In July 2025, Congress passed the Genius Act with the aim of ensuring that subscription coin issuers are not denied their licenses simply because they suggested using permits, open, and public blockchains such as Ethereum.
At the same time, the Federal Reserve Policy Statement 9 (13), issued in January 2023, remains in effect. The policy advises that state member banks should avoid certain activities, including open blockchain, and states that issuing tokens in such networks “is likely to be inconsistent with secure and sound banking.”
This regulatory tension is emerging as major financial institutions announce new blockchain infrastructure projects and raise questions about the future role of public networks like Ethereum in institutional finance.
The current reality of the Stablecoin market
Ethereum currently dominates the Stablecoin market, and as of August 2025, it owns around 49-54% of the global Stablecoin Supply of $271.1 billion. USDC is well ahead of other networks, with over $2 billion in daily daily transfers on Ethereum alone. Combined with Tron’s 35% market share, the two networks control nearly 84% of all Stablecoins.
Tron has acquired a position in USDT transactions that handle more than one million transactions, but Ethereum remains a major network of integrated stubcoins and institutional tokenized assets, including BlackRock’s $2.3 billion Buidl Treasury Fund.
Policy background
Policy Statement 9 (13) was developed following concerns about money laundering, operational risks and cybersecurity vulnerabilities in public blockchains during the Biden administration. The Federal Reserve policy states that “issuing tokens on open and unauthorized blockchains is highly likely to contradict secure and sound banking.”
The Genius Act takes the opposite approach and states, “The main federal payment stabilization regulators shall effectively reject a full application only if they deem the applicant’s activities unsafe or uncertain.
Policymaker position
In a July 2025 digital assets report from the White House, President Donald Trump said “The Federal Reserve must immediately withdraw its policy statement 9 (13),” adding that regulatory bias against unauthorized blockchains could undermine the US’s competitiveness and “we will only advance the interests of legacy institutions.”
During the June 2025 Senate Banking Committee hearing, Sen. Cynthia Lumith (R‑ Wyo.) directly asked Federal Reserve Chairman Jerome Powell.
“The Fed welcomes Congress’ actions, but its initial responsibility remains safety and sound.” He said the central bank continues to evaluate its policy “in light of new laws” while maintaining that it “takes appropriate attention regarding unauthorized platforms.”
New Blockchain Infrastructure Project
Suddenly, over the past few days, the ecosystem has at least two new blockchains, and is believed to have been permitted and designed for stable use in a controlled environment.
Circle Ark: On August 12, 2025, Circle announced plans to launch ARC, an EVM compatible layer 1 blockchain designed for regulated Stablecoin Finance. The network will enter public testnets in the fall of 2025, and ARC will be positioned as a compliance-centric platform that can bridge public networks like Ethereum.
Stripe tempo: According to Fortune on August 11, 2025, Stripe is working with the Paradigm to build a blockchain called Tempo, but the company has not officially confirmed the project. The effort reportedly includes a team of five working on payment infrastructure.
Regulatory Impact Assessment
Differences between Congressional intent and Fed guidance create uncertainty for agencies considering the Stablecoin project. Current Policy Statement 9 (13) requires that banks seeking to issue dollar aid tokens on permitted networks must demonstrate comprehensive compliance with safety and health requirements.
The circle’s decision to build an arc and stripe “tenor” development suggests that the agency is choosing a permit or semi-permissive approach that can later be bridged to public networks, rather than launching directly on Ethereum or similar platforms.
Impact on the market
Despite regulatory uncertainty, Ethereum continues to handle most of the stubcoin volume and remains a major platform for facility definition applications. The network’s advantage in tokenized financial products, such as BlackRock’s Buidl Fund and other real-world asset tokens, shows progress in institutional adoption through structured, compliance-centric vehicles.
The key question is whether future bank-issued stubcoins will be launched directly with Ethereum under the revised Fed guidance, or whether public network bridging will result in a two-stage model of permitted issuance following that will become the standard approach for regulated institutions.
Future outlook and advancement
The regulatory direction set in the coming months will play a critical role in shaping how Stablecoins interact with open blockchain platforms like Ethereum. The genius law mission for open network access and the emphasis on the safety and soundness of the Federal Reserve system could lead to a balanced framework that promotes both innovation and risk management.
For agencies, the hybrid approach combines permitted infrastructure with the ability to bridge public networks to provide a practical path. This model allows publishers to meet compliance requirements while leveraging Ethereum’s size, liquidity, and interoperability.
Advances in Blockchain Analytics and Regulatory Technology (REGTECH) make it easier for publishers to meet careful surveillance standards without sacrificing the transparency and programmatic nature of money laundering, cybersecurity, and public Ridgers. These tools will help reduce friction in regulatory approval, improve trust, and increase institutional participation in blockchain-based finance.
If policymakers and regulators can align with shared visions, the US can set up a global benchmark for integrating unauthorized blockchain technology into a regulated financial system. The question now is whether regulatory policies by the Federal Reserve potentially select winners and losers in the future design of blockchain platforms.
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