The GENIUS Act, officially titled the Guiding and Establishing National Innovation for U.S. Stablecoins Act, has become the first major federal law creating a comprehensive framework to regulate dollar-pegged cryptocurrency stablecoins in the United States.
The GENIUS Act passed through Congress with bipartisan support, passing the Senate 68-30 and the House 308-122, with votes crossing party lines in both chambers. President Donald Trump, who said the bill was named after him, signed the bill into law on July 18.
The global cryptocurrency market capitalization achieved an unprecedented $4 trillion valuation on July 18. Trump vowed to make America the “crypto capital of the planet.”
At its core, cryptocurrency is a digital or virtual currency that uses cryptographic techniques for security and operates independently of central authorities like governments or banks. These digital assets exist solely in electronic form and are built on decentralized blockchain technology, creating a peer-to-peer system that enables secure, transparent, and immutable transactions.
Cryptocurrency ownership in the U.S. has surged over the past three years, nearly doubling since the end of 2021. By 2025, about 28% of American adults, equivalent to roughly 65 million people, now hold some form of cryptocurrency. Unlike traditional fiat currencies where governments can print more money at will, cryptocurrencies operate under different supply models—some are strictly limited, others have unlimited supplies, and some fall somewhere in between.
Donald Trump owns and controls multiple cryptocurrency companies and ventures, making him the first U.S. president to have direct, substantial financial interests in the cryptocurrency industry while simultaneously serving as its chief regulator and policymaker. His crypto empire has generated an estimated $620 million to over $1 billion in wealth since 2024.
The GENIUS Act establishes a comprehensive dual federal-state regulatory system for payment stablecoins—digital assets backed by reserves and designed to maintain stable value relative to the U.S. dollar. Under the new framework:
Reserve Requirements: Stablecoin issuers must maintain 100% reserve backing with liquid assets including U.S. dollars, cash equivalents, or Treasury securities with maturities of 90 days or less.
In parallel with unprecedented government spending and large, deficit-financed legislative packages (such as the “One Big Beautiful Bill,” which raised the debt ceiling by $5 trillion and is projected to add $3.3–$3.4 trillion to deficits over the next decade), the GENIUS Act creates a mechanism where new debt issued by the federal government can be purchased, partly and silently, by the growing stablecoin sector. This is a backdoor solution for finding willing buyers for expanding US debt.
Regulatory Oversight: The legislation creates three categories of permitted issuers: approved bank subsidiaries, federally approved nonbanks, and state-chartered issuers. Companies handling more than $10 billion in stablecoins must operate under federal oversight, while smaller issuers can choose state-level regulation.
Consumer Protections: In the event of issuer insolvency, the Act prioritizes stablecoin holders’ claims over other creditors, providing a crucial safety net for consumers. Additionally, issuers must publish monthly reports detailing their reserves and undergo annual financial audits.
Despite bipartisan support, the legislation faced significant criticism, particularly from Senator Elizabeth Warren (D-Mass.), who argued the bill contains insufficient consumer protections and creates opportunities for corruption. Warren specifically criticized the potential for the Trump family’s crypto ventures, including their USD1 stablecoin through World Liberty Financial, to benefit from the new regulatory framework.
“The Trump family stablecoin surged to 7th largest in the world because of a shady crypto deal with the United Arab Emirates – a foreign government that will give them a crazy amount of money,” said Warren. “The Senate shouldn’t pass a crypto bill this week to facilitate this kind of corruption.”
The bill ultimately includes provisions prohibiting executive branch officials and lawmakers from issuing stablecoins, though questions remain about how this applies to Trump family enterprises.
On the other hand, the draw to cryptocurrency has always been the separation of the currency from government regulations. Freedom Caucus members initially opposed the bill because it left “a backdoor to a CBDC,” warning it could enable government financial surveillance. They argued the legislation contradicted President Trump’s January 23 executive order directing agencies to bar a retail CBDC, and therefore wanted iron-clad statutory language blocking any future Fed-issued digital dollar.
To secure enough Republican votes to pass GENIUS, party leaders promised to attach a different bill, the Anti-CBDC Surveillance State Act onto the National Defense Authorization Act (NDAA).
The GENIUS Act will take effect either 18 months after passage or 120 days after final regulations are issued by federal agencies, whichever comes first. Regulatory agencies must issue implementing rules within one year of enactment.
The legislation is expected to significantly impact the $250 billion stablecoin market, with projections suggesting it could grow to $2-3.7 trillion by the decade’s end. The Treasury Borrowing Advisory Committee estimates that a $2 trillion stablecoin market could absorb approximately $1.5 trillion in Treasury bills by 2028, roughly 9% of outstanding supply.
