The stablecoin competition is entering an era of layered structure. As major global economies develop institutional frameworks around stablecoins, a deeper change is taking place: competition is no longer a single-point policy adjustment, but is unfolding simultaneously along four levels: “rules – usage – regulation – supply.” In other words, stablecoins are no longer just a financial innovation issue, but are being broken down into different functional modules in different national systems, and reconstructed by institutional tools respectively.
United States: Still stuck in internal conflicts at the “rule definition layer.” The core disagreement in the United States regarding stablecoins currently lies not in the technological path, but in whether they should be included in the quasi-bank deposit system. The controversy surrounding the yield mechanism is essentially answering a more fundamental question: can stablecoins participate in “deposit pricing”? If yield is allowed, it will directly enter the alternative range of the bank’s liability system; if yield is restricted, stablecoins will be constrained to the inefficient attribute of payment tools.
The current compromise attempts to distinguish between “static yield” and “behavioral yield,” that is, prohibiting interest payments for holding behavior, but allowing incentives to be generated during transactions or usage. However, this design is highly prone to regulatory arbitrage in actual implementation, and its long-term stability is questionable. The disagreement between the banking system and the crypto industry is essentially a struggle for the “financial attribute ownership” of the same asset. More importantly, the time window is a problem: the uncertainty at the rule level is prolonging, and the delay in institutional definition in the United States is objectively allowing other regions to enter the implementation phase.
Japan: Entering the policy-driven stage of the “usage layer.” Unlike the United States, which remains in rule disputes, Japan has turned to the actual use of stablecoin construction. Tokyo has issued the “Subsidy for Promoting the Social Implementation of Stablecoins,” using financial subsidies to promote the actual application of Yen stablecoins in payment and remittance scenarios, with a maximum subsidy of 40.00 million yen per project. The core of this policy is not technological support, but direct intervention targeting the structural bottleneck of “insufficient application.”
Its policy logic is mainly reflected in three aspects: by reducing infrastructure costs, stablecoins are pushed from “available” to “trialable”; innovation is incorporated into the real regulatory framework to achieve a visual test environment; and the policy clearly points to the goal of currency internationalization, making stablecoins an extension tool of the Yen system. This path shows that Japan’s focus has shifted from “whether stablecoins exist” to “whether stablecoins form a real scale of use.”
South Korea and the United Kingdom: Building the “regulatory capability layer.” The core of this layer is not development or restriction, but “controllability.” South Korea, through an on-chain tracking system, sinks capital flows from the account dimension to the address and behavior dimensions, making on-chain transactions gradually enter a regulatable state. Its essence is: without changing the asset form, reconstruct the regulatory capability boundary. At the same time, the Bank of Korea clearly promotes the construction of CBDC and deposit token systems, and maintains a relatively cautious attitude towards stablecoins. The overall path points to an on-chain monetary structure with the banking system as the core, incorporating financial innovation into a controllable financial framework.
The United Kingdom takes another path: by unifying the payment regulatory framework, stablecoins are formally incorporated into the payment system structure, and attempts are made to cover future AI-driven payment scenarios. Both point to one direction: stablecoins are shifting from “unregulatable assets” to “regulatable financial infrastructure.”
Europe: Structural filling of the “currency supply layer.” Compared with the above three layers, Europe’s actions take place at a more fundamental level – the currency supply structure. The Qivalis consortium, composed of 12 major European banks, is promoting a Euro stablecoin issuance plan that is regulated by the Dutch Central Bank and complies with the MiCA framework. This progress means that the stablecoin issuer is shifting from a crypto-native institution to a traditional banking system.
The driving factor behind it is not product innovation, but the structural imbalance in the on-chain monetary system: USD stablecoins have in fact formed a global pricing and liquidity base, while non-USD systems have long been in a marginal position. This structure means that when financial activities gradually migrate to the on-chain environment, if the local currency lacks a corresponding stable value carrier, its role in the pricing and settlement system will be systematically weakened. Therefore, the collective entry of European banks is essentially rebuilding the monetary existence of the Euro in the on-chain financial system. This behavior is closer to the extension of the monetary system, rather than a single product innovation.
The real structure of stablecoin competition juxtaposes the four levels, and a clearer global division of labor can be obtained: the United States defines the rule boundary (rule layer); Japan promotes actual use (usage layer); South Korea and the United Kingdom build regulatory visibility (regulatory layer); and Europe competes for currency supply power (supply layer). This structure shows that stablecoin competition is no longer a single market issue, but a cross-level financial system restructuring process.
The focus of competition is moving upward. The “interest rate payment dispute” of stablecoins is only a cut in the rule layer. The real competition is migrating to a more fundamental level. When the four levels of rules, usage, regulation, and supply are gradually separated and evolve independently, stablecoins are no longer just financial products, but the way different national financial systems extend in the on-chain world. In this process, what determines the future pattern is no longer a single policy choice, but: who can form a structural advantage in their own level and expand it into a systemic existence. The end of stablecoins does not depend on definition, but on the moment when payment occurs.
*The content of this article is for reference only and does not constitute any investment advice. The market is risky, and investment needs to be cautious.
Stablecoin Competition Enters Multi-Layered Era: Global Financial Restructuring in Progress
The recent global regulatory developments surrounding stablecoins represent a fundamental shift from a single-dimensional innovation race to a multi-layered financial system restructuring. As major economies pursue divergent approaches across rules, usage, regulation, and supply layers, investors must reassess their stablecoin thesis beyond simple yield considerations and regulatory arbitrage.
