2025–theyearofpaymentstablecoins

2025–theyearofpaymentstablecoins

1

Layingthefoundation

Inour2023publication,EngagingwithStablecoins,andourinauguralpiecein2021,SoYouWanttobeaStablecoinIssuer,weexplored

thedynamicsofthisinnovativedigitalassetclass,highlighting

complexities,marketdisruptions,andtheevolvingregulatory

landscapebothintheUnitedStatesandglobally.1Fastforwardto2025,andmultipleforcesappeartobeencouraging“traditional”

financial(non-crypto-native)companiestoconsiderbecoming

stablecoinissuers,fromtherecentsurgeandmarketcapitalizationandtransactionvolumeoffiat-backedstablecoins,combinedwithsignalingfromthenewadministration,bankingregulatorsand

movementintheU.S.Congresstowardsa“paymentstablecoin”(“PSC”)lawandregulatoryregime.Apotentialpaymentstablecoinissuer(“PSCI”)shouldstrategicallyassessmarketopportunities,regulatoryrequirements,andrequiredcapabilitiestosuccessfullylaunchaPSC.

Weanticipate2025tobedifferentthan2021forafewreasons:

?Theadministration,sstatedpriorityinsupportingUSD-backedstablecoins2

?Forthcominglegislationwiththepotentialtocreatefurtherregulatoryclarity3

?Earlysignsofmarketadoptionandmarketactivitywithbankslookingtobecomeissuersandactivityamongventurecapitalandprivateequityfirms

Asaresult,weexpect2025tobe“Theyearofthepayment

stablecoin,”potentiallycreatingnewopportunitiesforawiderangeofmarketparticipants.

Inthisnextinstallmentinourstablecoinseries,wewilldelvedeeperintothecurrentstateofpivotalregulatorydevelopmentswhilealsopresentingarevised“impactandresponseframework,”groundedinleadingindustrypractices.Thisframeworkcanserveasaself-

assessmenttoolforfinancialservicecompaniesandothersthatarestartingfrom“thegroundup”inbuildingoutcapabilitiestosupporttheissuanceofPSCs.

Definition–“Paymentstablecoin”

TheproposedGuidingandEstablishingNational

InnovationforUSStablecoins(GENIUS)Actdefinesa“paymentstablecoin”asfollows:

(A)meansadigitalasset—(i)thatisorisdesignedtobeusedasameansofpaymentorsettlement;and(ii)theissuerofwhich—(I)isobligatedtoconvert,redeem,orrepurchaseforafixedamountofmonetaryvalue,not

includingadigitalassetdenominatedinafixedamountofmonetaryvalue;(II)representsthatsuchissuerwill

maintainorcreatesthereasonableexpectationthatitwillmaintainastablevaluerelativetothevalueofafixedamountofmonetaryvalue;or(III)hascompliedwiththeauthorizationrequirementsofthisAct;and

(B)that—(i)isnotanationalcurrency;(ii)isnotadeposit(asdefinedinsection3oftheFederalDepositInsuranceAct),includingadepositrecordedusingdistributedledgertechnology;(iii)doesnotofferapaymentofyieldor

interest;and(iv)isnotasecurity,asdefinedinsection2oftheSecuritiesActof1933(15U.S.C.77b),section3oftheSecuritiesExchangeActof1934(15U.S.C.78c),orsection

2oftheInvestmentCompanyActof1940(15U.S.C.80a–2),otherthanabond,note,evidenceofindebtedness,or

investmentcontractsatisfyingtheconditionsdescribedinsubparagraph(A).

AsreportedtotheSenateonMarch18,2025

2025–theyearofpaymentstablecoins

Recentdevelopments

Administrationdevelopments

Sincetakingoffice,theTrumpadministrationhasbeguntoreframeUSpoliciestowardthedigitalassetindustry.Inanearlystep,

PresidentTrumpsignedanexecutiveorderentitled“StrengtheningAmericanLeadershipinDigitalFinancialTechnology”thatcalledforanewapproachandseta60-daydeadlineforagenciestoidentifyanyrelevantpastguidanceondigitalassets.4WithrespecttoPSCs,theexecutiveorderputexplicitemphasisonpromotingtheglobalgrowthofdollar-backedPSCs.Intermsofpolicydetailsforachievingthisend,thenewadministrationisstillformulatinganapproach.

