U.S. President Donald Trump has signed the GENIUS Act into law, establishing a regulatory framework for dollar-pegged cryptocurrencies known as stablecoins. This landmark move could pave the way for these digital assets to become a mainstream method for making payments and transferring money.
The bill passed in the House of Representatives with a vote of 308 to 122, gaining bipartisan support from nearly half the Democratic members and most Republicans. It was previously approved by the Senate.
Treasury Secretary Scott Bessent stated that the new technology would reinforce the U.S. dollar’s status as the global reserve currency, expand access to the dollar economy, and boost demand for U.S. Treasuries, which back stablecoins.
What Are Stablecoins?
Stablecoins are cryptocurrencies designed to maintain a constant value, usually pegged 1:1 to the U.S. dollar. Their use has surged, especially among crypto traders moving funds between tokens. The industry anticipates that stablecoins will enter mainstream use for instant payments and fund transfers.
The new law requires stablecoins to be backed by liquid assets—such as U.S. dollars and short-term Treasury bills—and mandates that issuers publicly disclose the composition of their reserves monthly.
A Win for Crypto Advocates
The legislation is a significant victory for crypto supporters who have long advocated for regulatory clarity to legitimize the industry that began in 2009. Crypto companies and executives argue that such legislation will enhance stablecoins’ credibility, making banks, retailers, and consumers more willing to use them.
According to crypto data provider CoinGecko, the stablecoin market is valued at over $260 billion. Standard Chartered Bank estimated earlier this year that the market could grow to $2 trillion by 2028 under the new law.
The passage of the law culminates a prolonged lobbying effort by the industry, which donated more than $245 million in last year’s elections to support pro-crypto candidates, according to Federal Election Commission data.
Global Skepticism and Potential Risks
Despite the domestic support, the act has been met with skepticism internationally. Italy’s Economy Minister Giancarlo Giorgetti warned in April that stablecoins could pose a threat to Europe’s financial stability.
“Even more dangerous is the new U.S. policy on cryptocurrencies,” Giorgetti said. “In particular, the policy on dollar-denominated stablecoins.”
Warwick Powell, adjunct professor at Queensland University of Technology and senior fellow at the Taihe Institute, wrote on CGTN that the act could lead to greater financial risk both in the U.S. and globally. He explained that the GENIUS Act enables private institutions to mint dollar-pegged stablecoins using U.S. Treasury bonds as collateral. While this creates a faster financial network, it could also make the system more opaque and fragile. If a major stablecoin issuer fails, they might be forced to sell off U.S. Treasuries to meet redemptions, potentially causing disruptions in global bond markets.
Calls for Tighter Regulations
Domestically, critics argue that the law should have prevented big tech companies from issuing their own stablecoins, which could increase the influence of an already powerful sector. They also express concerns over anti-money laundering protections and the involvement of foreign stablecoin issuers.
“By failing to close known loopholes and protect America’s digital dollar infrastructure, Congress has risked making the U.S. financial system a global haven for criminals and adversarial regimes to exploit,” said Scott Greytak, deputy executive director of Transparency International U.S.
Growing Demand for Crypto Integration
As regulatory support for digital assets strengthens, major U.S. banks are contemplating expanding into cryptocurrencies. According to a May report by Reuters, initial steps may include pilot programs, partnerships, or limited crypto trading.
Several crypto firms, including Circle and Ripple, are seeking banking licenses to reduce costs by bypassing intermediary banks. Supporters of the bill believe it could generate new demand for short-term U.S. government debt, as stablecoin issuers will need to purchase more of the debt to back their assets.
President Trump’s administration has been proactive in revamping U.S. cryptocurrency policies, aiming to position the United States as a leader in the digital economy.
