Opinion by: Emir J. Phillips, associate professor of finance, economics and business law at Lincoln University of Missouri
A stablecoin’s “peg” is no longer a branding contest about being “fully backed.” It is becoming a quasi-constitutional question: In a panic, who has the enforceable right — and practical ability — to redeem at par, on demand, with reserves that stay reachable when trust collapses?
The next stablecoin crisis will not be decided by reserve existence; it will be decided by reserve access and legal priority.
The market already watched this movie during the Silicon Valley Bank weekend in March 2023, when USDC (USDC) traded off-par after Circle disclosed that part of its reserves were temporarily stuck at SVB. The Federal Reserve later treated that episode as a concrete case where secondary-market pricing reflected friction in redemption rails, not an abstract debate over whether collateral existed.
That experience is now being written into law. The United States and the European Union are hard-coding what a “$1” claim means and what it must do in stress. In the US, the GENIUS Act sets a perimeter for “payment stablecoins,” tightens reserve expectations and bans yield-for-holding. In Europe, the Markets in Crypto-Assets (MiCA) regulation classifies “stablecoins” into legal species and hard-wires redemption duties while imposing explicit brakes once a token starts functioning like a mass payments rail.
A two-tier market
Here is the contentious claim: These regimes are not only “stabilizing” stablecoins; they are engineering a two-tier market. The strictest designs will look like cash because convertibility is protected by statute, supervision and reserve discipline. Everything else will still trade at $1 in calm markets, but it will reprice like credit in a panic.
The GENIUS Act reflects an American instinct: Draw a bright line between money and investment, and then police that boundary. The non-negotiable element is the “no interest” clause: No issuer is supposed to turn a payment stablecoin into an internet-scale shadow deposit by paying yield simply for holding. That ban is not moralizing; it is run prevention. If digital cash pays yield, it stops behaving like cash and starts behaving like a bank deposit without insurance. The policy fight is already shifting to the edges: rewards programs, wrappers and indirect “benefits” that can mimic interest.
MiCA reflects a European instinct: Define the instrument, and then constitutionalize the redemption right. For e-money tokens, the at-par promise is written as a holder’s claim enforceable at any time. MiCA also signals a fear regulators rarely say out loud: Scale changes the physics. Once a stablecoin becomes a ubiquitous medium of exchange, Europe reserves the right to slow it down, treating excessive transaction volume as a financial stability event, not an adoption milestone. Cointelegraph’s reporting on MiCA’s stablecoin limits captures the tensions this creates for listings and payments use.
Clarity is needed around stablecoins
The most explosive, still-unsettled question is cross-border “multi-issuance”: one stablecoin brand marketed as interchangeable but issued by multiple legal entities across jurisdictions.
In a global run, the strongest legal perimeter becomes a magnet, as everyone tries to redeem where rights are best. That can overwhelm the reserves and operational capacity behind the “best” jurisdiction — even if the brand looks global and unified on the surface. The Bank of Italy urged clarity on multi-issuance standards, while EU institutions debated whether interchangeability could embed financial-stability risks. Multi-issuance can also become a run risk in disguise.
The two-tier future of stablecoins
Put together, 2026 will likely sort stablecoins into tiers.
Tier-1 tokens will be constitutional cash: clear redemption rights, high-quality liquid reserves, frequent disclosure/examination and tight rules against yield-for-holding.
Tier 2 will be synthetic cash: wrappers, reward programs and perimeter arbitrage that behave like money during calm conditions and behave like risk assets when redemption becomes crowded.
Related: Circle targets ‘durable’ infrastructure to drive institutional stablecoin adoption
The practical move is to rate stablecoins the way credit markets rate claims: by legal priority and liquidity under stress. Ask whether redemption is a right for all holders, at par, at any time; whether reserves are engineered for fire-sale liquidity and, just as important, whether they can be accessed when banks fail or wires freeze; whether “yield” is prohibited in substance or merely repackaged through rewards and wrappers; and whether cross-border structure creates a run magnet where one jurisdiction is asked to backstop a global brand.
Stablecoins are becoming institutions. Crypto spent a decade asking whether code could become law. Stablecoins are proving the inverse: Law is becoming the code that determines whether a peg survives. The GENIUS Act and MiCA are competing constitutions for internet settlement — different instincts about yield, scale and cross-border spillovers. The next stress event will not reward the loudest narrative; it will reward the issuer whose convertibility survives the night nobody sleeps.
Opinion by: Emir J. Phillips, associate professor of finance, economics and business law at Lincoln University of Missouri.
This opinion article presents the contributor’s expert view and it may not reflect the views of Cointelegraph.com. This content has undergone editorial review to ensure clarity and relevance, Cointelegraph remains committed to transparent reporting and upholding the highest standards of journalism. Readers are encouraged to conduct their own research before taking any actions related to the company.