Regulatorydevelopments

Todate,federalagencieshavetakensomeinitialstepstorescindandadjustpastguidanceandadjusttheirsupervisoryapproachandre-evaluatetheirapproachtocryptocurrency.5

OnMarch7,2025,ontopoftheslewofrecentadministrative

developments,theOfficeoftheComptrolleroftheCurrency(OCC)rescindeditsInterpretiveLetter1179(whichoutlinedtheagency’ssupervisorynonobjectionprocessforbankstoengageindigital

assetactivities)andreaffirmedthatnationalbanksmayengagein

crypto-assetcustody,distributedledger,andstablecoinactivities,asdiscussedinpriorinterpretiveletters.6

Legislativedevelopments

AsofFebruary2025,threebillshavebeenintroducedinCongress

thatwouldsetupalegalandregulatoryframeworkfor“payment

stablecoins”:(1)theGENIUSActintroducedintheSenatebySenatorBillHagerty(R-TN),withsomebipartisanco-sponsorship;(2)the

StablecoinTransparencyandAccountabilityforaBetterLedger

Economy(STABLE)ActintroducedintheHousebyRepresentative

FrenchHill(R-AR);and(3)anasyetunnamedbillintroducedinthe

HousebyRepresentativeMaxineWaters(D-CA).7TheprobabilityofPSCslegislationbeingenactedin2025hasincreasedsignificantly,

whichcoulddrivemorecompaniestoissuePSCsandencourage

otherstoleveragethemwithintheirbusinessoperations.This

politicalshiftisalsoexpectedtoinfluencetheregulatorylandscape,reinforcinglegitimacyoftheunderlyingtechnologyandproduct,andcreatingopportunitiesfornewmarketentrants.

InCongress,eachofthethreePSCbillsthathasbeenintroduced

establishesafederalregulatoryframeworkforPSCs,whichwouldbeacriticalstep.Commonelementsofthesebillsincludeone-to-onebackingofreserveassetstotokensincirculation,restrictionson

assettypesforPSCreserves,andregularauditingandcertificationofreserves.Asnotedabove,permittedPSCissuersarelimited

underthesebillstononbankentities(NBEs)andinsureddepositoryinstitution(IDI)subsidiaries.

2025–theyearofpaymentstablecoins

Stateframeworksandtheroleofstateregulators

Intheinterim,state-basedframeworks,liketheNewYork

DepartmentofFinancialServices(NYDFS)BitLicenseregimeandstatemoneyservicebusinesslicensingrequirements,remaintheprimarylicensingandregistrationavenueforthoseissuingPSCsintheUnitedStates.

ThedebateontheroleoffederalandstateregulatorsforPSCIs

remainsasignificantstickingpointinCongress.Therolesofthe

FederalReserveBoardofGovernors(FRB)andtheOCCdiffer

undertheproposedbills,asdotherolesofstateregulators.IftheapproachproposedunderthecurrentiterationsoftheGENIUSandSTABLEbillsprevailandbecomesthelaw,theOCCwouldbecometheexclusivefederalregulatorforNBEsthatarenotoperating

underaState-onlyoption.Thereare,however,adiversityofviewsonthesubject,includingthosewhomaynotsupporttheissuanceofPSCsbyentitiessubjecttoonlystateapprovalandsupervision

(a“state-only”option),regardlessofwhetherstate-onlyissuersaresubjecttolimitsontheamountoftokenstheymayissueornot.

Relatedfederalandstateissuesincludetheextenttowhichanewfederalregimemaypreemptstatelaws.Theseissueswillneedtoberesolvedbeforeafinallawbecomesreality.

