Global USD Stablecoin Enters EU, US Lawmakers Face Pushback

The global stablecoin landscape is rapidly evolving, with Paxos launching its USDG token across the European Union while US lawmakers face pressure to refine domestic regulatory frameworks. As Congress advances the GENIUS and STABLE Acts, New York Attorney General Letitia James has called for tighter oversight of stablecoin issuers, highlighting concerns that current proposals may fall short in safeguarding the public and the broader financial system.

Paxos Launches USDG Stablecoin in the European Union, Reinforcing Global Dollar Network Expansion

Paxos has officially launched its USDG stablecoin in the European Union, marking a major milestone for the Global Dollar Network (GDN). The announcement was made on Tuesday, highlighting that the USDG stablecoin is now live on a broad range of EU-based platforms, including prominent cryptocurrency exchanges such as Kraken and Gate.io.

The rollout of USDG aligns with the European Union’s Markets in Crypto-Assets (MiCA) regulatory framework, one of the most comprehensive digital asset regulations to date. Paxos stated that it has designed USDG to fully comply with MiCA’s reserve, transparency, and audit requirements. The issuance of USDG in Europe is conducted through Paxos Issuance Europe OY, a regulated entity based in Finland under the oversight of the Finnish Financial Supervisory Authority (FIN-FSA).

In addition to regulatory compliance within the EU, Paxos also operates under the supervision of Singapore’s central bank, signaling a growing trend of multinational regulatory harmonization in the digital asset sector.

The stablecoin has already secured partnerships with a host of crypto and fintech platforms, including Coinmetro, SwissBorg, Zodia Custody, Orbital, Hercle, CoinsPaid, Bitwyrem, Bitnet, and HiFi, alongside launch partners Kraken and Gate.io.

Mark Greenberg, global head of consumer at Kraken, emphasized the importance of stablecoins as foundational components of modern financial infrastructure. “As stablecoins become core infrastructure for global finance, USDG stands out for its usability and growing ecosystem,” he said.

USDG’s backing structure includes one-to-one redemption guarantees and a portion of its reserves held in European banks, which ensures stability and regulatory alignment with MiCA’s mandates. Paxos maintains a long-standing reputation for regulatory rigor, having previously issued stablecoins like USDP and worked with global giants such as PayPal and Mastercard.

Global Dollar Network: Bridging TradFi and Crypto

The European launch coincides with Paxos’ broader ambitions for the Global Dollar Network (GDN), a cross-industry stablecoin infrastructure initiative that aims to bring digital dollars into mainstream use. The GDN launched in late 2024 in collaboration with Robinhood, Galaxy Digital, Kraken, and Paxos. Since then, the network has expanded to include over 20 major partners from both the traditional finance (TradFi) and fintech sectors.

Mastercard’s recent entry into the GDN further signals the growing acceptance of digital assets within the established financial system. The payments giant confirmed it would support USDG in its stablecoin-related projects, paving the way for global merchants and financial institutions to integrate stablecoin transactions into existing workflows.

The launch of USDG arrives amid a broader market boom for stablecoins. According to DefiLlama, the total market capitalization of stablecoins reached $253.9 billion by early July 2025, up from $239 billion in late June. This expansion reflects increasing institutional and retail demand for blockchain-based dollar alternatives, especially as yield-bearing variants of stablecoins also gain traction.

Yield-bearing stablecoins, which offer passive returns through DeFi protocols or interest-earning reserves, have surged in popularity—growing from $1.5 billion at the start of 2024 to $11 billion today, capturing 4.5% of the total stablecoin market.

A report by Coinbase revealed that interest in stablecoin usage has tripled year-over-year since 2024. The study attributes this spike to corporations, small businesses, and consumers seeking faster, cheaper, and more transparent alternatives to traditional payment methods.

Stablecoin payment types (Source: Artemis)

Artemis and other data providers have documented $94.2 billion in settled stablecoin transactions from January 2023 through February 2025. 

