Author: Weilin, PANews
On July 19, U.S. President Trump officially signed the Genius Stablecoin Regulatory Act, establishing the first federal-level stablecoin regulatory framework in the U.S., also marking the first cryptocurrency-related law to become legislation in the U.S.
According to (Fortune), the previously controversial amendment related to the Trump family's cryptocurrency project did not pass, and the relevant provisions were not included in the final version of the bill.
At the same time, some cryptocurrency lawyers analyzed that the (GENIUS Act) provides incentives for stablecoin issuers to seek bank licenses. The act has brought unprecedented new signals to the U.S. cryptocurrency industry and sparked widespread discussion about future stablecoin issuers and market competition.
The Genius Act was officially signed into law, with multiple cryptocurrency company founders present.
In the cryptocurrency industry, the regulation of stablecoins has been an unresolved issue. The (GENIUS Act), as the first federal regulatory framework for stablecoins in U.S. history, provides clearer regulatory direction for the U.S. market and fulfills Trump's campaign promise regarding cryptocurrencies to attract voters.
Local time on July 18, U.S. President Trump stated at the bill signing ceremony: "This afternoon, we took a decisive step to consolidate America's dominance in the global financial and cryptocurrency sectors, and we will sign the landmark (GENIUS Act) into law."
Trump added: "Since the Biden administration, they (members of the Biden administration) have come a long way; back then, they didn’t even know what you were talking about, and half of them were arrested for no reason." Trump also stated that this signing is a 'huge recognition' of the cryptocurrency industry.
Trump also acknowledged the cryptocurrency industry executives present, including Tether CEO Paolo Ardoino and Coinbase CEO Brian Armstrong. Many other top executives and founders from the cryptocurrency industry also attended the signing ceremony, including Circle founder Jeremy Allaire, Anchorage Digital CEO Nathan McCauley, Coinbase Chief Legal Officer Paul Grewal, and Coinbase Chief Policy Officer Faryar Shirzad.
In a promotional video released by the White House, David Sacks, White House AI and cryptocurrency director, stated, "The bill will update outdated payment infrastructure with a revolutionary new payment system and will expand the dollar's dominance globally."
The Genius Act establishes a federal regulatory framework for stablecoins, requiring stablecoins to be fully backed by dollars or similar liquid assets, stipulating that issuers with a market capitalization exceeding $50 billion must undergo annual audits, and setting guidelines for foreign entities issuing stablecoins.
On local time Thursday, the (GENIUS Act) passed the U.S. House of Representatives with 308 votes in favor and 122 votes against. The bill has passed the Senate and will be sent to Trump for signing after passing the House. The process of passing the (GENIUS Act), along with the advancement of the Clarity Act concerning the structure of the cryptocurrency market and the anti-central bank digital currency (CBDC) bill, faced some obstacles as some conservative Republican lawmakers voted against during two procedural votes.
The Genius Act will take effect 18 months after Trump's signing, or 120 days after the 'primary federal payment stablecoin regulatory agency' (including the Treasury and the Federal Reserve) issues final regulations implementing the act.
The dual licensing structure allows for interstate regulation, failing to successfully avoid conflicts of interest involving the Trump family.
Before the bill was signed, cryptocurrency advocates expressed support on the X platform. Jeremy Allaire posted on X: "Heading to the White House to attend the historic signing ceremony of the (GENIUS Act), one of the most transformative pieces of legislation in decades. Welcome to the global financial system, internet!"
Nic Puckrin, founder of Coin Bureau, stated that the (GENIUS Act) could drive stablecoins into the mainstream by enhancing trust in the currency and encouraging more competition in the market.
'Currently, the stablecoin market is effectively a duopoly, almost completely dominated by Circle's USDC and Tether's USDT,' Puckrin said. Given that the bill will provide banks and other entities with a clear pathway to issue stablecoins, 'we are likely to see a flood of stablecoins entering the market,' he said.
Large banks are preparing to issue their own stablecoins. Although they may not all succeed, Puckrin stated that they will provide consumers with more options to help them find the stablecoin and issuer that best meets their needs.
However, critics of the (GENIUS Act) argue that it compromises the decentralization of cryptocurrencies and could lead to corruption, such as officials favoring certain specific stablecoins under the new regulations.
'We need to ensure that government officials do not openly request people to buy their coins to increase personal or family profits,' said Senator Jeff Merkley of Oregon, who opposed the bill, during the Senate debate. 'Where are those safeguards in this bill? Absolutely none.'
Some critics also argue that the bill grants too many entities the ability to issue new stablecoins, which could complicate the enforcement of regulatory standards.
