In a move hailed as a landmark achievement for the cryptocurrency industry, President Donald Trump signed the Guiding and Establishing National Innovation for U.S. Stablecoins (GENIUS) Act into law on Friday. The signing ceremony, held at the White House, was attended by prominent figures in the crypto world, marking a significant moment of recognition for an industry that has long sought legitimacy and regulatory clarity.
The GENIUS Act establishes a regulatory framework for stablecoins, a type of cryptocurrency designed to maintain a stable value by being pegged to assets like the U.S. dollar. This move is intended to bring much-needed consumer protection and stability to the rapidly growing digital asset market. The bill, which passed both the House and Senate with bipartisan support, is viewed as a crucial step towards mainstream adoption of cryptocurrencies.
During the signing ceremony, President Trump acknowledged the contributions of several crypto leaders, including Kraken co-CEO David Ripley, Gemini co-founders Cameron and Tyler Winklevoss, Coinbase CEO Brian Armstrong, Circle CEO Jeremy Allaire, Tether CEO Paolo Ardoino, and Robinhood CEO Vladimir Tenev. He emphasized that the signing was a "massive validation" of the crypto community's hard work and pioneering spirit, noting how far the industry has come in a short period. Trump also stated his support for the cryptocurrency industry was “good for the dollar and it's good for the country".
The GENIUS Act outlines several requirements for stablecoin issuers. These include compliance with U.S. anti-money laundering and sanctions laws, as well as the maintenance of reserves to back the cryptocurrency. These reserves must be equivalent to every dollar of stablecoins offered and include insured bank deposits, short-term Treasury bills, and central bank reserves. Issuers will also be required to publish the composition of their reserves monthly and have them examined by a registered public accounting firm.
The new law aims to foster innovation while mitigating risks associated with stablecoins. By setting clear rules of the road, the GENIUS Act seeks to provide market participants with the confidence needed to adopt emerging technologies. The Act allows multiple types of regulated entities, such as banks, credit unions, and nonbanks, to issue stablecoins, creating a dual federal and state legal framework to oversee them. Entities can choose to be regulated at the state level if they don't have over $10 billion in issued stablecoins.
While the GENIUS Act is widely seen as a positive step, some concerns remain. One contentious aspect of the bill is the prohibition of stablecoin issuers from offering interest or yield to holders and users. This could potentially impact the attractiveness of stablecoins as an investment option. Additionally, three years after the bill is signed, it will outlaw any stablecoins that don't come from an approved issuer from being offered in the US.
The GENIUS Act only regulates "payment stablecoins” and does not regulate stablecoins that are not “payment” stablecoins (for example, stablecoins that are pegged to a value other than fiat currency, such as stablecoins pegged to the value of other digital assets—what is known as “endogenously collateralized payment stablecoins”).
Despite these concerns, the passage of the GENIUS Act represents a significant milestone for the cryptocurrency industry. It provides a foundation for future growth and innovation while prioritizing consumer protection and regulatory clarity. As the U.S. aims to become a leader in the crypto space, this new law could pave the way for further advancements and wider acceptance of digital currencies.
