating charitable flows and everyday commerce into formal digital finance.
- The initiative shows how national central bank timelines and policy targets can accelerate concrete product deployments in retail payments.
- Interoperable QR systems help bridge mobile money, banking apps, and merchant acceptance, tightening links between digital assets and traditional accounts.
- Over the long term, such campaigns are key to deepening digital payment habits, improving traceability, and supporting inclusive economic growth in Bangladesh.
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