The GENIUS Act, passed on July 18, provides a clear regulatory framework for dollar-backed stablecoins in the U.S. It defines approved payment stablecoins, sets consumer protection rules, and ensures digital dollars are fully backed, promoting safe and transparent use.
Only authorized issuers can operate, and tokens must be backed 1:1 with secure assets such as cash, short-term Treasuries, insured bank deposits, and Treasury-backed repos. Issuers must maintain segregated reserves, allow full redemption at par, publish disclosures, and undergo audits. Foreign issuers must meet similar standards or show comparable regulation.
Analysts highlight potential risks, including uninsured deposits, non-financial issuers, and ambiguity in foreign regulations. Concerns also exist about issuers’ ability to prevent money laundering or terrorism financing under these rules.
Critics argue the law turns stablecoin issuers into indirect buyers of U.S. debt. By holding mainly Treasuries, issuers convert global stablecoin demand into constant Treasury purchases. Large redemptions could force rapid selling, affecting yields and market stability, possibly increasing pressure for a U.S. central bank digital currency.
Despite risks, the act fosters safer digital dollars, faster payments, and programmable money innovation. However, private stablecoins now play a hidden role in supporting U.S. government debt, tying payment innovation to fiscal policy and Treasury demand.
