Euro stablecoin market surges under MiCA

Sumitomo Mitsui Financial Group (SMBC), a Japanese banking and financial services conglomerate, along with business systems firm TIS Inc, Ava Labs — the developer of the Avalanche network — and digital asset infrastructure company Fireblocks, have signed an agreement to explore a framework for commercializing stablecoins in Japan.Under a Memorandum of Understanding, the companies will focus on developing strategies around issuing and circulating stablecoins pegged to the US dollar and Japanese yen, according to a joint announcement.Additionally, the collaboration will explore stablecoins as a settlement mechanism for tokenized real-world assets such as stocks, bonds, and real estate.Stablecoins continue to be a major focus of crypto regulatory frameworks worldwide, and one of the sectors venture capitalists are eyeing in 2025 as nation-states push stablecoins to the forefront of their digital asset strategies.Stablecoin total market overview. Source: RWA.XYZRelated: Stablecoins, tokenized assets gain as Trump tariffs loomStablecoins become central to US digital asset policySpeaking at the White House Crypto Summit on March 7, US Treasury Secretary Scott Bessent said that comprehensive stablecoin regulation was central to President Donald Trump’s stated goal to become the worldwide leader in crypto.Bessent said stablecoins would help protect US dollar hegemony in global markets by expanding the use and scope of the dollar across the world.Centralized overcollateralized stablecoins rely on short-term US Treasury instruments and fiat money held in banks to back the value of the tokenized real-world assets.According to Paolo Ardoino, the CEO of stablecoin issuer Tether, the company is now the seventh-largest buyer of US Treasury bills, beating out sovereign countries such as France, Singapore, Belgium, and the United Kingdom.Stablecoin issuer Tether is now the seventh-largest buyer of US Treasury bills. Source: Paolo ArdoinoStablecoin issuers like Tether and Circle accumulate the yield from holding US debt instruments as part of their profit from issuing tokenized fiat assets to buyers.Recently, calls to share stablecoin yield with customers have escalated, with industry leaders like Coinbase CEO Brian Armstrong proposing that stablecoin laws change in the US to allow firms to distribute yield to clients onchain.US Senator Kirsten Gillibrand disagreed with those proposals and warned against stablecoin issuers sharing yield with clients, arguing that it would displace the banking industry and disrupt home mortgage loans, small business loans, and local bank lending.Magazine: Unstablecoins: Depegging, bank runs and other risks loom

Opinion by: James Strudwick, executive director, Starknet FoundationThe outlook surrounding the use of new technologies has shifted in Washington. Tesla CEO and presidential adviser Elon Musk’s proposition to incorporate blockchain technology into the US Treasury has placed blockchain and its use for state finances at the forefront of the global debate. According to Musk, much of this drive is rooted in the concern over the unsustainability of current government spending. With its immutable ledgers and transparent audit trails, blockchain is waiting in the wind, offering a potential solution to managing vast public finances. Musk advocates for a unified information system that can track real-time payments, credentials and government resources, spurring a debate within the fintech community about the pros and cons of introducing such a tool at the government level. The idea is compelling, as the description on the blockchain tin effectively promises accountability, traceability and streamlined operations. The shift here, namely to a blockchain-powered government infrastructure, presents several challenges that may prove to be beyond what the new administration has expected thus far.Blockchain as state appendage A concern for stakeholders orbiting the blockchain world revolves around the sheer scale of government operations. Every day, the US government handles thousands of transactions across various departments. The feasibility of Musk’s vision is put into question simply as a result of its own complexity. The provable security that blockchain technology must offer while handling millions of daily transactions without buckling under the load to succeed at this scale is enormous.A proposed solution by Musk is a hybrid model that uses “Validium” zero-knowledge rollups. The speed and efficiency of modern ZK-rollups, which can handle hundreds of millions of transactions daily, have the potential to make sure each citizen’s share of government transactions is intact and verifiable. The technology’s rapidly evolving nature, scaling to handle even higher transaction volumes in the coming years, indicates that this could be achievable.Unfortunately, this in itself comes with its own hurdles, particularly when integrating public services, which tend to operate in silos.The human questionThe great irony here is that Musk’s declarations of government inefficiency as a reason for the ongoing shakeups could