Definition–“PaymentstablecoinIssuer”

UnderthethreecurrentPSCactsunderconsiderationinCongress,permittedpaymentstablecoinissuerswouldbelimitedtononbankentities(anentitythatisnotaninsureddepositoryorasubsidiaryofaninsureddepository,

eachan“NBE”)andsubsidiariesofinsureddepository

institutions(IDIs).NBEscouldbecontrolledbyabank

holdingcompany,oracompanythatdoesnotcontrolanIDI.Undertheseproposedregimes,whileIDIswouldbepermittedtoissuetokenizeddeposits,theywouldnotbepermittedtoissuepaymentstablecoins.

2025–theyearofpaymentstablecoins

Howdoyouwanttoengage?

Companieswillencountermultipleopportunitiestoengagewith

PSCsandmustcontinuouslyassesswhichpartofthevaluechain

toparticipatein.Someentitieswillaggressivelyseizemarketsharewithafirst-moverstrategy,whileotherswillreactwhenexternaluseofPSCsdemandstheirinvolvement.Executivesneedtoevaluate

marketconditions,competitivepositioning,andlong-termobjectivestonavigatethisevolvinglandscapeeffectively.Firmsshouldbegin

takingintoconsiderationwhichrole(s)toplay:

IssuanceofPSCs

?Issuer:OrganizationscancreateanddistributePSCs,assumingresponsibilityfortheirissuanceandredemptionaswellas

managingthestrategyofreserveassetallocation.

?Transactionbank:Facilitateongoingcollectionand

disbursementoffiatrelatedtomintsandredemptionofPSCs.

?Reservebank:Entitiescanfunctionasreservebanks,holdingandmanagingreserveassetsthatbackPSCs.

EnablingtheEcosystem

?CustodianofPSCs:FirmscansafeguardPSCsonbehalfof

clientsandusers,providingsecurestorageandtheabilitytousePSCsonplatformsthatallowtheiruse.

?Buildingplatformsforuse:Companiescanactasthe

platformwhichbuildstheinterfaceenablingtheuseofPSCsforsettlement,processing,andintegration.

?Providingecosystemservices:BusinessescanofferarangeofsupportservicestothePSCecosystem,includingtechnologysolutions,complianceassistance,andadvisoryservices.

Theuseofadistributedanddecentralizedblockchainsfor

issuanceandtransactionsusingPSCswillenableparticipantstobenimblewithintheecosystem.Lowerbarrierstoentryandhigher

competitionbetweenplatformswillfosterinnovationandprovideopportunitiesforentitiestostrategicallypositionthemselvesintheevolvingPSClandscape.

2025–theyearofpaymentstablecoins

Opportunities

PSCsofferspecificadvantagesbyallowinginstantsettlementat

reducedcostsacrossbordersandentities.Theyincentivizeusers

totransitionfromtraditionalfinancialsystems(andpaymentrails)

toblockchainnetworks,allwhileavoidingthevolatilityassociated

withnon-fiat-backedcryptocurrencies(ex.bitcoin).Asmarket

capitalizationofPSCshasgrowntoover$200billion,morebusinessarecreatingplatformstoenablepaymentsusingPSCs.8ThegrowingdemandinPSCsbythemarketpresentssignificantopportunitiesforprospectiveissuers.

Paymentstablecoinmarketcapitalizationandvolumehavebeen

driventodatelargelybytradingactivitiesinvolvingcryptocurrenciesanddigitalassets,withPSCsprovidingastablemediumofexchange,especiallyduringperiodsofincreasedmarketvolatility.Emerging

usecasesforPSCs,however,extendfarbeyonddigitalassettrading.Theyareincreasinglybeingutilizedinremittancesandpayments

unrelatedtodigitalassettransactions,offeringafaster,more

cost-effectivealternativetotransactionsreliantonlegacyfinancialinfrastructureandtraditionalpaymentrails.PSCsarebeingusedassubstitutesforfiatcurrency,highlightingtheirevolutionfromuseincryptonativetransactionstobeingadigitalextensionofthedollar.

