Stablecoins have yet to achieve widespread adoption and displace established payment platforms like Visa and Mastercard due to a lack of robust consumer protection mechanisms. According to Guillaume Poncin, chief technology officer at payment company Alchemy, integrating features such as chargebacks, fraud protection, and dispute resolution is crucial to attracting everyday users.

Traditional payment systems offer consumers a safety net that is currently absent in many stablecoin implementations. Poncin suggests that these protections can be integrated directly into smart contracts, while stablecoin issuers and payment platforms can create insurance pools to cover fraud-related payouts.

The future may involve a convergence of traditional payment rails and stablecoins. Poncin anticipates that major payment processors will integrate stablecoins, and banks will issue their own, leveraging blockchain's efficiency for new applications. While stablecoins are already gaining traction for cross-border payments and in emerging markets due to their 24/7 availability and lower transaction costs, hybrid models combining instant settlement with consumer safeguards are expected to emerge for domestic retail use.

In the United States, the GENIUS Act, signed into law by President Trump in July 2025, represents a significant step towards regulating stablecoins and digital assets. This legislation aims to provide a comprehensive regulatory framework for stablecoins, offering clarity to issuers, investors, and consumers. The Act requires 100% reserve backing with liquid assets, such as U.S. dollars or short-term Treasuries, and mandates monthly public disclosures of reserve composition. It also aligns state and federal regulatory approaches to ensure consistent oversight nationwide.

The GENIUS Act also addresses consumer protection by prohibiting misleading marketing claims about government backing or federal insurance. It prioritizes stablecoin holders' claims over other creditors in the event of an issuer's insolvency, providing a safety net for consumers. Moreover, the Act subjects stablecoin issuers to the Bank Secrecy Act, requiring them to implement anti-money laundering and sanctions compliance programs. Issuers must also have the technical capabilities to freeze or seize stablecoins when legally required.

The Financial Conduct Authority (FCA) in the UK is also tailoring its rulebook to accommodate cryptoasset activities, with a focus on consumer protection. The FCA is considering different approaches to implementing its Consumer Duty, which requires firms to deliver good outcomes for retail customers. One option involves applying the Duty with crypto-specific guidance, while the other entails introducing dedicated rules to achieve an appropriate standard of consumer protection. The FCA is also considering translating existing guidance about appropriateness assessments into rules to raise standards.