By Nassim Eddequiouaq, CEO, Bastion
For most of the history of modern finance, the dollar has been treated as a constant. But in a digital economy, not all dollars are equal.
Some dollars move instantly, some don’t. Some earn yield, others sit idle. Some are accessible globally, others are trapped in accounts that don't connect to other systems. These differences between formats of money—from paper dollars, to dollars transacted on credit cards, to USD backed stablecoins—aren't just technical. The format of money can shape how dollars can be used, how valuable they are to hold, and how global markets choose what infrastructure to build on.
Stablecoins expose these differences. They don’t just replicate fiat currency digitally—they expand its functionality. And in doing so, they force us to re-examine how we define money itself.
Consider how stablecoins are used today. In emerging markets, stablecoins are easier to access than bank accounts and faster to use than SWIFT. For companies operating across borders, stablecoins are presenting a new way to move value at internet speed. In the U.S., financial institutions are exploring how tokenized dollars can simplify cross-entity transfers, support embedded yield, and streamline treasury management.
The infrastructure is here. But the policy is not.
Traditionally, consumers have assumed that a dollar is always a dollar, regardless of how it's held. But in practice, the format of money—cash, bank deposits, or stablecoins—dramatically changes its utility, accessibility, and ultimately, its value.
Physical cash offers immediate spending power but earns no interest and can be difficult to manage securely. Operational accounts at banks are accessible and easy to spend from, but the yield is typically retained by the bank—not the account holder. To generate returns, businesses may move funds into money market funds or similar vehicles—but these come with tradeoffs, including delayed access and exposure to market-specific risks that don’t exist in standard bank accounts.
Stablecoins present a new and different way of doing things. When dollars are converted into stablecoins, the original funds can be safely invested in highly liquid, yield-generating assets like short-term U.S. Treasuries—similar to a traditional corporate sweep account. Meanwhile, the digital dollar issued in exchange remains fully spendable, instantly accessible, and easy to integrate into payments infrastructure. In other words, stablecoins allow institutions and businesses to hold productive reserves while maintaining the liquidity of cash—without exposing themselves to the same redemption frictions or risks associated with money market funds*.
This is not a speculative instrument; it's a new operational model. It's about using blockchain infrastructure to unlock the ability to spend money without sacrificing its ability to generate yield—essentially providing both liquidity and conservative returns at once. Current regulatory frameworks aren't designed to manage this dual functionality, because historically, yield-bearing money and liquid, spendable money have always been distinct categories.
Current regulatory frameworks are built on a clear divide: either you're offering regulated financial products that generate returns—like securities—or you're providing non-financial services without returns. Stablecoins don’t fit into these existing categories. A fully-backed USD stablecoin is not a security, nor does it inherently produce yield. It is simply a digital representation of the U.S. dollar, spendable and liquid like cash.
However, stablecoins introduce something new: they make it possible for underlying reserves to be placed into conservative, yield-generating investments like Treasury bills, while simultaneously offering the liquidity and spendability of cash. This structure is similar to traditional instruments like corporate sweep accounts—where businesses earn yield on excess funds—but with enhanced programmability and transparency.
Regulators haven't yet fully grasped this nuance. Existing policies were designed for simpler financial categories. They haven't accounted for formats of money that can remain productive (invested securely) while simultaneously remaining spendable. It represents an entirely new capability that traditional financial instruments have never been able to provide.
Clear policy guidance is needed to illustrate how reserves backing stablecoins can responsibly generate yield without mistakenly categorizing the stablecoins themselves as yield-bearing securities. Regulators need to explicitly define how this functionality can exist safely, transparently, and compliantly within existing frameworks.
Addressing this middle layer will clarify the role of stablecoins roles for enterprises, allowing businesses to confidently adopt these tools in their financial operations, knowing exactly how they can use them without creating unintended compliance risks.
One persistent regulatory concern is that new financial tools might create complexity, making compliance more difficult. With stablecoins, however, transparency is built into the technology itself.
Unlike traditional financial systems, stablecoins operate on public ledgers where each transaction is recorded and visible. Ownership and usage patterns are verifiable without intermediaries. If the underlying reserves are placed in conservative, yield-generating assets, the returns from these assets can be tracked and audited seamlessly. Distribution of returns can occur automatically and transparently, governed by predefined rules that eliminate guesswork or manual enforcement.