The Four-Layer Competitive Landscape
The most significant insight is the stratification of stablecoin competition into four distinct layers, each with its own value proposition and risk profile:
Rules Layer (United States): The Regulatory Stalemate
The US remains mired in defining whether stablecoins should be treated as bank deposits and whether yield mechanisms should be permitted. This “static vs. behavioral yield” distinction is fundamentally flawed – regulatory arbitrage will inevitably emerge, as any incentive structure can be recharacterized. The real question is whether the US will cede financial innovation leadership to other regions while its policymakers debate semantics.
For investors, this creates a bifurcated market: US-based entities face increasing compliance costs and operational uncertainty, while international stablecoin protocols gain breathing room to develop alternative frameworks. The prolonged regulatory vacuum in the US objectively advantages jurisdictionally agile projects that can establish beachheads in more progressive regulatory environments.
Usage Layer (Japan): Policy-Driven Implementation
Japan’s approach represents the most sophisticated understanding of stablecoin adoption dynamics. By directly subsidizing implementation through the “Subsidy for Promoting the Social Implementation of Stablecoins,” Tokyo is addressing the critical “chicken-and-egg” problem of infrastructure costs. This isn’t merely financial support; it’s a strategic intervention targeting the structural bottleneck of insufficient use cases.
Investors should monitor Japanese stablecoin initiatives closely – particularly those addressing cross-border payments and remittance applications. The ¥40 million maximum subsidy per project creates a clear funding signal for promising implementations. More importantly, Japan’s focus on currency internationalization through stablecoins positions it as a potential hub for Asian-based stablecoin innovation, creating opportunities for protocols that can demonstrate real-world utility beyond simple value transfer.
Regulation Layer (South Korea/UK): Building Controllability
South Korea’s on-chain tracking system and the UK’s payment framework unification represent a pragmatic approach to regulatory integration. Rather than attempting to ban or restrict, these jurisdictions are focusing on making the existing ecosystem more visible and controllable. This “regulatory capability layer” is particularly interesting for investors as it creates a middle path between permissionless innovation and outright prohibition.
For South Korean exchanges and protocols, this represents both a challenge and an opportunity – the requirement for on-chain tracking increases compliance costs but also legitimizes the asset class in traditional financial circles. The UK’s approach of incorporating stablecoins into the payment system structure suggests that regulatory acceptance may come faster than anticipated, particularly as AI-driven payment scenarios evolve.
Supply Layer (Europe): Monetary System Extension
Europe’s Qivalis consortium approach represents the most fundamental shift – moving stablecoin issuance from crypto-native institutions to traditional banking systems. This isn’t merely a regulatory capture; it’s a strategic move to address the structural imbalance in the on-chain monetary system where USD stablecoins dominate pricing and liquidity.
The implications for investors are profound: European bank-issued stablecoins will likely benefit from institutional trust and regulatory compliance, but may sacrifice some of the innovative characteristics that made crypto-native stablecoins attractive. This creates a market segmentation between traditional and innovative stablecoins, each serving different investor needs and use cases.
Investment Implications and Strategic Considerations
Regional Diversification Becomes Critical
The divergent approaches across jurisdictions create a complex mosaic where no single regulatory framework dominates. Investors should consider geographic diversification of stablecoin exposures, with particular emphasis on:
– Japan’s usage-focused initiatives for practical applications
– Europe’s bank-issued stablecoins for institutional-grade solutions
– Jurisdictionally flexible protocols for regulatory resilience
Value Proposition Shift: From Yield to Utility
The US debate around yield mechanisms represents a misunderstanding of stablecoin value. The real competitive advantage will shift from interest-bearing features to practical utility in cross-border payments, remittance, and DeFi applications. Projects that can demonstrate superior functionality beyond simple yield generation will capture long-term value.
Institutional Entry Creates Market Segmentation
As traditional financial institutions enter the stablecoin space, particularly in Europe, we’ll see a bifurcation between:
1. Institutional-grade stablecoins with high compliance but limited innovation
2. Crypto-native stablecoins with greater flexibility but higher regulatory risk
Each segment serves different investor needs, and protocols that can bridge this gap – offering institutional-grade compliance with crypto-native innovation – will capture disproportionate value.
Regulatory Arbitrage Opportunities and Risks
The four-layer structure creates both opportunities and risks:
– Opportunities: Protocols that can navigate multiple regulatory frameworks simultaneously
– Risks: Regulatory fragmentation increasing compliance costs and complexity
Investors should favor protocols that demonstrate proactive compliance across multiple jurisdictions rather than those seeking regulatory arbitrage.
Long-Term Market Structure Implications
The most significant implication is that stablecoins are evolving from financial products to financial system extensions. This represents a fundamental shift in market structure:
- From Innovation to Infrastructure: Stablecoins are becoming the plumbing of the on-chain financial system rather than mere trading instruments
- From Monopoly to Multipolar: The USD dominance in stablecoins will face increasing competition from regional alternatives
- From Crypto-Native to Hybrid: The line between traditional and crypto finance will continue to blur
For investors, this means evaluating stablecoin projects not just on technological merits, but on their ability to integrate with traditional financial systems while maintaining innovative characteristics. The winners will be those protocols that can serve as bridges between traditional and decentralized finance, rather than those that force an unnecessary choice between the two.
The time horizon for this transition is likely 3-5 years, with the most significant changes occurring in the next 18 months as regional frameworks solidify. Investors who position themselves now for the multi-layered stablecoin ecosystem will be best positioned to capture value as this financial restructuring unfolds.