OKG Research: The intersection of the GENIUS bill and Hong Kong regulations, why is stablecoin legislation accelerating at this time?

Written by: OKG Research

The U.S. Senate and the Hong Kong Legislative Council took key steps in stablecoin regulation this week, almost "back to back": the former overwhelmingly passed a procedural motion for the GENIUS Act, clearing the way for the first federal stablecoin bill in the U.S.; the latter passed the third reading of the "Stablecoin Regulation Draft", making Hong Kong the first jurisdiction in the Asia-Pacific region to establish a stablecoin licensing system. The high degree of overlap in the legislative rhythms of the East and West is not just a coincidence of timing, but also a competition for future financial discourse power.

The annual trading volume of stablecoins is expected to exceed 1 trillion USD by 2030.

According to incomplete statistics from OKG Research, the current global stablecoin market value is approaching $250 billion, having increased more than 22 times over the past 5 years; from the beginning of 2025 to now, the on-chain transaction volume has exceeded $3.7 trillion, and it is expected to approach $10 trillion for the entire year. Dollar stablecoins represented by USDT and USDC are widely used for trading remittances in emerging markets, with some regions even exceeding traditional payment systems in scale. Stablecoins have risen from a marginal asset to a key node in the global payment network and sovereign competition, with Hong Kong and the US almost simultaneously accelerating legislation, indicating that the global stablecoin market has entered a period of compliance acceleration.

Based on this, OKG Research refers to the previous modeling calculations of Standard Chartered Bank, and combines the current pace of regulatory signal release and institutional capital attitude, calculating that under the premise of maintaining the current stablecoin turnover rate basically unchanged:

In an optimistic scenario where the global compliance framework gradually expands and institutions and individuals widely adopt it, the global supply of stablecoins is expected to reach 3 trillion USD around 2030, with monthly on-chain transaction volumes hitting 9 trillion USD, and annual transaction totals possibly exceeding 100 trillion USD. This means that stablecoins will not only stand shoulder to shoulder with traditional electronic payment systems but will also occupy a structurally foundational position in the global clearing network. In terms of market value, stablecoins will become the "fourth category of base currency assets" following government bonds, cash, and bank deposits, serving as an important medium for digital payments and asset circulation.

More noteworthy is that under this growth trend, the reserve structure of stablecoins will also have a feedback effect on the macroeconomy. OKG Research previously reported that the current scale of stablecoins has absorbed about 3% of the upcoming short-term U.S. Treasury bonds, ranking 19th among overseas U.S. Treasury bond holders.

Considering that the GENIUS Act explicitly requires 100% of highly liquid U.S. dollar assets as reserves, short-term U.S. Treasuries are seen as the main option (more than 60% of USDT/USDC reserve assets are currently related to short-term U.S. Treasuries). At a 50% allocation, $3 trillion in market capitalization would correspond to at least $1.5 trillion in short-term U.S. debt needs. This is close to the current holdings of U.S. bonds by overseas sovereign buyers in China or Japan, and stablecoins are expected to become the "largest invisible creditor" of the U.S. treasury.

Comparison of Regulatory Frameworks for Stablecoins in the US and Hong Kong: Consensus Amidst Divergence

Although there are differences between the United States and Hong Kong in legislative paths and some details, there is a high degree of consensus on fundamental principles such as "fiat currency anchoring, adequate reserves, and licensed issuance."

The GENIUS Act restricts "paid stablecoins", i.e., stablecoins pegged to fiat currencies such as the U.S. dollar, with the promise of 1:1 redemption and no interest income, emphasizing their non-security attributes and intending to prevent stablecoins from evolving into financial products with investment attributes. Hong Kong, on the other hand, has not restricted interest income and anchor structure on the premise of ensuring full 1:1 anchoring, seeking to open up a new track in the US dollar-dominated stablecoin market and reserve room for future innovation.

In terms of reserve requirements, both the US and Hong Kong require sufficient anchoring of high liquidity assets, but the GENIUS Act clearly specifies the types of eligible reserve assets, including T-Bills, cash, and repurchase agreements, and mandates monthly audits; Hong Kong also requires audits and segregated custody, but the types of reserve assets are not fully specified.

