Guidance on the legitimization process of stablecoins through Genius Act
The Genius Act, a groundbreaking piece of legislation signed into law by President Donald Trump in July 2025, marks a significant step towards a more regulated and mainstream adoption of dollar-backed cryptocurrencies in the US. This comprehensive regulatory framework aims to bring stability, clarity, and consumer protection to the rapidly growing stablecoin market.
The Genius Act Establishes Clear Guidelines for Stablecoin Issuance
Key features of the Genius Act include stringent issuer restrictions, reserve requirements, compliance and consumer protection measures, clear definitions, and regulatory scope. Only insured depository institutions or federally/state-approved nonbank financial institutions can issue stablecoins, with foreign issuers operating under comparable regulatory regimes and supervised by U.S. regulators like the Office of the Comptroller of the Currency.
Issuers must maintain 100% reserve backing with low-risk assets such as physical currency, U.S. Treasury bills, or repurchase agreements and regularly report reserve composition and undergo audits by registered public accounting firms. Stablecoin issuers must also comply with the Bank Secrecy Act, implementing anti-money laundering and countering the financing of terrorism measures.
The Genius Act Defines and Excludes Payment Stablecoins
A payment stablecoin is a digital asset used for payment that the issuer promises to redeem at a fixed value and to maintain stable value. The Act excludes national currencies, bank deposits, and securities. Algorithmic stablecoins are effectively prohibited. The Genius Act removes stablecoins meeting its requirements from classification as securities or commodities, placing primary oversight with banking agencies rather than securities or commodities regulators.
The Genius Act Imposes Licensing, Reserve, Audit, and Compliance Requirements on Issuers
The Genius Act mandates 100% reserve backing with liquid assets such as the dollar or US Treasury Bills, and requires monthly public disclosures of the composition of reserves. Stablecoin issuers must also comply with strict marketing rules, forbidding them from making misleading claims such as stablecoins being government-backed.
Analysts Predict Increased Participation from Private Players
With regulatory clarity, analysts predict that private players such as Meta, Amazon, Visa, Walmart, etc., may join the stablecoin race. Traditional payments firms like Visa and Mastercard are considering stablecoins as complementary tools rather than competition.
Stablecoins Enter Mainstream Financial Transactions
The passage of the Genius Act allows stablecoins to enter mainstream financial transactions, making them an integral part of the global financial system. Concerns about surveillance and central bank digital currencies (CBDCs) persist with the wider adoption of stablecoins.
The Genius Act Aims to Make the US a Leader in Digital Assets
The Genius Act has several goals, including making the US a leader in digital assets, protecting consumers, ensuring the dollar's global reserve currency status, combatting illegal activity in the digital assets space, and stepping towards making the US the crypto capital of the world.
Stablecoins: A Type of Cryptocurrency Designed for Stability
Stablecoins are a type of cryptocurrency designed to be stable in value by pegging them to a real asset such as a fiat currency. They aim to keep their value close to the chosen real asset, resulting in low volatility compared to traditional cryptocurrencies.
The Passage of the Genius Act Boosts the Global Crypto Market
The passage of the Genius Act has temporarily lifted the global crypto market cap above $4 trillion, a figure higher than India's GDP. The Act's implementation is expected to bring about a new era of digital asset regulation and adoption in the US and beyond.
- The Genius Act, signed into law by President Trump in 2025, establishes clear guidelines for stablecoin issuance in the US, with a focus on stringent regulations, reserve requirements, and consumer protection measures.
- Key requirements for stablecoin issuers under the Genius Act include maintaining 100% reserve backing, compliance with the Bank Secrecy Act, regular audits, and adherence to marketing rules to prevent misleading claims.
- The Genius Act defines stablecoins as digital assets used for payment that maintain a stable value, and excludes national currencies, bank deposits, and securities from this definition. Algorithmic stablecoins are effectively prohibited.
- With the regulatory clarity provided by the Genius Act, private entities like Meta, Amazon, Visa, Walmart, and traditional payments firms such as Visa and Mastercard are predicted to participate in the stablecoin market.
- Stablecoins, a type of cryptocurrency designed for stability, aim to keep their value close to a real asset like a fiat currency, resulting in lower volatility compared to traditional cryptocurrencies.
- The passing of the Genius Act has boosted the global crypto market, temporarily lifting its cap above $4 trillion, a figure higher than India's GDP.
- The Genius Act aims to make the US a leader in digital assets, protect consumers, ensure the dollar's global reserve currency status, combat illegal activity in the digital assets space, and position the US as the crypto capital of the world.
- As stablecoins enter mainstream financial transactions, concerns about surveillance and central bank digital currencies (CBDCs) persist with the wider adoption of stablecoins, marking a significant step towards a more regulated and mainstream adoption of dollar-backed cryptocurrencies in the US.
