The GENIUS Act, signed into law by President Trump on July 18, 2025, redefines US dollar stablecoin issuance and regulation, involving the Federal Reserve and eligible financial institutions.
The law aims to stabilize the market, provoke significant institutional interest, and potentially boost the stablecoin market cap, impacting major cryptocurrencies and DeFi ecosystems.
GENIUS Act Forces Regulatory Overhaul for Stablecoins
The GENIUS Act is poised to reshape the financial landscape, unlocking institutional demand for USD stablecoins and potentially driving their market cap above $3 trillion by 2030, as noted by State Street’s research.
Stablecoin reserves are mandated to be 1:1 with cash or Treasuries, ensuring transparency through regular audits. This change may lead to shifts in DeFi liquidity and increase pressure on unregulated digital assets.
Federal Licensing Distinguishes GENIUS Act from MiCA
Unlike previous regulatory measures like MiCA, the GENIUS Act involves a federal license structure, making it a distinctive regulatory development. Prior regulations often led to fractured liquidity and market volatility.
Experts from Kanalcoin suggest that the GENIUS Act will bring about increased liquidity demands on short-term US Treasuries while posing volatility risks to the broader crypto market due to potential outflows from stablecoin reserves.
“The GENIUS Act signals a transformative inflection point in digital finance, embedding stablecoins within the US regulatory framework.” — Elliot Hentov, Head of Macro Policy Research, State Street Investment Management
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