The recently enacted GENIUS Act is set to revolutionize the stablecoin market in the United States, paving the way for a surge in "killer apps" and innovative payment services, according to Sygnum. Sygnum's Chief Investment Officer, Fabian Dori, believes the Act will steer stablecoin issuers away from yield-based models, pushing them towards payment-focused use cases.
Signed into law on July 18, 2025, the Guiding and Establishing National Innovation for U.S. Stablecoins Act (GENIUS Act) establishes a clear regulatory framework for payment stablecoins, which are digital assets designed to maintain a stable value relative to a national currency like the U.S. dollar. These stablecoins are backed by low-risk reserves such as cash or U.S. Treasuries and are intended to serve as a convenient and cost-effective payment method. The Act aims to strengthen consumer protection, encourage responsible innovation, and reinforce the U.S. dollar's position as the world's reserve currency.
Dori notes that the GENIUS Act brings the U.S. framework closer to the EU's Markets in Crypto-Assets (MiCA) regulation, fostering global consensus in the crypto space. He emphasizes that the Act's true impact extends beyond regulation, instilling confidence in organizations and issuers to develop groundbreaking "killer apps" that cater to existing customer needs and generate demand for entirely new services, including payments.
This confidence is already manifesting in growing demand, with major players like Mastercard and PayPal establishing the groundwork for compliant stablecoin use. Furthermore, companies like Amazon and Walmart are exploring stablecoin applications in payroll and cross-border settlements.
The GENIUS Act restricts interest-bearing stablecoins, leading issuers to focus on features like real-time settlement, low transaction costs, and programmable capabilities that seamlessly integrate into payment and trading systems. OKX's Chief Innovation Officer, Jason Lau, asserts that "utility beats yield now," suggesting that issuers will continue to pursue innovative models to drive adoption and new use cases in an increasingly competitive environment.
The Act defines a "payment stablecoin" as a digital asset designed for use as a means of payment or settlement, where the issuer is obligated to convert, redeem, or repurchase it for a fixed monetary value. Issuers must maintain at least one dollar of permitted reserves for every stablecoin issued. These reserves can include insured deposits, short-term U.S. Treasuries, reverse repo agreements, and government money market funds.
The GENIUS Act also establishes a two-tiered regulatory framework involving federal and state regulators for stablecoin issuance. For instance, nonbank issuers with less than $10 billion in outstanding issuance can opt for a state regulatory regime, while those exceeding this threshold would fall under federal oversight. The Act prohibits the issuance of payment stablecoins in the U.S. except by approved U.S.-based "permitted payment stablecoin issuers" regulated under the Act or registered foreign issuers operating under comparable regulatory regimes.
Within three years, unauthorized stablecoins generally cannot be offered or sold in the United States by digital asset service providers. This restriction ensures that the U.S. stablecoin market comprises issuers operating under U.S. state and federal supervision, contributing to the U.S. economy. The Act is expected to take effect in the first quarter of 2027.
The GENIUS Act represents a significant step forward in establishing a clear and comprehensive regulatory framework for stablecoins in the United States. By prioritizing payment-focused use cases and fostering innovation, the Act has the potential to unlock a new wave of "killer apps" and transform the way we conduct payments in the digital age.