be one of the biggest reasons not to go ahead with the plan. The real obstacle here is not so much technological as it is deeply, irrevocably human. The transition from archaic legacy systems to the more modern infrastructure of blockchain requires not just software updates but an entire reprogramming of the workforce. Government employees embedded in bureaucracy are used to outdated systems, and retraining them will be no small task.Recent: US housing dept mulls blockchain, stablecoin to pay and monitor grants: ReportMoreover, current government databases are a labyrinth of poorly documented, indecipherable data. Extracting and migrating this data to a blockchain infrastructure is itself a task that may require serious investment. For all its elegance, blockchain wasn’t built to contend with such inefficiency. Despite its potential for handling complex, distributed environments, the difficulties present in the system itself could make the transition more complicated than the hassle is worth.Balancing transparency and confidentiality Transparency of federal spending is also a factor worth highlighting. The innate strength of blockchain and its much-lauded appeal is its strength. It permits citizens to track how public funds are allocated and spent. Musk’s premise could foster a so-far unseen level of accountability, which makes transactions, every delegation of power and every resource distribution visible to the public in real-time. The problem is that sensitive government data, classified information or personal identification could be dangerously exposed on a public blockchain. Musk’s response is to try to tether sensitive data to private channels in the blockchain and ensure that only individuals with the appropriate authorization or from specific departments can access confidential information. Theoretically, this addresses the security concern while allowing blockchain’s public verifiability.Musk’s offer could lead to a more efficient, accountable system. The social drive behind this is the longstanding criticism of wasted spending and resource misallocation. There is also a possibility of strengthening democratic processes by holding public officials more accountable. A decentralized authority has the broader impact of empowering citizens through real-time access.There is a forward-thinking aspect to the vision. It raises a profound question. Technology could address human governance challenges, but we run the risk of a fundamental shift in how we understand privacy and accountable authority. As we question the nature of governance, it warrants careful consideration of the role of blockchain and what it could ultimately mean for the future of society as a whole.Opinion by: James Strudwick, executive director, Starknet Foundation.This article is for general information purposes and is not intended to be and should not be taken as legal or investment advice. The views, thoughts, and opinions expressed here are the author’s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.

The crypto industry’s sway in Washington DC has made it more likely that the industry will get beneficial legislation, but it’s also creating problems. Concerns of regulatory capture — a situation in which regulators or lawmakers are co-opted to serve the interests of a small constituency — have grown as crypto lobbying gains influence in Washington.The risks of regulatory capture are twofold: First, the public interest is shut out from policy-making in favor of a single industry or company, and second, it can make regulators blind to or paralyzed by economic risks. Now, not even three months into Trump’s presidency, American lawmakers and industry crypto observers have voiced concerns that this regulatory capture could not only negatively affect the country but curb competition within the crypto industry as well. Regulatory capture in the battle for crypto policyIn a March 28 letter, prominent members of the US Senate Banking Committee and Committee on Finance addressed Acting Comptroller Rodney Hood and Michelle Bowman, Chair of the Federal Reserve Board of Governor’s Committee on Supervision and Regulation.The letter specifically addresses the launch of USD1, a stablecoin project from the Trump family’s decentralized finance project World Liberty Financial (WLFI), as Congress considers GENIUS Act legislation on stablecoins. Related: Trump’s crypto project launches stablecoin on BNB Chain, EthereumThe senators suggest there are opportunities for regulatory capture and conflict of interest. “President Trump may review any actions the OCC takes with regard to USD1’s stablecoin application. He would be positioned to intervene in and deny the OCC from promulgating stablecoin safeguards, or force the agency to refrain from initiating any enforcement actions against WLF.”Son Eric Trump pumps his father’s memecoin ahead of the inauguration. Source: Eric TrumpThey added that he could attempt to intervene or deny assistance to USD1’s competitors and that the GENIUS Act provides no provisions to prevent such conduct. Crypto industry observers have also echoed concern over a single