The GENIUS Act, which stands for Guiding and Establishing National Innovation for U.S. Stablecoins, is a law that regulates stablecoins in the United States. It was signed into law by President Donald Trump on July 18, 2025. Here's what you need to know about the law¹ ²:
- *Key Provisions:*
- *Definition of Stablecoins*: The law defines stablecoins as digital assets tied to stable real-world assets like fiat currency.
- *Issuance Guidelines*: Only federally or state-approved entities can issue stablecoins, ensuring regulatory oversight.
- *Reserve Requirements*: Stablecoin issuers must back their coins with fiat currency or high-quality liquid reserves in a 1:1 ratio.
- *Consumer Protection*: The law requires public redemption policies, disclosure of financial reserves, and robust cybersecurity measures.
- *Impact on the Crypto Market:*
- *Broader Adoption*: The law could encourage wider adoption of stablecoins by institutional investors and promote mainstream financial transactions.
- *Regulatory Clarity*: The GENIUS Act provides a comprehensive framework for stablecoin regulation, aligning with global standards.
- *Criticism and Concerns:*
- Some critics argue that the law sets a precedent for future crypto bailouts by allowing stablecoin holders priority status in bankruptcy proceedings.
The GENIUS Act aims to balance innovation with regulatory oversight, potentially paving the way for stablecoins to play a larger role in the financial system.³