ForPSCstorealizetheirpromise,furtherstridesshouldbe

madetoreduceobstaclesthatlimitcurrentusageinretailandcommercialpayments.Thisincludesenhancingtechnological

infrastructureandfosteringbroaderacceptanceamongfinancialinstitutions,merchants,andconsumers.Byaddressingthese

challenges,PSCsmayleadtosignificantchangesinthewayvalueistransferredglobally,makingfinancialtransactionsquickerandcheapertoexecute.

Figure1paintsthepictureofPSCmarketcapsofthetwolargestUSDPSCs:USDT(knownas“Tether”)andUSDC.Thegraphreflectshow

USDCandUSDThavecontinuedtogrow,representingmorethanhalfoftheUSDPSCstotalmarketcap,despitemarketvolatilityandotherdigitalassetevents:

Figure1:Stablecoingrowth9

Source:DefiLlama,“Stablecoinscirculating,”accessedMarch11,2025.

ExcludingUSDTandUSDC,andincludingcertain“algorithmic”

stablecoinsthatwillnotbepermittedundertheUSDPSCregulatoryregimesnowbeforeCongress,theremainingtop10stablecoins

haveacombinedmarketcapitalizationof$15Billion.Withinthismixincludeotherfiat-backedstablecoins(i.e.,USDS,FDUSD),crypto-

backedstablecoins(i.e.,USDX),syntheticstablecoins(i.e.USDe),andalgorithmicstablecoins(i.e.,USDD).Whilethemixwithinthetop10continuestoshift,fullyreservedandfiat-backedPSCscontinuetohavethelargestshareofthemarket.

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2025–theyearofpaymentstablecoins

InexchangeforbeingaguardianofthedollarpegofaPSC,issuerscanearnyieldonthecollateralreservesbackingthetoken.Issuershavetheability,andunderthependingCongressionalbillswillbe

required,toinvestthereservesinhigh-quality,liquidassets.Theseassetscanpotentiallygenerateaconsistentreturnthroughinterestpayments.Forexample,yieldsonreserveassetscanbegeneratedthroughpaymentsonshort-termU.S.Treasuryinstruments,aswellasU.S.Treasuryrepurchase(“repo”)agreementsinwhichtheissuerlendscashovernighttoglobalfinancialinstitutions,collateralized

byU.S.Treasurysecurities.Thisreservemodelnotonlyhelpsto

ensurethestabilityofthePSC,butalsoallowsissuerstofund

operationsandprofitfrominterestearnedonthereservesecuritieshelddirectly,aswellasthespreadofthebuyandsellonovernightrepotransactions.

Takingthenextstep

Stablecoinsaretransitioningfromnicheuser-to-user

transactionstomainstreamB2BandB2Cpayment

applications,transformingtraditionalpaymentrails,a

spacetraditionallyownedbybanks.Asrelianceontheseproductsgrows,sodoestheriskofdisintermediationofexistingfinancialsystems.Withaclearfederalframeworkinplace,bankswillhaveanopportunitytocreatereliablesolutions(whetherB2BorB2C)thatleveragepaymentstablecoinstostreamlineoperationswithfaster,securepayments,whilecustomersmayincreasinglydemand

theiruse.Asofferingsandadoptiongrow,stablecoinscouldchallengethevaluechainoftraditionalpaymentinfrastructure,reshapingthefinanciallandscape.

Todate,PSCissuancehasprimarilybeendonebynon-banking

entitiesandcryptonativecompaniesoutsideofaU.S.federallegalorregulatoryregime.Thecompetitivelandscape,however,isshiftingasthelikelihoodofaU.S.nationalregulatoryframeworkforPSCs

increases.AclearandconsistentU.S.legalandregulatoryframeworkwillsupportentitiesexploringPSCissuance.

