All around the world, regulators are finally drawing lines around stablecoins.

The EU’s MiCAR came into force in late 2024, which set the standard for crypto-asset rules and brought e-money tokens under supervision. Hong Kong followed with a stablecoin licensing regime that took effect August 2025, requiring issuers of fiat-referenced tokens¹ to get approval from the Hong Kong Monetary Authority. In the U.S., the GENIUS Act landed in July 2025, mandating full fiat backing and federal oversight. And in the UK, draft rules are on the table for “qualifying stablecoins,” covering issuance, redemption, and custody.

Basically, stablecoins are here to stay. And with rules now in place, banks and fintechs have a greenlight to get into the game.

Over the past few months, headlines about these new laws and new stablecoin launches created a lot of hype, especially from traders celebrating the market pump. But this is bigger than market sentiment. It marks the move from suppressing stablecoins to shaping them, a shift that matters more than price action.

Why do we even need stablecoins?

The short answer: if you live in the West, you probably don’t.

Stablecoins are designed to hold their value ² unlike Bitcoin or ETH, which move up and down. That makes them useful as digital cash, something you can save, spend, and move quickly on blockchains. They’re the building blocks for lending, payments, and new financial tools.

But if you already have a bank account in pounds, euros, dollars, or yen, that doesn’t change much for you. You can tap your card for coffee, send money to friends easily with online banking, and earn interest through savings accounts. In other words, your financial system already works.

So who actually needs them?

The people who actually need them

It’s not the crypto natives ³ using them to hedge volatility or access DeFi, that’s another story.

The people who really need stablecoins are in places where financial infrastructure is broken. Imagine going to a bank to withdraw your own salary or life savings, only to be told you can’t because of capital controls ⁴. That’s a reality in parts of the world and in those situations, stablecoins aren’t a curiosity. They could be a lifeline.

But here’s the problem, when governments can’t manage their own money responsibly, how can they be trusted to oversee or worse, potentially issue stablecoins? That’s where the difference between centralized and decentralized models matters.

Trust the Issuer or Trust the Code?

Stablecoins generally fall into two buckets, centralized and decentralized.

Centralized stablecoins are issued and controlled by a single entity. That entity could adjust supply, freeze funds, or decide who gets access. Similar to how things already work with traditional institutions. The trade-off is simplicity: they’re easy to understand and usually backed 1:1 with reserves. The biggest examples, USDT(Tether) and USDC(Circle) are centralized, with Circle and Tether holding equivalent dollars in reserve for every one of their stables in existence.

Decentralized stablecoins, on the other hand, run autonomously on-chain. They aren’t controlled by one company, and no single entity controls access. That makes them harder to tamper with but also more complex and sometimes fragile. And we’ve seen what it looks like when decentralized models fail to hold their peg in the past.

Both types have a place. In high-trust environments, centralized stablecoins can be efficient and effective. But in low-trust environments, where institutions can’t be relied on, decentralized models matter. Decentralization for its own sake is pointless, but decentralization as a shield from failure or abuse is essential.

The infrastructure gap

There are now hundreds of stablecoins out in the wild. But in reality, only a few dominate, mainly USDT and USDC. But even though they’re all meant to represent “a dollar,” ⁵ they don’t all move easily between each other.

That creates two problems:

1. Too many versions of the same thing (Fragmentation). Imagine if Starbucks only accepted one type of $20 note and your grocery store only took another. That’s what stablecoin fragmentation is like.
2. They don’t talk to each other (Interoperability). Switching between them, or between different currencies like USD and JPY, is clunky and expensive. The result? People often end up going back through banks and centralized exchanges just to make simple transfers. That defeats the whole point of using stablecoins as digital cash.

What’s missing is the digital equivalent of foreign exchange that works instantly, on the blockchain, without middlemen. Until that exists, stablecoins won’t work well as money. They’ll just be alternate versions of dollars that don’t quite connect.

The Future

Once the infrastructure gap closes, the real consumer innovation will come quickly.

Think about what neobanks did to high street banks, stablecoin-native products will do the same to legacy fintech. With an on-chain FX layer and regulatory clarity, we’ll see services emerge that feel like “less than a bank, but somehow more.” Accounts, cards, payments, and savings but all digitally native, running on open rails.

We’re already seeing this with products like Gnosis Pay. Combine that with regulatory green lights and interoperable stablecoins, and blockchain stops being a backend curiosity and starts acting like a global settlement layer. SWIFT then becomes optional…

Stablecoins are mainstream now. But the real story isn’t just who issues them. It’s what kind of financial system we build on top and whether it actually serves the people who need it most.