From Crypto-Asset to Payment Instrument: The Regulation and Cost–Benefit of Stablecoin Payments

Author

Shehvar Saleem, Mohammad Salah Khan, Md Saqib Ansari


Abstract

 Stablecoins combine a transferable digital token with a claim, expectation, or mechanism intended to maintain a stable monetary value. Their legal treatment increasingly turns on the economic promise made to a holder rather than the ledger on which the token travels. This article compares the European Union’s Markets in Crypto-Assets Regulation, the United States’ enacted but not yet generally effective GENIUS Act, and the United Arab Emirates’ Central Bank Payment Token Services Regulation, while locating Dubai’s Virtual Assets Regulatory Authority within the UAE’s divided supervisory architecture. It argues that fiat-referenced payment tokens warrant a payment-oriented regulatory perimeter when they are held out for transfer at par and supported by enforceable redemption and credible reserves. Such treatment remains conditional: a nominal one-to-one peg alone does not establish either a legal right or reliable liquidity. The article then evaluates a concrete cross-border settlement arrangement involving LuLu Financial Holdings and USDC. Circle reports a 25–30 per cent reduction in settlement costs, 40 per cent growth in cross-border settlement volume, and beneficiary credit within one minute after settlement; these are company-reported outcomes without public corridor-level denominators or independently audited counterfactuals. The principal plausible efficiency gain arises in the interinstitutional middle mile, where a token can move treasury value continuously. Origination, foreign exchange, local payout, liquidity management, consumer protection, and financial-crime controls remain. The resulting policy case supports conditional recognition of payment stablecoins, coordinated issuer and service-provider oversight, and comparable measurement of total consumer costs. It does not establish that stablecoins generally outperform other modern payment rails or should be treated as sovereign money.


Keywords

stablecoins; payment tokens; MiCA; GENIUS Act; UAE; remittances; correspondent banking; USDC.



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References


Legislation and regulatory instruments

  • Regulation (EU) 2023/1114 on markets in crypto-assets [2023] OJ L150/40
  • Guiding and Establishing National Innovation for U.S. Stablecoins Act, Pub L No 119-27, 139 Stat 419 (2025) (GENIUS Act)
  • Central Bank of the UAE, Payment Token Services Regulation, Circular No 2/2024 (effective 31 August 2024) (PTSR)
  • Dubai Virtual Assets Regulatory Authority, Virtual Asset Issuance Rulebook, annex 1, Fiat-Referenced Virtual Assets Issuance Rules (2025)

Official reports and guidance

  • Bank for International Settlements, Annual Economic Report 2025, ch III accessed 25 September 2026
  • European Banking Authority, ‘Guidelines on redemption plans under MiCAR’ (10 February 2025) accessed 25 September 2026
  • Financial Stability Board, ‘G20 Roadmap for Cross-border Payments: Consolidated Progress Report for 2025’ (9 October 2025) accessed 25 September 2026
  • Financial Action Task Force, ‘Targeted Report on Stablecoins and Unhosted Wallets: Peer-to-Peer Transactions’ (3 March 2026) accessed 25 September 2026
  • World Bank, ‘Remittance Prices Worldwide’ accessed 25 September 2026
  • Financial Stability Board, ‘G20 Targets for Enhancing Cross-border Payments’ accessed 25 September 2026
  • Office of the Comptroller of the Currency, ‘GENIUS Act Regulations: Notice of Proposed Rulemaking’ (25 February 2026) accessed 25 September 2026

Case study

  • Circle, ‘LuLu Financial Holdings settles GCC, MENA, and APAC remittances 24/7 with USDC’ accessed 25 September 2026

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