Federal framework:
Enacted July 18, 2025, the GENIUS Act (“Guiding and Establishing National Innovation for U.S. Stablecoins Act”) is the first comprehensive U.S. law targeting payment stablecoins—tokens pegged to fiat like the U.S. dollar .
Who falls under it? Only “permitted payment stablecoin issuers” (PPSIs)—either U.S.-regulated entities or foreign issuers under equivalent oversight—can issue such coins domestically .
Reserves & transparency: PPSIs must:
Maintain 1:1 backing with U.S. dollars or low-risk assets (e.g., Treasuries)
Disclose reserve compositions publicly monthly
Undergo regular audits and follow strict custody rules .
⚖️ Legal carve-outs & protections
Not securities/commodities: Payment stablecoins are explicitly not classified as securities or commodities, removing oversight from the SEC/CFTC and placing it under agencies like the OCC, FDIC, and Federal Reserve .
Holder priority: In issuer insolvency, stablecoin holders get priority over all other creditors—providing a strong consumer safeguard .
Implementation timeline:
Law becomes active 120 days after final regulations, or 18 months post-enactment—whichever comes first
Exchanges and wallets have a 3-year transition, after which non-permitted coins become ineligible for U.S. trading .
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🌍 Global & market implications
Dollar dominance: The law supports U.S. Treasuries and fortifies the dollar's reserve role. The Treasury Secretary said the dollar is “coming on-chain” .
Stimulating adoption: Major banks and retailers are expected to launch stablecoin-based payment services soon .
Competitive dynamics: Tether (USDT), due to its opaque reserves, might be squeezed out unless it aligns with these rules—potentially boosting Circle’s USDC as a compliant alternative .
Global regulatory echoes: International bodies (e.g., the BIS) warn about stablecoin risks—like shadow monetary systems and weakening central bank authority—urging stronger oversight .
