Everything You Need to Know About Stablecoin Licensing, Compliance, and Regulation in 2025

Why Do Stablecoins Need Regulation?
Stablecoins have evolved way beyond a crypto experiment. They’ve established themselves as a fast and programmable alternative to traditional money, but they’re still operating in a regulatory gray zone. This has prompted policymakers to explore how existing financial rules should apply and where new frameworks are needed.
Before diving into specifics, here are the key reasons that regulation around stablecoins is important:
- Financial stability: Global regulators are concerned that unregulated stablecoins could weaken local currencies, disrupt monetary policy, or create financial instability in a crisis. By operating outside existing financial frameworks, stablecoins could introduce unforeseen systemic risks. To counter this, frameworks like the EU’s MiCA impose usage limits and supervisory oversight.
- Anti-money laundering and consumer protection: Because stablecoins can move quickly and across borders without intermediaries, they can slip through the cracks of traditional compliance systems. To reduce these risks, regulators require stablecoin issuers and platforms to follow anti-money laundering (AML) and know-your-customer (KYC) rules, just like banks and payment processors.
- Reserve backing and redemption assurance: Stablecoin users need confidence that their tokens can be redeemed at full value at any time. To support this, regulations require issuers to maintain one-to-one reserve backing, offer clear redemption rights, and publish regular attestations.
Breaking Down Stablecoin Licensing and Compliance by Region
United States
Instead of a unified law, stablecoins in the U.S. are regulated through a mix of state and federal rules:
- Federal oversight: Agencies like the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) dispute whether some stablecoins are securities or commodities. Additionally, existing proposals like the Stablecoin Transparency Act and Clarity for Payment Stablecoins Act aim to require issuers to maintain 1:1 fiat reserves, undergo audits, and obtain the proper licenses.
- FinCEN compliance: Under the Bank Secrecy Act, stablecoin operators must register as Money Services Businesses (MSBs) and comply with anti-money laundering (AML) programs.
- State-level regulations: New York requires stablecoin issuers to be licensed or chartered by the NYDFS, maintain liquid and segregated reserves, and submit monthly attestations from independent auditors. Most other states apply money transmitter laws, though many are calling for federal preemption.
European Union (EU)
The EU is ahead of the curve with its Markets in Crypto-Assets (MiCA) regulation, which was passed in 2023. As of June 2024, the rules for stablecoins officially took effect, introducing two key categories: Electronic Money Tokens (EMTs), pegged to a fiat currency, and Asset-Referenced Tokens (ARTs), backed by a basket of assets like commodities.
Here’s how MiCA treats each category under its new framework:
- EMTs must be issued by authorized Electronic Money Institutions (EMIs) or credit institutions and fully backed 1:1 by reserves, with 30–60% held in segregated bank accounts. They must offer par-value redemption at all times, prohibit interest payments, and submit detailed whitepapers to national regulators.
- ARTs face stricter oversight under MiCA. Issuers must guarantee perpetual redemption rights, demonstrate liquidity and custody of underlying assets, provide detailed disclosures, and comply with trading volume caps.
United Kingdom (UK)
The UK’s crypto regulatory framework has recently entered phase 2. Building on the initial rules for fiat-backed stablecoins, the government introduced expanded legislation in April 2025.
Here’s where the framework currently stands:
- Crypto asset service providers must be authorized by the Financial Conduct Authority (FCA) to operate trading platforms, issue stablecoins, safeguard digital assets, facilitate trading or lending, and provide staking services. Foreign firms are also subject to UK rules if they serve UK retail customers.
- Stablecoin issuers and custodians are still required to comply with Phase 1 requirements, including 1:1 backing with liquid reserves, FCA registration, asset segregation, and detailed recordkeeping.
- Stablecoin transactions are divided into hybrid and pure types. Hybrids use traditional rails for on and off-ramps (fiat in, stablecoin out), while pure onchain payments are governed by modified Payment Services Regulations requiring disclosures and execution timelines.
- Foreign-issued stablecoins are permitted, as long as UK-based firms can show they comply with local regulatory standards.
Asia-Pacific
Asia is quickly becoming a key driver of stablecoin and digital asset regulation across several markets:
- Japan requires issuers to be licensed entities such as banks or trust companies. All stablecoins must be fully backed by reserves on a 1:1 basis, and algorithmic stablecoins are explicitly prohibited.
- Singapore mandates that stablecoins be fully backed by reserves, subject to daily liquidity management and redemption guarantees. Issuers also need strong risk controls and must regularly share updates, following guidance from the Monetary Authority of Singapore (MAS).
- Hong Kong’s new stablecoin rules are a work in progress, but will require issuers to be based locally and meet standards for reserve transparency and risk management.
FAQs About Stablecoin Licensing and Compliance
Do I need a license to use stablecoins?
No, individuals and businesses can generally hold and transact in stablecoins without requiring a license. The regulatory burden typically applies to those involved in issuing stablecoins, customer fund custody, or facilitating large-scale payments and financial services using stablecoins.
What kinds of reserves do regulators require?
Regulators in most major jurisdictions now require stablecoin issuers to back their tokens with highly liquid and low-risk reserves, such as cash or U.S. Treasury bills. In addition, issuers are typically required to provide regular financial transparency through third-party audits or attestations, often on a monthly basis.
Is Dynamic an on and off ramp?
Dynamic provides embedded wallet infrastructure and developer tools that allow apps to onboard users easily. While it can integrate with on and off-ramp providers through partners or APIs, Dynamic is not an on or off-ramp itself. Its core focus is secure wallet creation, authentication, session management, and developer abstractions.
In terms of “moving money”, does Dynamic help with licensing and liquidity?
No, Dynamic does not currently provide money movement infrastructure or licensing support. It does not custody user funds, provide liquidity, or operate as a regulated money transmitter or stablecoin issuer. If your application involves moving funds across jurisdictions, handling large-scale payments, or integrating stablecoin rails for treasury or commerce use cases, you will likely need to work with licensed providers or acquire appropriate licenses independently.
Do you have bank relationships?
Because Dynamic is not a financial institution or custodian, it does not offer banking services. However, depending on your use case, you may need to form partnerships with banks, trust companies, or regulated stablecoin issuers. Dynamic can be integrated alongside such providers but does not directly handle fiat operations.
Who requires licenses for stablecoins?
Licenses are required by entities that:
- Issue stablecoins
- Custody customer funds or digital assets
- Provide exchange, liquidity, or payment services at scale
- Facilitate lending, staking, or yield-generating financial services
- Operate as payment processors or money transmitters
In most jurisdictions, apps that simply integrate wallets or allow stablecoin usage for basic functionality do not require licenses. However, if your platform enables onchain financial services, cross-border payments, or acts as a financial intermediary, you should seek legal advice to understand the specific licensing requirements.
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