It is worth mentioning that the amendment to avoid conflicts of interest involving Trump did not pass. Before the (GENIUS Act) was passed on local time Thursday, some Democrats raised concerns about World Liberty Financial USD1 operated by the Trump family. Democratic House Financial Services Committee member Maxine Waters raised potential conflict of interest issues on Thursday and conveyed additional concerns regarding foreign issuers.
Moreover, Todd Phillips, a professor of banking and administrative law at Georgia State University, pointed out that the new bill will authorize the Office of the Comptroller of the Currency (OCC) to regulate stablecoin issuers nationwide, but the Trump administration has increasingly sought to weaken the independence of regulatory agencies, including firing agency heads. 'The president has an indirect financial relationship with stablecoin issuers, which is a very big issue,' Phillips said. 'This stablecoin issuer might apply for a license from the OCC, and if the OCC does not approve it, the president can fire the currency supervisor.'
He also expressed concerns about the structure of the new bill, which creates a dual licensing structure for some stablecoin issuers, allowing them to seek federal or state regulation. He stated that this could lead to different jurisdictions competing with 'low standards' to attract cryptocurrency companies.
Bank licenses will be sought after by stablecoin issuers, while DeFi platforms face uncertainty.
According to Cointelegraph, Logan Payne, a cryptocurrency lawyer at Winston & Strawn, stated that the (GENIUS Act) provides incentives for stablecoin issuers to seek bank licenses. He said that stablecoin licenses established under the (GENIUS Act) will limit the company's activities to 'purely stablecoin issuance,' but most stablecoin issuers do not just do this.
'Currently, almost every issuer of stablecoins under U.S. law is engaged in activities beyond the scope of that license,' Payne said. Even if issuers obtain the license approved by the (GENIUS Act), Payne stated that they still need to obtain state-level money transmission licenses to operate nationwide.
This provides incentives for stablecoin issuers to apply for national trust bank licenses, as Circle and Ripple are doing, "which allows them to engage in stablecoin issuance as well as broader activities without needing licenses between states," he said.
Bridget Harris, an investment manager at Founders Fund, holds a similar view. Bridget wrote on the X platform, 'Everyone is competing to become a bank: many entities in the U.S. will become stablecoin issuers (banks, payment service providers, fintech companies, retailers, etc.). The (GENIUS Act) establishes bank-like regulations for stablecoin issuers (but prohibits lending, etc.). Since they are regulated like banks, why not just become banks, allowing them to do more things? Everyone is vying for bank licenses (Circle, Coinbase, Paxos, etc.) and access to the federal clearing system (Fedwire), master accounts, etc. There is no longer a need for intermediary banks; stablecoin issuers can interact directly with the Federal Reserve.'
She stated that the issuer's application to establish a bank could bring the following benefits: the ability to pay interest on stablecoin deposit accounts/tokenized deposits (since the (GENIUS Act) prohibits stablecoin issuers from sharing profits, they also need to become banks to do so); direct settlement with the Federal Reserve in 'real dollars'; broader capabilities including lending.
For some cryptocurrency users, a controversial part of the bill is that it prohibits stablecoin issuers (whether foreign issuers or issuers regulated under U.S. law) from providing interest or returns to holders and users.
Yield offerings are one of the marketing strategies used by stablecoins to attract users. Some stablecoins provide returns natively to holders, while others, such as Circle's USDC, reward users who hold stablecoins on exchanges like Coinbase and Kraken. Lawyer Payne mentioned, 'In the coming years, there will be more legislation and regulation to fill some gaps to address the challenges of DeFi.' One of these is the (CLARITY Act), a bill that categorizes digital assets and specifies relevant regulatory agencies, has been passed by the House and sent to the Senate on local time Thursday.
Payne also analyzed the exemptions for foreign stablecoin issuers. Within three years of the bill's signing, any stablecoin without approval from an approved issuer will be prohibited from being offered in the U.S. Additionally, foreign-issued stablecoins will also be prohibited unless the issuer is able and willing to comply with the legal requirements of the bill.
The bill provides some exemptions for foreign stablecoin issuers, including if the Treasury determines that their home country has a comparable regulatory framework. If this is the case, foreign issuers can provide services to the U.S. market by registering with the Office of the Comptroller of the Currency (OCC) and obtaining approval within 30 days, provided they hold sufficient reserves at U.S. financial institutions to cover their U.S. customers.
Overall, the signing of the (GENIUS Act) marks a new historical phase for U.S. stablecoin regulation. Although the bill has sparked controversy in certain aspects, especially regarding potential conflicts of interest involving the Trump family, it may also provide arbitrage opportunities for future stablecoin issuers. As the regulatory landscape evolves, PANews will continue to monitor subsequent developments.
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(PANews released the 2025 Global Stablecoin Industry Development Report: Dollar stablecoins account for 99% of the market, and USDC is expected to surpass USDT by 2030)
