Stablecoin regulation: GENIUS, MiCA and the rules by country

Every major stablecoin regime now asks for a licensed issuer, full reserves and redemption at par, and every one of them stops the issuer from paying holders interest, so the return on a regulated stablecoin comes from how the holder puts it to work.

Stablecoin regulation is the set of licensing, reserve and redemption rules a country applies to firms that issue or distribute tokens pegged to a currency. On 27 September 2026, $313.1 billion of dollar-pegged stablecoins were in circulation, according to DefiLlama, and most of that supply now sits under at least one dedicated regime: the GENIUS Act in the US, MiCA in the EU, and purpose-built frameworks in the UK, Singapore, Hong Kong, the UAE and Japan.

The regimes differ on who may issue and how reserves are held, and they agree on the core: a licence, reserves equal to at least 100% of tokens outstanding, redemption at face value, and no interest paid by the issuer for holding the coin. Status varies: the GENIUS Act is law with rules pending, the CLARITY Act failed a Senate procedural vote on 15 September 2026, and the UK regime starts in October 2027. This is general information and doesn't constitute legal advice.

Common stablecoin regulation terms

Stablecoin laws by country

United States: the GENIUS Act

The GENIUS Act, signed on 18 July 2025, lets only a permitted payment stablecoin issuer issue in the US. Issuers choose a federal licence (the OCC for nonbanks) or a state regime open to issuers with $10 billion or less outstanding, and one that crosses $10 billion has 360 days to move to federal supervision. Reserves must back tokens at least one to one in cash, insured deposits, Treasury bills of 93 days or less, short-dated repos and government money market funds.

Section 4(a)(11) sets the yield rule: no permitted or foreign issuer "shall pay the holder of any payment stablecoin any form of interest or yield (whether in cash, tokens, or other consideration) solely in connection with the holding, use, or retention of such payment stablecoin." The Congressional Research Service's overview of the Act notes that holders aren't defined and that "there is no restriction against exchanges paying interest to customers", which is the gap the CLARITY Act tried to close.

When the GENIUS Act takes effect

The Act takes effect on the earlier of 18 January 2027 or 120 days after regulators issue final rules. The OCC proposed its implementing rule on 25 February 2026, and Comptroller Jonathan Gould said on 19 August 2026 that "we will have a final rule out by November", according to an OCC release. The Federal Reserve followed with two proposals on 24 September 2026 for the issuers it supervises. Three years after enactment, in July 2028, exchanges and other service providers may no longer offer a payment stablecoin to US persons unless a permitted issuer stands behind it (Sec. 3(b)(1)).

Our piece on how the GENIUS Act and CLARITY Act reshape stablecoin yield covers the yield debate.

CLARITY Act status

The CLARITY Act (H.R. 3633) is the market structure bill that would split crypto oversight between the SEC and the CFTC. It passed the House 294 to 134 on 17 July 2025, and the Senate Banking Committee ordered an amended version reported on 14 May 2026. On 15 September 2026 the Senate voted 49 to 50 on cloture on the motion to proceed, short of the 60 votes needed to start debate, according to the congress.gov record. Senator Thom Tillis entered a motion to reconsider that day, which keeps a second vote procedurally possible, and NPR reported that the bill now faces steep hurdles before the November midterms.

The Senate text would have extended the GENIUS yield ban to exchanges, brokers and their affiliates, barring payments for holding a balance while allowing rewards tied to activity such as payments, staking or providing liquidity. Community banks fought the rewards carve-out, arguing it would pull deposits from local lending. With the bill stalled, the federal yield rule on 27 September 2026 is the GENIUS clause alone.

European Union: MiCA

MiCA's stablecoin titles have applied since 30 June 2024, making the EU the first large market with a single stablecoin rulebook in force. A single-currency stablecoin is an e-money token, and only a credit institution or an electronic money institution authorised in the EU may offer one to the public (Article 48). Holders can redeem at par, at any time and without a fee (Article 49). Issuers must keep at least 30% of the funds received in deposits at EU credit institutions, rising to 60% once the token is classed as significant, and hold the rest in highly liquid, low-risk assets (Articles 54 and 58 of the MiCA Regulation).

