In June 2025, the U.S. Senate passed a comprehensive bill called the GENIUS Act. Against the backdrop of rapidly growing demand for transparency in stablecoins, this event can be considered a turning point in the history of cryptocurrency regulation in the United States.

Stablecoins are digital assets whose value is pegged to stable fiat currencies, most often the US dollar. Due to their low volatility, stablecoins play a key role in cryptocurrency trading, international transfers, decentralized finance, and the integration of blockchain technology into the traditional financial systеm.

This article aims to clarify what the new stablecoin law entails, who initiated it, and its key provisions. We will examine how the GENIUS Act will alter the landscape and why it could set a precedent for other jurisdictions.

What is the GENIUS Act?

The GENIUS Act (Guiding and Establishing National Innovation for U.S. Stablecoins Act), officially passed by the Senate on June 17, 2025, by a majority vote (68 in favor, 30 against, is the first federal stablecoin law in U.S. history. The bill resulted from heated discussions in Congress and aims to establish a clear regulatory framework for the issuance and circulation of dollar-pegged stablecoins under U.S. cryptocurrency legislation.

Work on the document began in early 2025 and was formalized after its introduction in the Senate on May 1. The initiative was authored by a group of senators from both parties:

• Bill Hagerty (Republican of Tennessee), a former ambassador to Japan and a well-known proponent of economic growth through technological development. Hagerty actively lobbies for the interests of the crypto industry as a driver of national competitiveness.
• Tim Scott (Republican of South Carolina), the head of the Senate Banking Committee, advocates for the predictable regulation of stablecoins and the protection of American investors from unstable assets.
• Kirsten Gillibrand (Democrat of New York) is one of the few Democrats who openly supports cryptocurrency projects and blockchain solutions in the financial sector.
• Cynthia Lummis (Republican of Wyoming) is one of the most consistent advocates for cryptocurrencies in Congress and previously promoted the Financial Innovation Act (the Lummis-Gillibrand bill).

The main goal of the GENIUS Act is to legalize and standardize the issuance of U.S. dollar-backed stablecoins by introducing nationwide standards for reserve backing, issuer auditing, and KYC/AML requirements. The law aims to strengthen the dollar’s position in the digital economy, prevent systemic risks, and create conditions that will attract institutional investors to the U.S. crypto market.

Key Provisions of the GENIUS Act

The law introduces clear requirements for issuance structure, reserve storage, and compliance. It divides responsibilities between states and federal authorities depending on the issuer’s scale. Below are its main provisions:

1. Reserve backing:

Issuers of dollar-pegged stablecoins must back their issuance with assets at a 1:1 ratio. Acceptable forms of reserves inсlude US cash and short-term Treasury bonds with minimal credit risk.

1. Transparency of reserve status:

The law requires issuers to publish monthly reports on the composition of their reserves. These documents must be made publicly available.

1. Issuer Audit:

Issuers with a market capitalization exceeding $50 billion are subject to a mandatory annual audit. The audit must be conducted by an independent public auditing firm listed in the PCAOB (Public Company Accounting Oversight Board) register. The audit must confirm that the company complies with financial regulatory rules and reserve requirements. The issuer’s reports are published and sent to regulators.

1. KYC/AML Requirements:

The GENIUS Act requires mandatory compliance with Know Your Customer (KYC) and Anti-Money Laundering (AML) requirements. Issuers must verify customer identities, monitor suspicious activity, and comply with the Bank Secrecy Act. This provision aligns cryptocurrency transactions with traditional security standards.

1. Restrictions on Big Tech:

Tech giants, such as Amazon, Meta, and Google, are prohibited from issuing their own stablecoins without partnering with licensed financial institutions. This step aims to prevent monopolization and the concentration of power in the hands of non-monetary corporations.

1. Federal Regulation:

The law establishes a differentiated approach to supervision.

• Issuers with a market capitalization of up to $10 billion fall under the jurisdiction of individual states.
• Larger participants are subject to federal regulation, including oversight by the Treasury Department, the SEC, and the Federal Reserve.

Impact on the Crypto Market

The GENIUS Act has positive effects, such as strengthening investor confidence and promoting the institutionalization of the industry. However, it also raises concerns among supporters of decentralization and international issuers.

Positive Effects

• It attracts institutional investors. A clear legal framework for regulating stablecoins is a powerful incentive for institutions such as banks, hedge funds, and public companies to enter the market. According to Circle, there will be growing interest from institutional investors in USDC and other stablecoins that meet the new standards as early as June 2025.
• The USD is strengthened in the digital economy. Dollar-pegged stablecoins controlled by the U.S. and backed by Treasury bonds are becoming a global standard and successfully competing with other countries’ digital currencies.
• Integration with traditional financial systems. Following the law’s approval, companies such as Visa and Mastercard announced they would expand support for stablecoin payments. By 2026, it is expected that most major acquirers in the US will offer transactions with regulated stablecoins as standard.
• Growth in the sector’s capitalization. Analysts at BeInCrypto and CoinDesk predict that the total market capitalization of U.S. stablecoins will grow 35–50% by the end of 2025. This growth will result from increased demand for verified, regulated assets on both decentralized finance (DeFi) and centralized platforms.

