Today (local time, June 17), the United States made an important breakthrough - the U.S. Senate passed the GENIUS Act. The bill will establish a clear federal regulatory framework for U.S. dollar-backed cryptocurrencies (i.e., "stablecoins"). Next, the bill will be submitted to the House of Representatives and President Trump for approval, and if successfully passed, will officially take effect.
Key Provisions of the GENIUS Act
The core content of the bill is to establish a federal framework for U.S. dollar-backed stablecoin issuance, with key provisions including:
● 1:1 Asset Backing: Each stablecoin must be fully supported by high-quality, liquid reserve assets, such as: U.S. dollar cash, insured bank deposits, short-term U.S. Treasury bonds, or other safe assets. Issuers need to hold at least one dollar of compliant reserves for each stablecoin. For issuers with circulation exceeding $50 billion, monthly reserve disclosure and audit are required.
● Tiered Regulation Based on Issuer Size: The GENIUS Act adopts a tiered regulatory approach based on issuer scale. For large issuers issuing over $10 billion in stablecoins, federal regulation will be implemented; small issuers can choose to be regulated by state-level regulatory agencies.
● Prohibition of Algorithmic Stablecoins: The bill explicitly prohibits so-called "algorithmic stablecoins" - tokens that rely on programs or internal crypto assets to maintain value, rather than physical collateral.
● No Yield Allowed: Payment stablecoins cannot pay interest, dividends, or any form of returns to holders. Providing yields may blur the line between stablecoins and savings financial products, raising concerns about regulation and financial stability.
● Not Securities or Commodities: The bill amends existing securities laws to clarify that compliant payment stablecoins do not fall under the categories of securities or commodities. This provision resolves the uncertainty in regulatory classification of stablecoins. Stablecoin issuers will be regulated by the OCC, Federal Reserve, FDIC, NCUA, and state regulators.
● Bankruptcy Protection: In bankruptcy events, stablecoin holders' claims will have priority over other creditors.
Why is This Important?
Stablecoins are no longer merely crypto-native assets but have become increasingly critical infrastructure in global financial activities. Currently, the total market value of stablecoins exceeds $250 billion, primarily dominated by Tether and Circle. Circle recently listed on the New York Stock Exchange with a market value of $37 billion, with its stock price rising over 400% since listing, indicating high market expectations for stablecoin mainstreaming and highlighting the positive impact of clear regulation on issuers like Circle.
Stablecoins are deeply embedded in the global payment ecosystem. Annual transaction volume exceeds $30 trillion, with 261 million active addresses.
Data Source: rwa.xyz, DeFi Llama, Visa On-Chain Analytics
A recent Coinbase survey shows that 81% of SMBs familiar with cryptocurrencies are interested in using stablecoins. The number of Fortune 500 companies planning to adopt or explore stablecoins has grown more than threefold compared to 2024.
In emerging markets, stablecoin adoption is accelerating. In regions with volatile currencies, stablecoins provide an alternative. According to the Chainalysis 2024 Stablecoin Report, Latin America and Sub-Saharan Africa lead globally in retail and professional-level stablecoin transfers, with annual growth rates over 40%; East Asia and Eastern Europe follow, growing 32% and 29% respectively.
Source: Chainalysis
The EU (through MiCA), Singapore (Payment Services Act), and Hong Kong (Stablecoin Act) have all made clear progress in stablecoin regulation. The U.S. was previously constrained by political disagreements and had not issued clear policies.
However, the Senate's passage of the GENIUS Act may break this deadlock.
Impact on Investors, Startups, and Industry Ecosystem
Regulated Stablecoins: U.S. stablecoin issuers like Circle and Paxos will benefit from regulatory legitimacy, opening doors for institutional funds to compliantly enter on-chain payment domains. The bill's requirement for stablecoins to be backed by cash or U.S. bonds will also consolidate the position of these mainstream compliant issuers, while unregulated issuers providing illegal coin support or promising yields may exit the U.S. market. However, the "no yield" requirement may also force Circle to adjust its marketing strategy. Currently, Circle shares revenue with Coinbase as an important distribution channel for USDC.
Offshore Stablecoins: The era of offshore stablecoin regulatory arbitrage is coming to an end. The GENIUS Act imposes heavy penalties on unregulated offshore issuers. As the largest stablecoin by market value, Tether (USDT) may face significant challenges if it does not register with the U.S. OCC, similar to its situation in Europe. However, USDT's moat remains solid and difficult to replace in the short term. Tether may also re-enter the U.S. market by issuing a new compliant U.S. dollar stablecoin.
FinTech Companies: This bill also marks a shift in U.S. crypto legislation from "enforcement-only" to structured policy-making. Stablecoins are becoming a legitimate financial carrier, which will not only drive retail user adoption but also attract more capital. Take Stripe, for example, which is accelerating its stablecoin domain layout through mergers and acquisitions: in February, it acquired the payment infrastructure platform Bridge for $1.1 billion, and recently acquired wallet service provider Privy. While tech giants like Meta are not prohibited from issuing stablecoins, they will face strict compliance requirements and special scrutiny, and this uncertainty may actually benefit startup development space.
? What's Next?
House Review and Potential Amendments: Although the Senate's passage is crucial, it is only one step in its legislative process. The focus now shifts to the U.S. House of Representatives. Currently, stablecoins have strong momentum, but we should pay attention to potential amendments the House might propose. Any changes could impact the future stablecoin landscape.
Regulatory Details and Implementation: While the GENIUS Act establishes an overall framework for stablecoin issuance, specific rules for capital adequacy, liquidity, and risk management still need to be further developed by regulatory agencies. We need to observe how agencies like the Federal Reserve, OCC, FDIC, and FinCEN will translate this framework into specific rules. The actions of individual states under this regulation are also worth watching.
● https://x.com/Bitcoin_Laws/status/1935025938527559718
● https://www.bitpush.news/articles/7498336
● https://www.coinbase.com/en-sg/blog/the-state-of-crypto-the-future-of-money-is-here
● https://www.everycrsreport.com/reports/IN12522.html
● https://bitcoinmagazine.com/news/u-s-senate-passes-stablecoin-bill-the-genius-act