Existingfinancialinstitutionsandpaymentprocessorsshould

considerhowtheymightleveragetheirexistingplatformsto

integrateanativePSCintotheiroperationstodriveefficiencies

andmeetcustomeropportunitiesanddemands,consistentwith

theemergingfederalregulatoryregime.Atthesametime,PSC

usersshouldbenefitfrominteractingwithanissuersubjecttoa

clearnationallegalandregulatoryregimethatensuresconsistentprotections,adefinedsupervisoryframework,andtransparent

periodicreportingrequirementsregardingthePSC’sreserve.As

moreorganizationsintegrateandbuilduponaninfrastructure

meetingtherequirementsoftheevolvingfederalregulatoryregime,theenhancednetworkeffectsmaycontributetoamorerobust

andversatilefinancialecosystem,attractingfurtherparticipationandinvestment.

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2025–theyearofpaymentstablecoins

7

Risks

WhilePSCsunlockvariousopportunities,theyalsointroduce

significantrisksthatissuersmusthandle,encompassingthose

associatedwithoperatingwithinthetraditionalfinancialregulatoryenvironmentaswellasthenewcrypto-nativeecosystem.DependingontheroleanentityplaysinthePSCecosystem,theapplicability

andseverityofrisksareexpectedtovary.Agoodpracticefor

firmstomanagetherisksposedbybeinginthePSCecosystemistoestablishorenhanceitsriskandcontrolframeworksthroughconductingadigitalassetriskassessment10specifictothe

characteristicsoftheunderlyingproductsandtechnologies.

Cybersecurityanddataprotection:Issuersshouldsafeguard

theirdigitalinfrastructureagainstcyber-attacks,whichcouldleadtothetheftofPSCsandlossofprivatekeys.Suchbreachescan

resultinsignificantfinanciallosses,legalliabilities,anderosionof

usertrust.Tomitigatetheserisks,issuersshouldimplementrobustcybersecuritymeasures,includingmulti-factorauthentication,

regularvulnerabilityassessments,andcomprehensiveincident

responseplans.Furthermore,theriskoftechnologicalfailures,

suchasmalfunctionsintheblockchainnetworkorissueswith

theunderlyingprotocol,candisruptPSCoperationsandleadto

transactiondelaysorfailures.Issuersmustconfirmthattheir

technologicalinfrastructureisresilientandcapableofhandlinghightransactionvolumes,especiallyduringperiodsofmarketvolatilityinadditiontocontinuallymonitoringtheunderlyingprotocols

theyoperate.Regularstresstestingandcontingencyplanningareessentialtomaintainingoperationalstabilityandensuringthe

reliabilityofPSCservices.

Anti-moneylaundering:Issuersshouldcomplywithstringent

regulationsrelatedtoanti-moneylaundering(AML),know-your-

customer(KYC),andapplicablestatelaws.Failuretocomplycan

resultinenforcementactionsbyregulatorybodies,whichmay

includefines,restrictionsonoperations,andeventherequired

cessationofbusinessactivities.Non-compliancecanalsoleadtoreputationaldamageandlossofcustomertrust.Tomitigatetheserisks,issuersmustconfirmdevelopandimplementcomprehensivecomplianceprogramsthatincluderobustAMLandKYCprocesses.Thisinvolvesconductingthoroughcustomerduediligence,

maintainingdetailedrecordsoftransactions,andreportingsuspiciousactivitiestotherelevantauthorities.

Blockchainandsmartcontractrisk:Therelianceonblockchaintechnologyandsmartcontractsintroducesuniquerisks.Smart

contractscancontainvulnerabilitiesorbugsthatmaybeexploitedbymaliciousactors.Additionally,theunderlyingblockchainnetworkmayexperienceforks,congestion,orothertechnicalproblemsthatcanimpacttheperformanceoftransactiononthenetwork.Such

issuescanleadtodelays,failures,andpotentialfinanciallosses.Tomitigatetheserisks,issuersshouldfrequentlyassessthereliabilityofsmartcontractsandblockchains.Implementingcomprehensiveincidentresponseplansspecificallyforsmartcontractand

blockchainnetworkissuesiscrucial.Furthermore,issuersshould

establishaprocesstoevaluateprospectiveblockchainnetworks

theyplantoissuetheirPSC.Continuousmonitoringofblockchain

infrastructureisessentialtoensurethestabilityandefficiencyofthetechnologystacksupportingtheissuanceandmanagementofPSCs.

