The newly approved GENIUS Act creates a federal regulatory structure for dollar-pegged stablecoins in the United States but contains provisions allowing foreign issuers to operate domestically under comparable standards. This regulatory loophole raises concerns about competitive imbalances between domestic and international stablecoin providers.
US-based stablecoins including USDC now face potential new competition from major American banks and retail corporations empowered by the legislation to issue their own stablecoins. The Act mandates that all US-issued stablecoins maintain full backing by US dollars or equivalent assets, a requirement expected to drive increased demand for US Treasury instruments.
Foreign-issued stablecoins may be sold domestically provided they satisfy regulator-determined ‘comparable’ standards, introducing uncertainty into market dynamics. Additionally, the legislation explicitly bans yield payments on stablecoin holdings.
Industry analysts project this yield prohibition may accelerate capital migration toward Ethereum-based decentralized finance protocols as investors seek passive income alternatives. The Act’s dual emphasis on regulatory clarity and institutional participation signals a pivotal shift toward mainstream stablecoin adoption.