The recently enacted GENIUS Act has established a comprehensive regulatory framework specifically for stablecoins, providing unprecedented legal certainty for fiat-backed variants like USDC and USDT that dominate the market.
Fiat-backed stablecoins account for approximately 85% of the sector, maintaining a 1:1 peg to traditional currencies through reserves of liquid assets. This contrasts with riskier cryptocurrency-collateralized models requiring overcollateralization and algorithmic variants, whose vulnerabilities were exposed by high-profile failures including Terra.
Major financial institutions such as Bank of America, JPMorgan and Citigroup are now advancing stablecoin initiatives within the clarified compliance parameters. The legislation has triggered measurable expansion of the stablecoin market capitalization through reduced regulatory uncertainty and significant capital inflows.
By defining clear operational standards, the GENIUS Act fosters competitive innovation while accelerating institutional integration of stablecoin technologies into mainstream financial infrastructures.