Regulatory Path Forward

The MiCA framework, which came into force in 2024, has created a unified approach to digital asset regulation across the EU. Unlike fragmented regimes in other jurisdictions, MiCA offers clarity around stablecoin reserve requirements, audit standards, and consumer protection—conditions Paxos says it welcomes.

With USDG meeting MiCA’s strict requirements and Paxos receiving approvals from both Finnish and Singaporean regulators, the company is positioning itself as a global leader in compliant digital finance solutions.

As the Global Dollar Network scales and USDG adoption spreads across Europe and beyond, Paxos may pave the way for a new era of interoperable, regulatory-compliant digital dollars—bridging traditional banking and decentralized finance across continents.

New York Attorney General Warns Congress on Stablecoin Legislation, Urges Stronger Protections

Meanwhile, as momentum builds in Washington to pass federal legislation regulating stablecoins, New York Attorney General Letitia James is urging lawmakers to strengthen existing proposals, warning that current drafts leave the American financial system—and its citizens—exposed to unnecessary risk.

In a letter sent to congressional leaders on Monday, James raised concerns about two prominent stablecoin bills making their way through Congress: the Senate’s Guiding and Establishing National Innovation for US Stablecoins (GENIUS) Act and the House’s Stablecoin Transparency and Accountability for a Better Ledger Economy (STABLE) Act. While she acknowledged the need for swift regulatory action, James emphasized that both proposals fall short of essential safeguards.

James, who has been one of the most aggressive US state officials in cracking down on cryptocurrency fraud and misconduct, argued that stablecoin issuers should be regulated more like banks. This includes requirements for deposit insurance—an added measure to safeguard users in the event of an issuer’s insolvency.

She also proposed that the Federal Reserve Board, not other federal agencies or politically influenced entities, be designated as the primary overseer of non-bank stablecoin issuers. The Fed’s independence, James noted, would help insulate supervisory decisions from political pressure and ensure sound risk management in a rapidly evolving financial sector.

The GENIUS Act, which passed the full Senate in June with bipartisan support and backing from the White House, requires stablecoins to be fully backed by US dollars or similarly liquid assets. Issuers with a market cap exceeding $50 billion would be subject to mandatory annual audits. It also establishes a federal framework for handling stablecoins issued by foreign entities.

President Donald Trump has publicly endorsed the GENIUS Act, stating that he expects a version of the bill to land on his desk for signing by August. The bill’s White House support marks a significant shift in the federal government’s stance toward integrating stablecoins into the regulated financial ecosystem.

Meanwhile, the House version—known as the STABLE Act—has cleared the House Financial Services Committee but has yet to be scheduled for a floor vote. The House bill diverges from the GENIUS Act in its handling of state-chartered stablecoin issuers and in its approach to foreign stablecoins, reflecting broader debates about federal versus state regulatory authority.

Ongoing Concerns About Foreign Stablecoins

This isn’t the first time Attorney General James has sounded the alarm on stablecoins. In April, she sent a letter to congressional leaders specifically warning about the systemic risks posed by foreign-based stablecoin issuers like Tether (USDT)—currently the largest stablecoin by market capitalization.

At the time, James cautioned that relying on foreign-controlled issuers could weaken US monetary sovereignty and distort Treasury markets, recommending a legislative push toward “onshoring” stablecoins to reinforce the US dollar’s global dominance.

Her latest letter reiterates these concerns, warning that legislation should not inadvertently provide loopholes that allow foreign entities to dominate US stablecoin infrastructure without sufficient oversight.

Stablecoins, digital assets pegged to fiat currencies like the US dollar, have grown into a multi-hundred-billion-dollar market and are increasingly used in payments, decentralized finance, and remittances. According to DefiLlama, stablecoins represent over $250 billion in value as of mid-2025.

The explosive growth of these assets has spurred calls for regulation, especially after episodes of market instability—including the 2022 collapse of algorithmic stablecoin TerraUSD and numerous enforcement actions against unlicensed issuers. As traditional financial institutions like PayPal, Circle, and Mastercard enter the stablecoin arena, federal policymakers are under pressure to define clear rules that promote innovation without jeopardizing financial stability.