WASHINGTON, July 19 (Xinhua) -- U.S. President Donald Trump on Friday signed the Guiding and Establishing National Innovation for U.S. Stablecoins Act, or GENIUS Act, into law, marking the country's first major federal law governing cryptocurrencies.

Passed by a bipartisan majority in Congress, the legislation gave an immediate boost to market sentiment: the total value of cryptoassets surged past 4 trillion U.S. dollars, according to CoinGecko, a cryptocurrency data aggregator website.

"This could be perhaps the greatest revolution in financial technology since the birth of the Internet itself," said Trump.

WHAT ARE STABLECOINS?

Unlike volatile cryptocurrencies like Bitcoin, stablecoins are designed to hold a steady value by being pegged one-to-one to a stable asset, usually to the U.S. dollar. For every stablecoin in circulation, the issuing company is expected to hold equivalent reserves, such as cash or short-term Treasury bonds.

In a Brookings Institution report, stablecoins currently in circulation have a collective market capitalization of over 250 billion dollars with approximately 99 percent pegged to the U.S. dollar.

Among major stablecoin issuers are Tether (USDT) with a market cap of nearly 161 billion dollars, and Circle (USDC) with about 65 billion dollars, according to data from CoinMarketCap.

"At the end of the day, it's about being able to send dollars outside of banking hours and to send dollars the way you and I might interact with WhatsApp or messaging platforms," Circle's chief strategy officer Dante Disparte told CBS in a recent interview.

With the GENIUS Act passed, banks, nonbanks and credit unions could dive into the market by issuing their own stablecoins, local media reported.

Citigroup CEO Jane Fraser said on the company's earnings call Tuesday that the bank is considering issuing its own form of the cryptocurrency.

PROS AND CONS

Stablecoins emerged in 2014 and have since ballooned in popularity particularly for their potential use in digital payments, said Darrell Duffie, a professor of finance at Stanford University.

The total market value of stablecoins soared from 20 billion dollars in 2020 to 246 billion dollars in May 2025, according to analysts at Deutsche Bank.

U.S. Senator Bill Hagerty said stablecoins could allow businesses and consumers to settle payments "nearly instantaneously," as opposed to the current system, which can take weeks.

In some developing countries, where dollars aren't easily accessible, firms with international partners are turning to stablecoins to speed up transfers that would otherwise take days or weeks through traditional banks.

However, stablecoins come with mounting concerns. Among the biggest are the depegging risks. If reserve assets lose value or liquidity, stablecoins may break their peg. This can trigger trading losses or systemic market risks to insolvency and liquidity, as seen during the 2023 banking crisis, said a report from S&P Global Ratings.

Another risk is lack of transparency. John Reed Stark, a former top financial regulator who served as chief of the SEC Office of Internet Enforcement, said, "In most instances, we have no visibility to any stablecoins, no public audits, no examinations, no inspections -- who knows what is really going on?"

A further concern revolves around the potential use of stablecoins by illicit actors, such as drug dealers and scammers. Zhao Yao, a researcher at Renmin University of China, said that the anonymity and decentralized nature of stablecoins could facilitate money laundering and other illegal transactions.

IMPLICATIONS FOR U.S. AND GLOBAL FINANCE

The GENIUS Act aligns with Trump's pledge to make the United States "the crypto capital of the world."

Christian Catalini, founder of the MIT Cryptoeconomics Lab, said this move could usher in mainstream adoption of stablecoins for digital payments and spur growth in the stablecoin industry.

Lawmakers also passed two other crypto bills, rounding out what Republicans called "Crypto Week." 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 Trump administration and crypto advocates see the moves as a step toward mainstream adoption, local media reported.

Eneko Knorr, CEO of Stabolut, said that stablecoins "strengthen dollar dominance" by boosting demand for dollars and U.S. Treasuries in global trade -- though others like Dean Baker, co-director at the Center for Economic and Policy Research, argued that the benefits are "trivial" compared to central bank digital currencies, which offer similar advantages without the risks of private issuers.

However, one point of controversy in this legislation is whether and how to restrict the ability of the president and other federal politicians from issuing stablecoins of their own, wrote a Brookings Institution commentary.

The Trump family has direct ties to crypto ventures, including a meme coin called $TRUMP, and a business called World Liberty Financial, which has launched a stablecoin called USD1 -- though the White House has said that there are no conflicts of interest present for Trump and that his assets are in a trust managed by his children.

Hillary Allen, a law professor at American University, said in an interview with CNN that the crypto industry poured money into Trump's reelection campaign and congressional races. "This is the return on investment for the campaign spending by the crypto industry," Allen said.

Critics also worry about unintended macroeconomic consequences. The Economist warned if consumers move funds from bank deposits into stablecoins, banks could lose key funding sources, limiting their ability to lend.

It also pointed out an irony in U.S. Treasury Secretary Scott Bessent's ambition to popularize stablecoins globally: Efforts to expand stablecoin use abroad could backfire economically at home -- strengthening the dollar but undermining U.S. exports and trade goals. ■