entity’s undue influence over policy when it comes to Coinbase’s influence in Washington’s development of stablecoin policy.In January, Coinbase CEO Brian Armstrong signaled that his firm would be willing to delist Tether (USDT), the world’s largest stablecoin, if the version of the stablecoin bill under consideration in Congress became law.Under those terms, USDC, in which Coinbase is a major shareholder, would essentially be fencing out its largest competitor from the US market. Castle Island Ventures partner Nic Carter cried foul, stating that “Regulatory capture is poison. Reminds me of what SBF used to do.”Related: SBF always played both sides of the aisle despite new Republican pleaAt the time, Vance Spencer, founder of crypto venture firm Framework Ventures, said that it was “a blatant attempt at regulatory capture by US players done at the expense of US national interest.”“The future of stablecoins can be US dollar-based only if we allow a broader competitive set of stablecoin issuers to flourish and deny gatekeeping/gaslighting by those interested in regulatory capture,” he concluded.George Selgin, senior fellow and director emeritus of the Cato Institute’s Center for Monetary and Financial Alternatives, told Cointelegraph that the Bitcoin reserve is another clear example of the crypto lobby’s influence over the regulatory process. Trump signs the Bitcoin reserve executive order. Source: David Sacks“It’s unlikely that anyone would have considered it desirable, let alone necessary, for the US government to maintain digital asset stashes — in fact, there’s no good reason for its doing so — had it not been for intense pressure from cryptocurrency enthusiasts,” he said.Regulatory capture is old hat in Washington lawmakingDifferent lobbies influencing policymaking in Washington are nothing new, so much so that “regulatory capture” to the layman would seem to describe business as usual. Selgin said that the Biden administration’s approach to crypto was equally an example of regulatory capture, just in favor of traditional financial firms that, with their lobbying efforts, wished to limit competition from industry upstarts. “Regulators’ relatively hostile stance toward crypto [under Biden] was no less evidence of regulatory capture than their more indulgent stance toward it today. The main difference was in who did the capturing,” he said. “Financial regulatory capture is an old story; only some new players are now proving to be adept hunters.”When asked how one would differentiate between legitimate industry advocacy and regulatory capture, Selgin said, “I don’t think you need to. First of all, the line between them is very thin.”Industries rarely take complete control of regulators due in part to the fact that individual firms within an industry have different ideas about what ideal regulation looks like, said Selgin.  Furthermore, any kind of successful advocacy “‘captures’ regulators to some extent” if only by virtue of the fact that it makes them change their beliefs about how best to regulate.What is to be done?The question remains then: is regulatory capture just to be accepted as a natural part of the policymaking process?Some academics have suggested creating entirely new government bodies to deal with the problem. Gerard Caprio, William Brough professor of economics, emeritus at Williams College, proposed the creation of an expert panel dubbed a “Sentinel” to oversee regulator behavior. But such proposals face nearly impossible headwinds, not only because of their technical complexity, but due to the simple fact that lawmakers have no incentive to set up an organization that oversees them. Related: Trump’s CFTC pick Brian Quintenz gets crypto’s foot in the revolving doorAccording to Selgin, the ultimate determination is not “whether or how the industry manages to influence regulators. It’s whether the resulting regulatory regime serves the public interest […] If a regulation is harmful, it’s harmful whether it was lobbied for or not.”And the public’s interest in crypto is getting harder to see. Polls about crypto sentiment, trust and ownership vary wildly, and the Trump administration’s personal interest has done little to endear it to skeptics or middle-of-the-road voters. Some industry surveys claim that a whopping 70% of Americans own crypto. Source: NFT EveningEven crypto lobbyists admit that the (barely) bi-partisan drive for crypto is driven by a desire to appease the crypto industry’s deep pockets ahead of the 2026 midterms. Dave Grimaldi, executive vice president of government relations at Blockchain Association, said, “There are […] pro-crypto candidates who won and were funded by our industry and had votes coming to them from crypto users in their district. […] And then there were also incumbent, sitting members of Congress who lost their seats because they were so negative for completely unnecessary and illogical reasons.”Little can be done until lawmakers and regulators agree there is a problem to solve and exert the political will to solve it. Magazine: Arbitrum co-founder skeptical of move to based and native rollups: Steven Goldfeder