August 2025
Trump Signs GENIUS Act, Setting U.S. Stablecoin Regulation and AML Standards
On July 18, 2025, President Trump signed the bipartisan GENIUS Act, creating the first federal framework for dollar-pegged stablecoins. The law requires 1:1 backing with liquid assets, monthly reserve disclosures, and Bank Secrecy Act compliance. It prohibits Congressional members and families — but not the President’s family — from issuing stablecoins. Treasury Secretary Bessent praised it for strengthening dollar dominance and Treasury demand. Supporters anticipate legitimizing stablecoins for mainstream finance, potentially growing the market from $260 billion to $2 trillion by 2028. Critics worry about weakened anti-money laundering protections and unrestricted tech firm participation, fearing increased illicit activity risks.
LYODS INSIGHTS: The GENIUS Act transforms stablecoin issuers into regulated financial institutions under Bank Secrecy Act requirements, demanding comprehensive AML compliance including KYC, transaction monitoring, sanctions screening, and reserve transparency. LYODS offers automated solutions: risk-based profiling, real-time alerts, reporting modules, and executive certification tools. Rising demand exists for technical controls enabling transaction freezing and seizure under lawful orders. Our platform includes blockchain forensics, identity resolution, and access controls for token systems. With banks, nonbanks, and tech companies entering the ecosystem, our consultancy helps develop governance frameworks and audit trails. Despite initial compliance costs, the Act provides regulatory clarity, creating opportunities for enterprise-grade AML integration.
ONLY BY ISSUING A NEW TAIWAN DOLLAR STABLECOIN CAN WE HAVE A SAY
Taiwan is moving toward issuing New Taiwan Dollar (TWD) stablecoin to strengthen its role in digital finance ecosystem. Experts argue that TWD-denominated stablecoin is essential for domestic virtual asset development, real-time settlement of tokenized real-world assets (RWA), and reducing currency risks in cross-border trade. Pilot programs are already underway with banks exploring stablecoin applications. Industry leaders emphasize the need for regulatory frameworks and advocate a public-private model. Without timely action, Taiwan risks falling behind as USD-backed stablecoins dominate global payment networks.
LYODS INSIGHTS: Taiwan is moving toward issuing a TWD-backed stablecoin.
Goal: Strengthen Taiwan’s role in the digital finance ecosystem. Experts see a TWD stablecoin as essential for:

  • Domestic virtual asset development.
  • Real-time settlement of tokenized real-world assets (RWA).
  • Reducing currency risks in cross-border trade.
Pilot programs are underway, with banks testing stablecoin applications. Industry leaders call for a regulatory framework and favor a public-private development model.
Risk: Taiwan may fall behind as USD-backed stablecoins dominate global payment networks.
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JANPAN TO APPROVE FIRST YEN-BACKDED STABLECOINS THIS FALL
Japan’s Financial Services Agency will approve the country’s first yen-backed stablecoin this fall, led by Tokyo fintech JPYC. The token maintains 1:1 yen parity, backed by bank deposits and Japanese government bonds, issued through bank transfers to digital wallets. This marks Japan’s entry into the $286 billion stablecoin market, currently dominated by US dollar tokens. JPYC could significantly impact Japan’s bond market by boosting government bond demand, similar to how US stablecoin issuers became major Treasury buyers. This follows Circle’s USDC launch in Japan in March 2025, reflecting Japan’s strategic approach to compete in digital currencies while strengthening domestic financial markets..
LYODS INSIGHTS: Japan’s yen-backed stablecoin rollout requires comprehensive AML/KYC frameworks including mandatory identity verification, enhanced due diligence for high-value transactions, and integration with Japan’s FSA compliance infrastructure. Essential features include automated suspicious activity detection, real-time sanctions screening, and JAFIC reporting compliance. Smart contract capabilities should incorporate programmable compliance with automated KYC checks, transaction limits, blacklist functionality, and geographic restrictions. Transparency features must include on-chain audit trails, immutable compliance records, and real-time reserve verification. Security mechanisms require multi-signature wallets, circuit breakers, and emergency pause functionality. Advanced integration includes APIs for traditional banking, government verification systems, and cross-platform interoperability. Additional features like zero-knowledge proofs, automated tax reporting, and programmable monetary policy enforcement would help JPYC meet Japan’s strict regulations while leveraging blockchain transparency advantages
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MARKET CONFUSION & OTC FRAGMENTATION POST-STABLECOIN ORDINANCE
Regulatory Scope Misinterpretation: Market participants initially misinterpreted the ordinance as banning eg USDT/USDC. In reality, it only regulates stablecoins pegged to HKD or issued in HK. Offshore stablecoin still tradeble via OTC.
OTC Regulatory Vacuum: Pending licensing framework (expected 2026), practices diverge sharply:

  • Some OTCs continue selling offshore stablecoins, exploiting regulatory gaps;
  • Some halted services for retail access.
Retail Access Uncertainty: Regulatory signals suggest potential retail bans on mainstream stablecoins (eg USDT), though unconfirmed. This ambiguity fuels market fragmentation, drives some OTC operations underground.
LYODS INSIGHTS: Systemic Risk Alert: Unregulated OTC channels could concentrate illicit flows if legitimate players exit. We agree with Industry to urge expedited OTC rules to prevent market distortion.