The Genius Act establishes a clear regulatory framework for the issuance of “payment stablecoins” and establishes clear boundaries for which digital currencies could be referred to as stablecoins. With the Genius Act signed into law, banks, nonbanks and credit unions can dive into the market by issuing their own stablecoins.
, is the first major law governing digital currency and establishes a regulatory framework for the $250 billion
stablecoin market.The White House says the Genius Act prioritizes consumer protection, strengthens the US dollar’s reserve currency status, and bolsters our national security. "We worked hard. It's a very important act, the GENIUS Act. They named it after me," the president joked in the East Room of the White House. "I want to thank you. This is a hell of an act."
The Act bans Congress members and families from profiting off
stablecoins but excludes the President, raising concerns about Trump’s World Liberty Financial.
To understand what is inside the Genius Act, let's first know what is a stablecoin. A stablecoin is a cryptocurrency whose value is designed to be stable, typically by being pegged to a fiat currency like the US dollar, according to JP Morgan. On paper, they aim to offer the benefits of cryptocurrency — high-speed, low-cost and decentralized transactions — with the stability of traditional assets.
Stablecoins offer a way to save cash while reducing reliance on banking institutions. It allow individuals and corporations to transfer assets quickly and inexpensively between regions, even during non-business hours.
Stablecoins eliminate the currency risk inherent in transacting with volatile tokens like Bitcoin, enabling users to buy digitized assets with digitized dollars, says JP Morgan.
The Genius Act would enforce 1:1 reserves in high-quality liquid assets like Treasury bills and Federal Reserve deposits, mandate anti-money laundering programs, ban interest payments and require regular audits. As a result, stablecoins have newfound legitimacy.-The Genius Act is seen as a major milestone for the once fringe industry as it sets up a regulatory regime for so-called stablecoins, a kind of cryptocurrency backed by assets seen as reliable, such as the dollar.
-The Act paves the way for private firms to issue what are known as stablecoins, which are privately issued digital money.
-It lays out specific requirements for companies who issue stablecoins, like complying with anti-money laundering laws and monitoring and reporting suspicious activity, according to NBC News.
-According to Wall Street Journal, many large US banks, along with the payments platform Zelle, are in talks about issuing a joint stablecoin. Certain reports also claimed that Walmart and Amazon might also issue stablecoins.
-The Genius Act raises the prospect of a proliferation of privately issued stablecoins, which could force consumers to use different currencies at each place they shop at, instead of just the plain old dollar. This means consumers would have to create their own crypto wallets.
Lawmakers also approved two other cryptocurrency bills, capping what Republicans dubbed "Crypto Week" in Congress. The Clarity Act will regulate digital commodities beyond stablecoins, and the Anti-CBDC Surveillance State Act prevents the Federal Reserve from issuing any retail central bank digital currency directly to Americans. The legislation is seen by the Trump administration and the crypto community as a way of bringing digital currency into the mainstream financial system.