The regulatory challenge, therefore, isn't ensuring transparency—it's recognizing and leveraging the transparency already inherent in stablecoins. Rather than complicating oversight, stablecoins offer regulators clearer visibility into money flows and yields than many existing financial structures. This built-in clarity enables a safer and more accountable environment for institutions looking to use stablecoins within clearly defined guidelines.
Clear policies that explicitly define how this transparency can be used to safely integrate yield generation without transforming stablecoins themselves into securities would help unlock enterprise adoption, aligning innovation with regulatory expectations.
Regulatory ambiguity actively discourages responsible innovation and slows institutional adoption. Clear guidelines offer businesses and financial institutions the assurance needed to confidently integrate new technologies into their operations. Without this clarity, legitimate organizations often hesitate, leaving market opportunities to less accountable actors willing to operate within unclear regulatory boundaries.
This isn't unique to stablecoins. Consider peer-to-peer lending platforms like Prosper Marketplace. In 2008, the SEC temporarily halted Prosper’s operations because the company’s loan notes hadn't been clearly classified, leading regulators to treat them as unregistered securities. This classification uncertainty significantly disrupted Prosper's business, illustrating how regulatory ambiguity can create real operational risks for companies exploring new financial models.
Outside finance, gig-economy companies such as Uber and Lyft spent years operating under uncertain labor laws. Ambiguity over the legal status of drivers—as independent contractors or employees—led to costly legal battles, operational disruptions, and reputational harm. California's AB5 law exemplifies this ambiguity, where shifting regulatory interpretations led to significant uncertainty, causing companies substantial expense and strategic confusion.
When regulation fails to provide clarity, it makes adoption riskier and rewards those willing to test the boundaries. As Bitwise and VettaFi’s 2025 Benchmark Survey shows, financial professionals want access to digital assets—crypto allocations by advisors doubled in 2024, reaching a record 22%. But only 35% of advisors say they can currently buy crypto in client accounts, and 71% report that clients are investing independently without professional guidance. The real barrier isn’t interest, it’s infrastructure and policy.
In the context of stablecoins, explicitly addressing how reserves can safely generate yield, while maintaining liquidity and avoiding classification as securities provides enterprises the necessary confidence to build and invest at scale. This is why the next move in regulation matters. When the rules are clear, good actors participate. Advisors engage. Institutions innovate. And technology matures inside the system, not outside it.
Clarity isn’t just good for compliance. It’s good for business. And in this next phase of digital finance, it's what will separate sustainable adoption from preventable risk.
Regulators don’t need to solve every scenario upfront, but they do need to act on what’s already here. Stablecoins are already embedded into enterprise infrastructure, increasingly used in international commerce, and actively shaping the future of programmable finance.
Practical, low-risk use cases exist today that policy can support—without opening the door to systemic risk. For example, allowing enterprises to hold stablecoins in treasury accounts, pass through modest incentives to customers, or operate closed-loop payment ecosystems. Each of these applications can be paired with thoughtful guardrails: reserve quality requirements, regular attestations, disclosure rules, and strict limitations on who can receive what and how.
These are active, usable use cases that give regulators a chance to support innovation within the system, rather than watching it grow outside of it. Because what’s ultimately at stake isn’t just the success of a new financial instrument. It’s the position of the U.S. dollar in a world where money itself is becoming programmable.
Stablecoins are already the digital expression of the dollar in many parts of the world—easier to access than bank accounts in emerging markets, and faster than traditional rails for global businesses. But that position isn’t guaranteed. If U.S. regulation restricts core functionality or delays clarity, innovation will move offshore. We’ve already seen the growth of digital assets and stablecoins in Europe, LATAM, and other regions—coupled with regulatory support like MiCA. If this continues, the infrastructure for a digital dollar may shift to ecosystems beyond U.S. reach.
A clear, forward-looking policy framework can ensure stablecoins continue to reflect the stability, safety, and transparency that define U.S. financial leadership while evolving to meet the needs of a programmable economy. We don’t need to start from scratch. The infrastructure is here. The institutions are ready. What’s needed now is clarity so stablecoins can reach their full potential as secure, compliant, and productive tools for modern finance.