Regulating Decentralized Stablecoins: Comparing MiCAR and the GENIUS Act

Stablecoins have become one of the cornerstones of the digital asset ecosystem, facilitating over $10 trillion in annual transactions. Yet while lawmakers, regulators, and scholars worldwide have focused intensely on centralized stablecoins issued by identifiable companies like Tether and Circle, a parallel market of decentralized stablecoins has quietly grown to command billions in value, all without comparable scrutiny. These protocols, exemplified by MakerDAO's DAI, operate as autonomous software systems, without identifiable issuers, and with users interacting exclusively with code rather than corporate counterparties. As this shadow infrastructure becomes increasingly integrated into mainstream finance, billions in user value remain exposed to legal uncertainty and without adequate legal protection. This Essay provides the first comprehensive legal analysis of decentralized stablecoins and, in doing so, reveals a major private law vacuum that distinguishes these tokens from traditional financial instruments. Through our systematic examination of MakerDAO, we demonstrate that the absence of legal personhood leaves users in a complete contractual void, renders title to their holdings uncertain, and largely forecloses viable remedies in tort, criminal, or fiduciary law. Moving beyond critique, we then propose three private ordering solutions, ranging from transparency requirements to decentralized insurance mechanisms to legally incorporated DAOs, that each offer different trade-offs between decentralization and legal certainty. Finally, we provide the first comparative analysis of how the European Union's Markets in Crypto-Assets Regulation (MiCAR) and the United States' recent GENIUS Act approach decentralized stablecoins. While both frameworks explicitly defer substantive regulation of these protocols to future study, their interim strategies reflect diverging regulatory philosophies. MiCAR employs functional definitions that technically encompass decentralized stablecoins but impose impossible compliance requirements that effectively ban them via liability transfer. The GENIUS Act adopts structural prerequisites that categorically exclude protocols that lack identifiable issuers, thus leaving them in regulatory limbo. Neither framework successfully resolves the fundamental challenges that these decentralized protocols present: namely, replicating financial functions without financial institutions. By mapping both the private law vacuum and the regulatory landscape, our analysis charts a path toward coherent legal frameworks.