The U.S. signed the GENIUS Act into law on July 18, 2025, establishing comprehensive federal regulation for stablecoin issuance and requiring 1:1 reserves.
This landmark legislation aims to boost institutional adoption, reshape the stablecoin market, and potentially increase cross-border transaction volumes, with anticipated impacts on liquidity and financial institutions.
The GENIUS Act, signed into law on July 18, 2025, provides the first comprehensive framework for stablecoin issuance in the United States. It mandates 1:1 reserves and requires issuers to be banks or qualified nonbanks.
The Act subjects stablecoin issuers to the Bank Secrecy Act, ensuring the establishment of effective anti-money laundering programs, in line with the White House official statement.
GENIUS Act Sets New 1:1 Reserve Mandate
Introduced by a bipartisan group of Senators including Bill Hagerty and signed by President Trump, the Act subjects issuers to the Bank Secrecy Act. The U.S. Treasury and Federal Reserve are key implementers.
Liquidity Challenges for Stablecoin Issuers Under New Rules
Stablecoin issuers must adhere to new regulatory standards impacting their liquidity. Major institutions may see increased market share as a result of these changes. Requiring reserves in cash or low-risk assets could drive institutional flows into U.S. Treasuries. Historical trends suggest possible market consolidation towards federally insured entities and licensed fintechs.
U.S. Regulations Inspired by EU and Hong Kong Precedents
The GENIUS Act resembles earlier regulations in the EU and Hong Kong, focusing on reserve backing and anti-money laundering. Prior cases showed market fragmentation but led to medium-term growth. Kanalcoin experts predict increased tethered asset adoption as institutions align with new standards, potentially raising cross-border stablecoin volumes to $4T annually, according to surveys.
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