Business Leaders,
This is important! Below, I highlight what the GENIUS ACT is and how the financial system has changed. If you want to discuss how this affects your business, schedule time to talk.
Overview
The Guiding and Establishing National Innovation for U.S. Stablecoins (GENIUS) Act was signed into law on July 18, 2025. It represents the first major federal legislation to regulate digital assets in the United States. The Act marks a significant shift in the U.S. financial system by formally integrating stablecoins into the regulated banking and payment infrastructure, providing a path for digital dollars to move from the “crypto fringe” into mainstream commerce.
1. Key Provisions of the GENIUS Act
The primary goal of the Act is to provide consumer protection and ensure that stablecoins used for payments are as safe as traditional bank deposits.
* 1:1 Reserve Requirement: Issuers must back every stablecoin with high-quality liquid assets (like cash and short-term Treasury bills) on at least a one-to-one basis.
* Permitted Issuers: Only “Permitted Payment Stablecoin Issuers” can legally operate. This includes:
* Subsidiaries of Insured Banks: Traditional banks can now issue their own stablecoins.
* Federally Licensed Non-Banks: Non-financial companies can apply through the **Office of the Comptroller of the Currency (OCC)**.
* No Interest/Yield: To prevent stablecoins from being treated like high-risk investment securities, issuers are **prohibited** from paying interest or yield to holders.
* Not a “Security” or “Commodity”: The law explicitly clarifies that payment stablecoins are not securities (governed by the SEC) or commodities (governed by the CFTC), placing them firmly under banking regulators like the Federal Reserve and OCC.
2. How the Financial System Changed
The GENIUS Act changed the U.S. financial landscape from one of regulatory uncertainty to one of “authorized innovation.”
Federal vs. State Supervision
The Act created a “dual banking” style system for digital assets:
* Large Issuers (>$10B):** Any company issuing more than $10 billion in stablecoins must be federally regulated.
* Small Issuers (<$10B):** Smaller entities can be regulated at the state level, provided the state’s rules meet federal standards.
Integration with Traditional Banking
The Act allows stablecoins to act as a bridge. For example, a community bank can now issue stablecoins to its customers, keeping the reserves in U.S. Treasuries. This increases the demand for U.S. government debt while providing customers with 24/7, near-instant settlement for payments.
The Decline of “Offshore” Stablecoins
By setting a high bar for transparency and auditing, the U.S. aimed to push out unregulated offshore stablecoins (like older versions of USDT) in favor of U.S.-regulated ones (like USDC or the new USAT), reinforcing the U.S. dollar’s role as the primary global reserve currency in the digital age.
If you want to discuss how this affects your business, schedule time to talk.
-Will Holmes
Founder of WHC