The interest rule in Article 50 reaches further than the US version. It bars both issuers and crypto-asset service providers from granting interest on e-money tokens, and Article 50(3) counts any remuneration or benefit "related to the length of time" a holder keeps the token, including from third parties. ESMA's 17 January 2025 statement then told exchanges to stop offering tokens without an authorised EU issuer by the end of March 2025. Our guides to the MiCA licence for service providers and to euro stablecoins cover authorisation and the euro market.

United Kingdom: FCA and Bank of England

The UK runs two tiers: the FCA supervises issuers under the Cryptoassets Regulations 2026, passed by Parliament on 4 February 2026, and the Bank of England takes over any coin HM Treasury recognises as systemic. The FCA published its final issuance rules (PS26/10) on 30 June 2026, the authorisation window runs from 30 September 2026 to 28 February 2027, and the full regime starts on 25 October 2027, according to the FCA's regime page.

Under PS26/10, core reserves sit in short-term deposits and government debt on statutory trust, with redemption by the next business day. The FCA is "prohibiting issuers from paying interest or income from the backing asset pool to tokenholders", and third parties can't pass that income on, though they may pay rewards to their own customers from their own funds. For systemic sterling coins, the Bank of England's 22 June 2026 policy statement sets reserves at 70% short-term gilts and 30% unremunerated Bank deposits, drops per-person holding limits, and caps issuance at £40 billion per coin for now.

Singapore: MAS single-currency stablecoins

The Monetary Authority of Singapore finalised its framework on 15 August 2023 for stablecoins pegged to the Singapore dollar or a G10 currency and issued in Singapore, which can carry a protected "MAS-regulated stablecoin" label. Reserves must cover 100% of tokens in cash, cash equivalents and short-dated government debt, with par redemption within five business days, per the 2023 MAS release.

The framework moves into law through amendments to the Payment Services Act. MAS opened that consultation on 1 September 2026 with feedback due by 16 October 2026, and its proposals include a prohibition on interest paid on MAS-regulated stablecoins, according to the MAS consultation release.

Hong Kong: the Stablecoins Ordinance

Hong Kong's Stablecoins Ordinance (Cap. 656) came into force on 1 August 2025, and issuing a fiat-referenced stablecoin in Hong Kong, or a Hong Kong dollar coin anywhere, now needs an HKMA licence. Licensees need HK$25 million in paid-up capital and full backing in high-quality liquid assets held on trust. The HKMA's supervisory guideline adds that licensees must not pay interest or interest-like incentives to holders, other than marketing incentives unrelated to interest, and that income from managing reserves belongs to the issuer.

The HKMA granted its first two licences on 10 April 2026, to Anchorpoint Financial Limited and The Hongkong and Shanghai Banking Corporation, per the HKMA press release.

UAE: Central Bank payment token rules

For stablecoins used in payments, the Central Bank's Payment Token Services Regulation sets the terms. It took effect on 31 August 2024 with a one-year transition, per the CBUAE rulebook. Only dirham tokens from a licensed issuer can be used for general payments onshore, while foreign stablecoins from a registered issuer may be used only to buy virtual assets or their derivatives. Algorithmic stablecoins are banned outright.

Reserves must be held as cash in a separate escrow account, with up to 50% allowed in UAE government bonds and Central Bank monetary bills with an average duration of six months or less. Article 12(3) bars an issuer from paying, or arranging for anyone else to pay, interest or any other benefit "related to the length of time" a customer holds the token.

Japan: electronic payment instruments

Japan regulated stablecoins earlier than most large markets. Amendments to the Payment Services Act in force since 1 June 2023 treat fiat-pegged, par-redeemable stablecoins as electronic payment instruments and limit issuance to banks, registered fund transfer service providers and trust banks or trust companies, according to a Clifford Chance summary of the law. A further amendment enacted in June 2025 lets trust-type issuers hold up to half of reserves in short-dated Japanese government bonds and redeemable term deposits.