In terms of institutional framework, the GENIUS Act adopts a "federal-state" dual-track system, providing three pathways for stablecoin issuance: banks or their subsidiaries can apply to issue stablecoins, regulated by banking regulatory agencies such as the Federal Reserve and FDIC; non-bank institutions can apply to the OCC to become federally licensed issuers or obtain licenses through state regulatory agencies. In Hong Kong, the Monetary Authority issues licenses uniformly and requires that regardless of whether the stablecoin issuer is located in Hong Kong, as long as it is pegged to the Hong Kong dollar or actively provides services to the public in Hong Kong, it must apply for a license.

In terms of managing overseas issuers, the GENIUS Act explicitly prohibits the circulation of unlicensed overseas stablecoins in the U.S. market and authorizes the Treasury to establish a "Non-Compliant Stablecoin List," blocking their circulation through U.S. digital asset service providers; Hong Kong, on the other hand, mainly focuses on stablecoins pegged to the Hong Kong dollar and remains open to non-HKD stablecoins.

The differences in these systems reflect the different demands for stablecoin positioning in the two regions. The United States focuses on maintaining the dominance of the dollar and serving the structural financing needs of its fiscal system, promoting stablecoins as an extension of on-chain dollars; meanwhile, Hong Kong aims to attract global Web3 projects without compromising local financial stability, leaving room for policy flexibility in many details, with the goal of creating a controlled yet open and compatible compliance innovation testing ground in the Asia-Pacific region.

How will the implementation of stablecoin regulations affect the Web3 ecosystem?

The true significance of the regulatory implementation of stablecoins lies in providing the foundation for payment and settlement for the large-scale adoption of Web3.

In the DeFi space, although stablecoins like USDT and USDC are important settlement assets for on-chain financial innovation, the lack of a clear legal status and accountability mechanisms makes it difficult for institutions to participate directly. If regulatory frameworks for stablecoins, such as the Genius Act, are implemented, the stablecoins issued by compliant issuers will become the clearing core of "compliant DeFi," with protocols embedding more KYC, AML, and asset identification modules, and decentralized finance will gradually evolve into a "auditable on-chain financial network."

In the Web3 payment system, the implementation of stablecoin regulation will break the gray boundaries between past payment scenarios and asset circulation, allowing stablecoins to truly transition from "transaction intermediaries" to "payment channels." OKG Research has observed that since Visa announced that the cumulative stablecoin settlement amount surpassed $225 million, several payment technology companies have successively integrated stablecoins into their merchant settlement processes; Web3 wallets are expanding micro-payment scenarios such as recharging, tipping, and subscriptions with stablecoins as the default payment asset. On-chain payments are transitioning from "transfer tools within the crypto circle" to "enterprise-level financial interfaces," and compliance is a necessary prerequisite for this transformation.

The deeper change lies in the reshaping of the global clearing structure: stablecoins, which are pegged to fiat currencies at a 1:1 ratio, bridge the connection between local currencies and on-chain assets, while not relying on the bank account system, allowing for "peer-to-peer" settlement. This means that in the future, stablecoins may replace traditional banks as the central hub for fund circulation in scenarios such as cross-border payments, on-chain trade financing, and RWA payouts.

In the past, we discussed the large-scale adoption of Web3, focusing too much on technological breakthroughs and user experience, while neglecting the legitimacy of underlying assets. Today, compliant stablecoins provide the "last piece of the puzzle": they are recognized trading assets under the system and possess programmability for on-chain circulation. They are digital mirrors of USD and HKD, and can be directly utilized in DeFi protocols and NFT transactions.

In other words, stablecoins are not a mere accessory of Web3, but one of the driving forces that propel it towards the mainstream. With the support of compliant stablecoins, from RWA asset trading to on-chain salary payments, from cross-border settlement to Web3 payment interfaces, stablecoins will become the "infrastructure asset" that drives the large-scale adoption of the on-chain economy.