GENIUS Act Awaits Trump’s Approval: Key Changes Ahead
The GENIUS Act, legislation designed to regulate stablecoins, is poised for enactment pending President Donald Trump‘s signature. This law will significantly alter how stablecoins function both in the United States and globally. It encourages stablecoin issuers to secure banking licenses, prohibits interest or yield on stablecoins, and introduces regulatory uncertainty for DeFi platforms.
What the GENIUS Act Will Change
Under the new law, issuers must maintain a 1:1 reserve ratio for their tokens and submit monthly reports. It also restricts non-approved issuers from operating in the U.S. market, though it provides certain exemptions for foreign issuers. A dual federal and state regulatory framework will govern stablecoin regulation, with oversight from multiple agencies.
Key Facts About the GENIUS Act
- The GENIUS Act incentivizes stablecoin issuers to obtain banking licenses.
- It prohibits offering interest or yield on stablecoins.
- DeFi platforms may face regulatory ambiguity under the new rules.
- Issuers are required to back tokens fully with reserves and report monthly.
- Non-approved issuers will be excluded from the U.S. market, with some exceptions for foreign entities.
Regulatory Framework for Stablecoins
The legislation permits various regulated entities, including banks, credit unions, and nonbanks, to issue stablecoins. It establishes a joint federal and state regulatory system. Oversight will be conducted by the National Credit Union Administration, the Federal Deposit Insurance Corporation, the Office of the Comptroller of the Currency, the Treasury, or the Federal Reserve, depending on the entity type.
Expert Insight on the GENIUS Act
“The GENIUS Act marks a pivotal moment in the formal recognition and regulation of stablecoins within the financial system,” notes Logan Payne, a cryptocurrency attorney at Winston & Strawn. “Yet, the prohibition on interest may discourage users from holding stablecoins, potentially affecting their widespread use.”
