The crypto world is abuzz, and for a good reason. On July 18, 2025, President Donald Trump signed the GENIUS Act into law, marking a historic milestone in stablecoin regulation.
Stablecoins are blockchain-based tokens designed to have a stable value, similar to normal real-world currency like the US dollar. Let’s dive into what the Act entails and why it got the crypto market rallying.
What is the GENIUS Act?
The Guiding and Establishing National Innovation for U.S. Stablecoins (GENIUS) Act is the first-ever federal regulatory framework for stablecoins in the United States. The core of the act is to define and regulate stablecoins while making sure they are safe, stable, and reliable.
Simply put, the act is to ensure all aspects regarding stablecoins are safe, transparent, and trustworthy for everyone to use. This is also a way for Trump’s administration to further elevate the United States as the “crypto capital of the world.”
The bill was passed by the Senate on June 17, 2025, with a vote of 68-30. On July 17, the U.S. House of Representatives passed the Act, with a vote of 308-122. The GENIUS Act was then signed into law on July 18, by President Trump.
Prior to July 18, stablecoins lacked a federal regulatory framework. Meaning? Issuers and intermediaries were only bound by state laws and regulations, in this case state-level money transmitter laws (e.g., BitLicense in New York).
Previous regulatory laws for stablecoins were a patchwork of fragmented and ambiguous rules. As a result, it led to regulatory uncertainty, inconsistent standards for safety measures, stability concerns, absence of consumer protection, and difficulty in fully enacting the law for illicit activities (for instance, money laundering).
Due to these downsides, stablecoin wasn’t really something cryptomarketers were fully receptive to, as it came with lots of risks and uncertainties. However, with the GENIUS Act, many of these downsides will be removed by providing a much-needed regulatory clarity and legitimacy.
Let’s take a look into some areas the GENIUS Act will be regulating.
- Issuers of stablecoin are required to hold at least $1 of permitted reserves for every $1 of stablecoin issued. This means for every $1 worth of stablecoin an issuer puts in circulation, there must be at least $1 designated as safe assets as a backup.
- The permitted reserves are limited to coins and currency; deposits held at insured banks/credit unions; short-dated treasury bills; repurchase agreements backed by treasury bills; central bank reserves; or any other government-issued asset approved by regulators.
- Stablecoin issuers are exempt from the regulatory capital standards applied to traditional banks.
- Issuers are subject to the Bank Secrecy Act (this is part of the Anti-Money Laundering (AML) and Sanctions Compliance).
- Issuers with more than $50 billion in stablecoins outstanding will be required to submit audited annual financial statements.
- Stablecoins can be issued by banks and credit unions. Non-banks have to be vetted by the Stablecoin Certification Review Committee (SCRC) before they can issue stablecoins to parties other than financial firms.
- Anyone previously convicted of certain financial crimes is prohibited from becoming an officer or director of an issuer.
- Custodians of stablecoin can be issuers or non-issuers, provided they are regulated by federal or state banking regulators like the Securities and Exchange Commission (SEC) or the Commodity Futures Trading Commission (CFTC).
- Issuers must issue periodic reports of outstanding stablecoins and reserve composition, which need to be certified and examined by executives of registered public accounting firms.
- Payment stablecoins (i.e., stablecoins used primarily as a means of payment or settlement) are not securities or commodities and are not federally insured.
- There are also criminal penalties for violations like unlicensed issuance; false certifications of monthly reports; false certification of AML and sanctions compliance programs; and misrepresenting insured status.
What This Means for the Crypto Market
The GENIUS Act has bolstered crypto marketers interest and investor confidence in stablecoin. For the first time following the announcement of the bill, the total crypto market surpassed $4 trillion, showing the amount of receptiveness and confidence crypto marketers have in this new regulation.
With time the full impact of the GENIUS Act will unfold, but for now the response to the bill has been nothing but positive. According to NewYork Post, Citigroup analysts have estimated that the stablecoin market could grow to $3.7 trillion by 2030.
For now, keep an eye on the market and the breakthrough stablecoin regulation it promises to unlock, and watch it shape the financial landscape for years to come.