Depeggingofstablecoin:TheprimaryriskassociatedwithPSCsisthepotentialfordepegging,wheretheunitsofthePSCincirculationdivergefromitsintendedpeg(e.g.,1:1dollarvaluetoitsunderlyingfiatreserves).Depeggingcanoccurduetoon-chainfactors,

includingmintingandburningoperationsandreservemanagement.Tomitigatethisrisk,issuersshouldmaintainarobustcontrol

environmentthatensuresaccuratemintingandburningactivitiesandeffectivereservemanagement.Effectivecommunication,

throughtheissuanceoftransparencyreports,demonstrates

themechanismsinplacetomaintainthepegofthePSC,whichisnecessarytomaintaintrustandconfidence.

Taxconsiderations:Whilestablecoinsmaybeusedasameans

ofpaymentandcarryavaluesimilartofiatcurrency,theymaynotbeconsideredmoneyorcurrencyforUSincometaxpurposes.

Rather,stablecoinsmaybeconsideredgeneralpropertyorevenadebtobligationsfortaxpurposesdependingonthestructureofthestablecoinandinterpretationsofexistingUStreasuryregulations

developedpriortotheadventofblockchainsanddigitalassets.Further,paymentsinstablecoinsmaybesubjecttothesameinformationalrequiresasotherdigitalassets(Form1099-DA).

2025–theyearofpaymentstablecoins

Regulatorynon-compliance:TheregulatorylandscapeforPSCsiscomplexandcontinuouslyevolving.Non-compliancewithrelevantlawsandregulationscanleadtoseverepenalties,legalactions,

customerharm,andreputationaldamage,significantlyaffecting

theissuer’soperationsandfinancialstability.Tomitigatethese

risks,issuersmuststayinformedaboutchangesintheregulatory

environmentandensurecompliancewithallapplicablelawsand

regulations.Thisinvolvesengagingwithregulators,participating

inindustryforums,andseekinglegalandcomplianceexpertise.

Regularreviewsofcomplianceprogramscanhelpidentifyand

addresspotentialgapsorissues.Proactiveengagementwith

regulatorsandtransparentcommunicationaboutcomplianceeffortscanfurthermitigatetheriskofregulatorynon-compliance.

Accountingconsiderations:Fromanaccountingperspective,

holdersofstablecoinswillneedtoassessthetermstoidentify

whetherthosestablecoinsrepresentfinancialassetsorintangibleassets,whichwillimpactclassification,subsequentmeasurement,andtheaccountingforsubsequenttransfers.Forstablecoins

concludedtobeintangibleassets,entitieswillalsoneedtoconsiderwhethersuchassetsarewithinthescopeofthenewUSGAAP

accountingguidanceforcryptoassets,includingthenewrequireddisclosures.Finally,forentitiesthatareissuersofstablecoins,

entitieswillneedtodeterminewhetherthosestablecoinsrepresentfinancialliabilities.

Operationalandmarketrisks:Issuersalsofaceoperationalrisks,suchasthepotentialforhumanerror,fraud,orinternalmisconduct,whichcanaffectthestabilityandreliabilityofPSCoperations.

Additionally,marketrisks,includingfluctuationsinthevalueof

reserveassets,canaffectthestabilityandvalueofPSCs.Theseriskscanleadtofinanciallosses,operationaldisruptions,anderosionofusertrust.Tomitigatetheserisks,issuersmustimplementrobustinternalcontrols,riskmanagementframeworks,andgovernance

structures.Thisincludesdevelopingmetricstomonitorthe

performanceofAPIsandpartnersinaccordancewithestablishedrulesandlimits,includingprofitabilityandmarketplaceimpacts.