JPYC became the first licensed yen issuer in August 2025, and SBI's trust bank-backed JPYSC followed in June 2026. The Payment Services Act has no yield clause drafted like Article 50 or Section 4(a)(11).

What stablecoin regulation means for yield

Each regime above leaves reserve income with the issuer, and Japan's framework does so by restricting who may issue, with no express ban on paying holders. That income is how issuers make money, and our explainer on how stablecoins make money walks through the reserve economics. A regulated stablecoin works much like a banknote: the central bank earns on the bonds behind the notes in circulation, and whoever holds a note earns nothing until it is lent or invested somewhere that pays. The rules then diverge on distributors: the US binds issuers only while CLARITY is stalled, the EU and the UAE reach anyone paying a benefit tied to holding time, and the UK blocks backing-pool income from flowing through third parties while allowing rewards a distributor funds from its own account.

Across all seven jurisdictions, a return on a stablecoin comes from what the holder does with it: lending it to borrowers, supplying liquidity, or depositing it in a strategy with its own disclosed risks. The yield source moves from issuer subsidies to returns generated by the strategy itself, which is where onchain vaults come in. An exchange, neobank or wallet can build an earn product on a vault while the stablecoin stays a plain payment token. Our guide to how neobanks and fintechs offer stablecoin yield compares the models, and whether a given product sits inside a local interest rule remains a question for that firm's counsel and regulator.

In the diagram, the holder swaps cash for tokens at par, the issuer keeps its reserve income and may not pay interest for holding, and any return comes through a separate vault that deploys the token into lending or liquidity.

Upshift builds stablecoin vaults that partners run under their own brand. Deposits stay in non-custodial smart contracts, and a curator allocates within the protocols, tokens and functions the vault's risk management framework allows. The contracts have been through 10 smart contract audits by 6 independent firms, and vault returns vary with the strategy and are never guaranteed.

Risks that still apply under regulation

A licence and full reserves make a depeg less likely without ruling one out, as our write-up on stablecoin depegs shows, and other risks remain.

• Rule-change risk: the OCC and Fed rules aren't final, CLARITY could return, and the UK regime won't start until October 2027.
• Access risk: a token without an authorised local issuer can lose its listing, as happened in the EU in 2025.
• No deposit insurance: the GENIUS Act states that payment stablecoins aren't federally insured, and most other regimes rely on segregated reserves over insurance.
• Strategy risk: lending or deploying stablecoins adds smart contract, counterparty and liquidity risk outside the reserves.

Always make sure to do your own research and be aware of the above and any other risks before depositing.

Frequently asked questions

What is the GENIUS Act?

The US federal law for payment stablecoins, signed on 18 July 2025. It requires licensed issuers and one-to-one reserves, and bars issuers from paying holders interest.

Is the CLARITY Act law?

No. It passed the House in July 2025, and a Senate cloture vote failed 49 to 50 on 15 September 2026.

When does the GENIUS Act take effect?

On 18 January 2027, or 120 days after regulators issue final rules if that comes first. The OCC has said it expects a final rule by November 2026.

Can stablecoins pay interest?

Regulated issuers in the US, EU, UK, Hong Kong and the UAE can't, and Singapore has proposed the same. Holders can still earn by lending stablecoins or depositing them in a strategy, which carries its own risks.

Is USDT legal in the EU?

Holding it remains possible, though EU exchanges were told to stop offering tokens without an authorised EU issuer by the end of March 2025. MiCA-authorised coins such as EURC and EU-issued USDC remain available on regulated venues.

Which countries regulate stablecoins?

The US, EU, Hong Kong, UAE and Japan have regimes in force; the UK starts in October 2027 and Singapore is legislating.

Keep reading

• Safest stablecoin. Reserves and redemption terms across the largest coins.
• Tokenized deposits vs stablecoins. Bank-issued tokens against reserve-backed ones.
• USDC vs USDT. The two largest dollar coins compared.
• How onchain yield vaults are secured. Roles, permissions and controls inside a vault.