For most of the past decade, stablecoins operated without any real federal rulebook. Issuers held reserves; however, they saw fit, disclosed what they wanted to disclose, and answered to whichever state or country happened to have the loosest rules. President Trump ended that grey zone on July 18, 2025, signing the Guiding and Establishing National Innovation for U.S. Stablecoins Act – the GENIUS Act – into law, which gave the United States its first federal framework built specifically for payment stablecoins.
Senator Bill Hagerty introduced the bill in February 2025, building on a discussion draft he'd circulated the previous October, with Senate Banking Committee Chair Tim Scott, Kirsten Gillibrand, and Cynthia Lummis backing it as co-sponsors. From there it moved fast by Washington standards. The Senate Banking Committee approved it 18-6 in March, the full Senate passed it 68-30 in June, the House followed 308-122 in July, and Trump signed it within a day. A companion House bill, the STABLE Act, covered similar ground but never became the vehicle that reached his desk.
Why stablecoins ended up on Congress's radar
A stablecoin is a token designed to hold a fixed value, almost always one U.S. dollar, by keeping cash or cash-equivalent assets in reserve to back every coin in circulation. They've become the plumbing of the crypto economy; traders use them to move between positions without touching a bank, and they're increasingly used for cross-border payments and remittances that would otherwise take days and cost far more. As that usage grew, regulators started paying closer attention. Terra's UST collapsed in May 2022, wiping out roughly $50 billion in value within days because it was never actually backed by real dollars, just an algorithmic promise. Tether spent years fielding questions about the composition of its reserves. Then FTX collapsed later that same year, and lawmakers on both sides of the aisle concluded that an industry moving trillions of dollars annually couldn't keep running without baseline federal rules.
The rules issuers now have to follow
At its core, the law requires that a stablecoin marketed as being worth a dollar actually be backed, one for one, by a dollar or an asset close enough to cash that it can be liquidated instantly if holders want their money back. Only a "permitted payment stablecoin issuer" may legally issue a dollar-pegged token for U.S. users going forward, and that status is limited to insured bank subsidiaries, nonbank issuers approved and supervised by the Office of the Comptroller of the Currency, and state-qualified issuers operating under rules a federal review committee has certified as substantially similar to the federal standard. Issuers with more than $10 billion in outstanding stablecoins must operate under federal supervision; smaller issuers can stay under state oversight, though they eventually have to graduate to the federal track, secure a waiver, or stop issuing once they cross that threshold.
Reserves are restricted to a narrow set of assets: cash, insured bank deposits, short-dated Treasury bills, repo agreements backed by Treasuries, and a short list of similarly liquid instruments. Issuers can't rehypothecate those reserves, meaning they can't lend them out or use them for anything beyond backing the coin, outside a few narrow exceptions. They also have to publish monthly reserve reports examined by a registered accounting firm, with their CEO and CFO personally certifying the results. Issuers with more than $50 billion outstanding owe the market something more: a full audited annual financial statement. Custody providers holding stablecoin reserves or the private keys behind them face their own segregation and anti-commingling rules, and everyone in the chain answers to the Bank Secrecy Act's anti-money-laundering requirements.
A wrinkle worth flagging: issuers themselves can't pay interest or yield to stablecoin holders directly, but nothing in the statute stops an exchange from paying its customers yield on stablecoin balances held there. This distinction has already created friction between platforms that want to compete on yield and banks that see it as a workaround of the interest ban in all but name.
How the law lands and who's pushing back
For everyday users, the practical upside is a stablecoin that's supposed to behave the way it's marketed: redeemable at par, backed by assets a regulator can actually inspect. For issuers, it means either becoming a licensed, audited entity with real compliance overhead or losing the ability to serve U.S. customers once transition periods run out; digital asset service providers get three years before they must stop offering coins from unlicensed issuers. Exchanges and custodians inherit new segregation and reporting duties. Investors and institutions get something closer to a defined asset class instead of a patchwork of self-attestations.
Tether, which is not a U.S.-chartered entity, and Circle, which already published monthly attestations before the law existed, land in different spots. Circle's existing practices map fairly closely onto the new baseline. Offshore issuers like Tether face a harder choice: seek U.S. compliance, restrict U.S. distribution, or lean on the law's foreign-issuer pathway, which requires Treasury to find their home regulatory regime comparable.
Critics have pushed back on several fronts. Consumer Reports argues the law lets large tech and fintech companies engage in bank-like activity without bank-level oversight. New York Attorney General Letitia James and other state prosecutors have flagged a gap around stolen funds; the law doesn't require issuers to return money to fraud victims, which they warn could let issuers keep proceeds tied to scams. Economists Kenneth Rogoff and Max Harris have gone further, comparing the law's permissive structure to the free banking era of the mid-1800s, when a proliferation of privately issued currencies produced instability rather than order.
Where the U.S. sits next to other countries
Other major markets have moved on stablecoins too, and most have landed on tighter rules than the U.S. has. The European Union's MiCA framework treats dollar-pegged tokens as e-money tokens that can only be issued by licensed credit institutions or e-money institutions, with reserves that must sit in bankruptcy-remote EU custody – a stricter setup that's already pushed some EU exchanges to delist non-compliant coins. Hong Kong's Stablecoins Ordinance, in force since August 2025, put reserve and licensing requirements under the Hong Kong Monetary Authority and issued its first licences to HSBC and a Standard Chartered-backed venture in April 2026. Japan restricts yen-pegged stablecoin issuance to licensed banks and trust companies, and Singapore's Monetary Authority put its own single-currency stablecoin framework into effect on July 1, 2026. Each regime rests on the same basic principles: full reserves, licensed issuers, and redemption rights, but the GENIUS Act's dual federal-state structure and its allowance for nonbank issuers give it more room for the kind of fintech-driven experimentation that European regulators have been more cautious about.
Beyond stablecoins, the GENIUS Act hands Congress something it didn't have before: a working template for regulating a category of digital asset from scratch, combining licensing, reserve rules, and enforcement in one bill. That template is already shaping the debate over the CLARITY Act, which would divide other tokens between the SEC and CFTC. Whether that follow-on bill moves as fast as GENIUS did remains to be seen, but the baseline for federal crypto regulation has already shifted.
Matvii Diadkov
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