What does the US GENIUS Act mean for stablecoins?

Key Points

1. The GENIUS Act, signed into law on July 18, 2025, defines what a 'payment stablecoin' is and sets rules for who can issue them in the US.

2. Before the GENIUS Act, stablecoins existed in a legal gray zone, despite their rapid growth and widespread use, with circulating supply surpassing $230 billion in mid-2025.

3. The law aims to mitigate systemic financial risks and competition from foreign-issued stablecoins by introducing a national regulatory framework.

4. Key features include clear guidelines for stablecoin issuance, backing, and consumer protections, while prohibiting certain activities.

5. Market reactions were mixed initially, with some stablecoins experiencing volatility, but major crypto firms like Coinbase welcomed the regulatory clarity.

6. The GENIUS Act also signals a preference for private stablecoins over a state-run central bank digital currency (CBDC).

7. The law is expected to intensify competition among stablecoin issuers and lead to industry consolidation, favoring compliant projects over those built on opacity.

8. Everyday users gain greater assurance of stablecoin safety, with requirements for 1:1 backing by real assets, though yield-bearing stablecoins face new restrictions.