Regularstresstestingandcontingencyplanningareessentialto

ensureoperationalstabilityandresilienceduringperiodsofmarketvolatility.Providingongoingtrainingtoemployeesonoperational

proceduresandriskmanagementpracticescanhelpminimizetheriskofhumanerrorandmisconduct.Additionally,maintaininga

diversifiedportfolioofreserveassetscanhelpmanagemarketrisksandensurethestabilityofthePSC.

2025–theyearofpaymentstablecoins

9

Essentialcapabilities

Inthisrapidlyevolvinglandscapeofdigitalfinance,payment

stablecoinissuersfaceanarrayofchallengesthatdemandrobust

operationalframeworks,ongoingcompliance,andsophisticatedriskmanagementstrategies.Asdetailedabove,theregulatorylandscapeforPSCsiscomplexanddynamic,withdifferentjurisdictionsand

authoritieshavingvariedapproachesandrequirements.Issuers

andentitiesprovidingservicestoissuersshouldbeawareoftheserequirementsandtheirimpactonvariousaspectsoftheirPSC

offeringsandservices,includingbusinessstrategy,governance,

enterpriseriskmanagement(ERM),compliance,audit,andtreasury.ThisawarenessshouldincludeandconsiderthekeycomponentsandcommonfeaturesofthePSCframeworks(includingpermittedissuersandthefederalandstateapprovalandsupervision

frameworks)reflectedinthePSCSenateandHousebillsinplayinthecurrentCongress.

Paymentstablecoinissuersandnon-issuers*shouldarticulate

businessstrategiessupportedbyongoinganalysisoftheregulatoryandcompetitiverisklandscapesAformalizedriskmanagement

frameworkisessentialtoidentify,measure,monitor,andmitigaterisksassociatedwithPSCandblockchain-basedactivities.Theserisksmayincluderegulatorynon-compliance,marketvolatility,

operationalinefficiencies,andcybersecuritythreats.Arisk

governanceframeworkshouldbeestablishedtodefineaformalriskappetiteandmaintaineffectivecontrolstoensurecompliancewiththecurrentregulatoryenvironment,andisabletorespondinatimelymannerastheregulatoryrequirementschangeinthisdynamicandevolvingenvironment.Itisessentialtoimplement

animbleriskresponseprogramthatpromptlyidentifiesandimplementsnetnewcapabilities.

Forissuers,stronggovernancearrangementsarecrucialand

includedefinedorganizationalstructures,effectiveboardand

managementcommittees,andclearrolesandresponsibilities.

EffectivemanagementofunderlyingPSCreservesisessential

toensuringthestabilityandliquidityofPSCs,requiringrobust

treasurypolicies,regularstresstesting,andcontingencyplanningtomaintainthepegandsupporttimelyredemption.Theissuershouldperformaroll-forwardoftokensincirculationandareconciliationtounderlyingreserves.Issuersshouldpubliclyreleaseatransparencyreportthatincludesthisroll-forwardandreconciliation,enhancingtheconfidenceandtrustof,andaccountabilityto,PSCusers.

Thesemeasuresaddressriskssuchasliquidityshortfalls,reservemismanagement,andfailuretomaintainthePSCpeg.

Bydevelopingandmaintainingtheseessentialcapabilities,issuersandnon-issuerscanbetternavigatethecomplexrisklandscape,ensuringcompliance,operationalefficiency,andconsumertrustintheirPSCissuanceandrelatedservices,respectively.Financialinstitutionslookingtoparticipateintheecosystemmustprioritizetheseareastothriveinthisrapidlyevolvingmarket.Leveraging

expertiseinregulatorycompliance,operationalexcellence,andriskmanagementcanhelppositioninstitutionsforsuccessinthePSCecosystem.

*A“non-issuer”isanentityengagedinactivitiesrelatingtoandsupportingapaymentstablecoinissuance,butwhichisnottheissuerofthepaymentstablecoin.Examplesofnon-issuersinthiscontextincludeanentityactingasacustodian,apaymentprocessors,adepositoryforpaymentstablecoincashreserves,

oraliquidityprovider.

2025–theyearofpaymentstablecoins

10

Impactandresponseframework

Asmentionedprevi