What is the GENIUS Act?
The GENIUS Act is a bipartisan U.S. law aimed at creating the first federal regulatory framework for stablecoins. It was passed by the U.S. Senate on June 17, 2025, with a 68-30 vote and is now awaiting revisions in the House of Representatives.
Key Points of the GENIUS Act:Stablecoin Regulation:
Stablecoins are cryptocurrencies designed to maintain a stable value, typically pegged to the U.S. dollar, to reduce price volatility.
The law requires stablecoin issuers to:
Hold reserve assets backing the stablecoin to ensure consumers can withdraw funds.Prioritize stablecoin holders for payments in case of bankruptcy.Comply with anti-money laundering (AML) rules and anti-terrorism sanctions.
Goals and Benefits:
Supporters, like Senator Bill Hagerty, say it accelerates cheaper and faster payments and strengthens the U.S. dollar’s role in the digital economy.Allows banks and non-bank entities to issue stablecoins, provided they meet regulatory standards, fostering innovation and competition in the payment sector.Helps make stablecoins a mainstream payment tool by increasing consumer trust.
Criticism and Concerns:
Some senators, like Elizabeth Warren, criticize the law for not addressing potential conflicts of interest, particularly related to President Donald Trump’s involvement in crypto projects like World Liberty Financial and the USD1 stablecoin.Other concerns include security risks like digital wallet hacks, lack of FDIC-equivalent protection (deposit insurance up to $250,000), and potential use of stablecoins for illegal activities like money laundering.Critics also argue the regulation may be too weak, potentially opening the door to public bailouts if stablecoin issuers fail.
Impact on the Crypto Market:
With a stablecoin market value of about $250 billion, the law is considered the crypto industry’s first major legislative victory, which spent around $250 million on lobbying during the 2024 election cycle.Expected to boost the legitimacy and adoption of stablecoins in mainstream finance, potentially benefiting other cryptocurrencies like Bitcoin and Ether.However, there are concerns about dominance by large issuers (e.g., if tech giants like Google or Amazon issue stablecoins), which could create monopolies or oligopolies.
Advantages:
The regulation can increase trust in stablecoins, facilitate their use for everyday transactions, and drive adoption in emerging markets like Latin America and Sub-Saharan Africa.
Risks:
Users still face risks such as losing private keys, digital wallet hacks, or issuer bankruptcy. There is no guarantee of protection equivalent to traditional bank deposit insurance.