G20 finance ministers and central bankers meet this year under a US presidency that has made digital finance a central part of its economic agenda. The Trump administration has identified “endorsing a vibrant digital assets ecosystem” and “improving cross-border payments” as policy priorities. A recent joint statement by the US-UK Transatlantic Taskforce for Markets of the Future echoes that ambition, calling for greater coordination on stablecoin regulation to ensure that “digital financial innovation strengthens, rather than fragments, our transatlantic marketplace.”
Yet regulatory progress has outpaced international coordination. The US GENIUS Act, the EU’s Markets in Crypto-Assets (MiCA) regulation, and the growing number of stablecoin regulations worldwide remain fragmented, leaving issuers and users without a coherent framework for cross-border transactions. The G20’s limited progress toward its own cross-border payment targets underscores the coordination gap.
Ahead of the Miami summit in December, the G20 now has an opportunity to move beyond broad commitments and address remaining barriers to interoperability. Three issues stand out: mutual recognition of stablecoin issuers, common rules for stablecoin use, and economic fungibility across jurisdictions.
Progress across all three will be essential if stablecoins are to fulfill their potential to make cross-border payments faster, cheaper, and more efficient.
First, establish regulatory equivalence
The ideal configuration for stablecoin issuance is one in which a well-regulated issuer can make its stablecoins available globally—buying and selling directly with customers around the world. This minimizes duplicative licensing, capital and reserve requirements, and examinations, as well as the frictions and costs that arise when issuers cannot transact directly with otherwise eligible customers because of where they are located. Achieving that requires countries to recognize when another jurisdiction’s stablecoin rules provide equivalent safeguards.
The GENIUS Act takes a step in this direction. Foreign issuers can offer payment stablecoins in the United States without obtaining a full GENIUS license if the US Treasury Department determines that an issuer’s home regulatory regime is comparable to US requirements. MiCA offers no equivalent pathway. It requires stablecoin issuers to be locally established and regulated. Both regimes also require issuers to hold at least some reserves with local financial institutions, adding another practical hurdle for foreign issuers.
The result: global stablecoin companies must issue through two separate, locally licensed and regulated entities—even to operate across the United States and the EU. That means duplicating issuer functions and absorbing additional operational, compliance, and business costs. It also makes fungibility across jurisdictions more important. If stablecoins issued under different regimes cannot be treated as equivalent, their usefulness across borders will be limited. And as more jurisdictions introduce their own rules, the costs and complexity will only increase.
Second, recognize stablecoins for payments, settlement, and collateral
Even when an issuer can offer its stablecoin across jurisdictions, users need to know—with legal and commercial certainty—that the asset will be recognized locally for payments, settlement, and collateral.
Under the GENIUS Act, for example, only payment stablecoins issued by US-based, GENIUS-licensed issuers can be treated as cash equivalents for accounting purposes, used as cash margin or collateral for derivatives or other regulated transactions, or accepted as a settlement asset by banking organizations. However, stablecoins issued by foreign issuers, even when they have received comparability determinations under the GENIUS Act, do not qualify for these uses. And MiCA takes an even harder line, prohibiting the offering, marketing, or distribution in the EU of stablecoins issued by non-EU entities altogether.
The result is a fragmented market in which legal availability does not necessarily translate into economic usability. Without better solutions, stablecoins will not function as an effective global payment or settlement instrument, and market participants are unlikely to adopt them at scale, regardless of their technical availability.
Third, ensure stablecoin fungibility
Stablecoins must be economically fungible, in addition to being legally recognized, for users to treat them as globally useful money. Ideally, stablecoins issued under different regulatory regimes would be usable at par in host and home jurisdictions, with users treating them as interchangeable regardless of the issuer. Yet that requires regulatory standards to converge in four key areas:
- Redemption rights are the foundation of a stablecoin’s value at par: a holder accepts a stablecoin because it can be exchanged for its face value on demand. But a stablecoin that can reliably be redeemed within two business days will be worth more than one that may take a week. More broadly, differences in redemption timing, conditions for pausing redemptions, or fees mean stablecoins issued under different regimes will not be economically equivalent.
- Reserve composition determines the credit risk a stablecoin holder takes. Different types of eligible reserve assets create different risks for the issuer. Even where regulatory regimes require full backing, materially different reserve compositions create different risk profiles for issuers and holders.
- Capital and liquidity requirements determine the issuer’s resilience to shocks and the cushion available to protect holders if reserves prove insufficient. Capital absorbs losses, liquidity supports redemptions in periods of stress, and operational backstops fund ongoing operations when revenues fall. While there may be some leeway for tailored supervisory calibration, the resulting protections must be comparable if markets are to treat stablecoins as economically equivalent.
- Treatment of holders in resolution is perhaps the most challenging topic for cross-border coordination. Bankruptcy and resolution regimes may treat home and host users differently, so that holders of the same stablecoin could face different outcomes when things go wrong. This will affect the exante value of stablecoins as they circulate globally—and markets will price those differences.
Building the scaffolding for stablecoin cross-border payments
The G20 can help prevent further fragmentation and close gaps in stablecoin regulation. While host and home regulators always have strong interests in maintaining authority over the money used in their economies, the G20 can build on its existing work on global stablecoin arrangements to develop principles for regulatory equivalence, the use of stablecoins for payments, collateral, and settlement, and economic fungibility.
Industry should do its part by developing workable standards for interoperability. Common approaches to reserve composition and reporting, coordinated resolution planning, and inter-affiliate reserve mechanics can help align regulation across jurisdictions. New infrastructure, such as stablecoin clearinghouses and exchange facilities, can further reduce frictions and lower costs. By narrowing these operational gaps and giving regulators strong models to build on, the public and private sectors can move closer to their shared goal of making stablecoins a more effective tool for cross-border payments.
Jai Massari is a lecturer at Stanford Law School, a fellow at the Berkeley Center for Law and Business, and of counsel at the boutique law firm Arktouros.
At the intersection of economics, finance, and foreign policy, the GeoEconomics Center is a translation hub with the goal of helping shape a better global economic future.
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Image: House Republicans hold a news conference after the House passed the GENIUS Act. Source: REUTERS/Tom Williams/CQ Roll Call/Sipa USA.