Risks and Criticism

One concern is the threat to decentralization. One of the main arguments against the GENIUS Act is that it allows for excessive government interference in blockchain regulation. For many market participants, rejecting centralized control is fundamental to the Web3 philosophy. New KYC/AML, audit, and reserve requirements call into question the future of algorithmic and decentralized stablecoins.

Restrictions for foreign issuers. Foreign companies that issue stablecoins, including Tether and Tron USDD, inevitably encounter problems when operating in the U.S. This reduces competition and could lead to the de facto dominance of “approved” projects.

Fears of political bias. Some experts point to the political subtext of the law. Among the projects actively lobbying for the introduction of regulated stablecoins is World Liberty Financial, a Donald Trump-associated initiative. This raises questions about possible conflicts of interest and the risk of corruption in the distribution of licenses and supervision.

Market and Expert Reaction

The passage of the GENIUS Act has resonated widely, both within the cryptocurrency community and among traditional financial institutions. Reactions range from enthusiastic support to harsh criticism.

Industry Support

The largest market players, Coinbase and Circle, welcomed the law’s passage as a step toward legal certainty and institutional maturity. According to Circle CEO Jeremy Allaire, “The GENIUS Act creates a competitive regulatory environment in which dollar-pegged stablecoins can scale with trust and transparency.” Representatives of Tether, the issuer of the world’s largest offshore stablecoin (USDT), did not express direct support. Tether CEO Paolo Ardoino merely expressed interest in the law through the media and said that the company is considering issuing a separate stablecoin that would meet U.S. requirements.

Criticism and Doubts

On the other hand, Senator Elizabeth Warren, a staunch cryptocurrency opponent, and a number of other Democrats have expressed concern about potential risks to financial stability. Warren stated that the bill “creates the illusion of control without addressing fundamental threats,” and that the proposed controls are insufficient to prevent the potential use of stablecoins for sanctions evasion and various types of fraud.

Some experts also point out that the lack of a single regulatory body in the supervisory systеm could hinder coordination between federal and state levels, negatively impacting crisis management.

International Context

Analysts believe that the GENIUS Act could become a model for regulation in other countries. Similar initiatives are already being discussed in the UK, Japan, and Singapore, where regulators are closely monitoring the US experience.

The law is often compared to the European MiCA (Markets in Crypto-Assets Regulation) legislation. Indeed, both documents establish requirements for reserves, transparency, and KYC/AML. However, unlike MiCA, the GENIUS Act emphasizes the participation of private companies, such as crypto exchanges, fintech startups, and custodial platforms, as well as institutional investors. The European model, on the other hand, focuses primarily on government control and consumer protection.

What lies ahead for the stablecoin market?

Market Growth and Institutionalization

According to BeInCrypto and Messari analysts, the global market for dollar-pegged stablecoins could grow to $3.5–3.7 trillion by the end of the decade, becoming comparable to the US money market fund market.

Transparent regulation, clear reserve requirements, and mandatory issuer audits make U.S. stablecoins more attractive to institutional investors. Additionally, the GENIUS Act legalizes the participation of traditional banks and licensed custodial providers in stablecoin issuance and maintenance, accelerating their adoption in everyday cryptocurrency transactions and settlement operations between corporations, fintech companies, and government agencies.

Integration with DeFi and Traditional Finance

Regulated stablecoins can be used as collateral, a unit of account, and a means of saving in DeFi protocols, eliminating the risk of sanctions or asset freezing. Concurrently, their legal status will reduce barriers for banks, insurance companies, and trust companies to connect to the smart contract economy.

Large issuers dominate, and new players are arriving.

Against the backdrop of tightening regulatory requirements, large issuers with compliance experience and large-scale operating systems will definitely strengthen their positions. However, the law also opens up prospects for new participants, such as banks and fintech companies, provided they can meet its requirements. In particular, large custodians focused on the corporate sector are expected to launch new regulated stablecoins. This could lead to the creation of niche assets, such as stablecoins tailored to specific industries, like energy, logistics, and Web3.

Conclusion

The passage of the GENIUS Act is an important milestone in the development of the American model of stablecoin regulation. For the first time, the law establishes a comprehensive legal framework that gives dollar-pegged stablecoins the status of regulated digital assets with transparent rules.

This step strengthens the U.S.’s position as a leader in blockchain regulation, increases financial stability, and creates favorable conditions for attracting institutional investors. However, the law is not without its contradictions. It tightens control over cryptocurrency transactions, limits opportunities for tech giants, and raises the entry threshold for small players and foreign issuers.

In the coming months, the focus will be on the House of Representatives and the relevant agencies responsible for implementing the law’s provisions. Market participants must closely monitor developments in the regulatory framework and adapt their processes to the new rules to maintain their positions in the U.S. cryptocurrency market and take advantage of emerging opportunities.

Thank you for your attention. Invest safely and profitably!

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