Stablecoin Regulation and Formal Verification: Building the Foundation of Compliance and Trust

With the continuous development of Web3 applications, more and more central banks and institutions are beginning to pay attention to digital asset products, with stablecoins becoming a key focus. Stablecoins integrate the efficient and transparent characteristics of blockchain with the stability of traditional finance, and are expected to reshape global payment and financial infrastructure. However, to promote the mainstream adoption of stablecoins, a solid foundation still needs to be established in terms of user trust, regulatory compliance, and compatibility with existing Web3 systems.

Under a strict Compliance framework, Formal Verification is seen as a highly promising method that can help build reliable stablecoin contracts while verifying key Compliance requirements. This article will focus on the following directions:

• A comprehensive understanding of the regulatory requirements for stablecoins is crucial for all issuers.
• When launching stablecoin projects in the United States, the "GENIUS Act" is an important basis for assessing compliance risks.
• Formal Verification can help stablecoin projects more effectively meet the Compliance requirements of the GENIUS Act.

Overview of Stablecoin Regulatory Landscape

Since the launch of the first batch of cryptocurrency stablecoin projects in 2014, stablecoins have been seen as a bridge connecting the traditional financial system and the Web3 world. The traditional financial system generally suffers from high latency, lack of transparency, and high costs. To address these shortcomings, stablecoins introduced:

• Real-time Settlement
• Immutable records
• Smart contracts that can automatically verify rules or redirect foreign exchange paths
• Greater financial inclusion, allowing anyone to easily participate.

The electronic currency regulatory framework launched in 2009 was not initially designed for Web3 scenarios, but has gradually extended to cover Web3-compatible solutions, including stablecoins.

Currently, regulatory agencies in multiple locations, including the Abu Dhabi Global Market and the Hong Kong Monetary Authority, have begun testing related solutions. The U.S. Congress has passed the GENIUS Act, outlining a regulatory roadmap for the Compliance development of stablecoins.

GENIUS Act

The "GENIUS Act" launched in June 2025 establishes a mandatory Compliance framework for stablecoin payments in the United States. The Act establishes a unified federal-level "certification" for stablecoins, helping to reduce regulatory fragmentation and providing clear institutional guidance for product design, risk management, and audit preparation. Adhering to the standards set forth in the "GENIUS Act" is not only a fundamental requirement for Compliance but also a key safeguard for enhancing the security of user asset transactions.

From Legal Texts to Formal Verification Lemmas

Formal Verification expresses each Compliance requirement as an invariant or activity on the chain. Taking the "GENIUS Act" as an example, the legal text can be formally expressed as the corresponding lemma. Additionally, the technical invariants of certain stablecoins should be rigorously proven to ensure compliance with specific legal requirements.

These formal lemmas will become proof obligations in the selected verification framework. However, only some of these specifications are related to the formal verification process at the smart contract stage.

Solana stablecoin program example: How to implement the invariance requirements of the "GENIUS Act"

We have built a stablecoin system case based on Solana and conducted Formal Verification of its specifications. This program demonstrates how to satisfy core invariants in all operations on the chain.

In the complete results, we successfully formal verified the invariant: total supply ≤ total reserves. After all proof obligations were proven, this Solana stablecoin program example can be mathematically rigorously proven to meet the compliance requirements of Article 4(a)(1)(A) of the "one-to-one reserve backing" in the GENIUS Act.

The Necessity of Formal Verification

Formal Verification is crucial for the compliance of stablecoins, as it protects the funds and confidence of every participant. Following the best practices of Formal Verification will bring additional advantages to the stablecoin protocol:

1. Win the trust of regulators
2. Reduce Risk
3. Improve Audit Efficiency
4. Achieving Market Differentiation

In addition, being able to indicate that the protocol has undergone Formal Verification in accordance with the requirements of the GENIUS Act, and that there are no unresolved proof obligations, transforms compliance risks into competitive advantages. This not only enhances the project's credibility but also significantly accelerates several key processes.

Conclusion

As global regulators deepen their focus on stablecoins, compliance and security have become the core challenges faced by issuers. Whether to meet the requirements of the GENIUS Act or to plan for global expansion, stablecoin projects need to build a reliable security foundation from the ground up.

The Formal Verification framework is built specifically for real blockchain application scenarios, capable of generating on-chain machine-verifiable security proofs that directly correspond to Compliance requirements. This is not theoretical exploration, but a reliable guarantee aimed at practical production environments.

Whether to meet the compliance requirements of the GENIUS Act or to create a trusted stablecoin for the global market, Formal Verification can safeguard the project and help it launch safely and efficiently. Through systematic and provably secure methods, stablecoin projects can achieve compliance and high reliability in their operations.