Trump signs “Genius Act”: a new era for stablecoins in the US

Well, folks, it’s been a busy time for crypto regulation in the US! On July 18, 2025, President Trump officially signed the “Guiding and Establishing National Innovation for U.S. Stablecoins Act”, which everyone’s calling it the “Genius Act.” This is a pretty big deal because it sets up the first federal rules for payment stablecoins, which are those digital currencies designed to stay pegged to a stable asset like the US dollar.

This new law is the first major step in crypto legislation since Trump promised to create a friendlier regulatory environment during his 2024 campaign. But the “Genius Act” isn’t the only game in town. There are other potentially important bills moving through Congress that deal with different aspects of crypto, not just stablecoins.

How we got here

The crypto regulatory scene in the US has been on a wild ride lately. Under President Biden, the Securities and Exchange Commission (SEC) took a pretty aggressive stance, arguing that many cryptocurrencies and digital assets should be classified as “securities.” They based this on a Supreme Court decision from way back in 1946 (the Howey case) that outlines what makes something an “investment contract” and therefore subject to securities laws.

But things started shifting as the 2024 election approached. Then-candidate Trump voiced strong support for the crypto industry, promising a more welcoming regulatory climate if elected.

What the “Genius Act” does

So, what’s in this “Genius Act”? Well, It focuses specifically on payment stablecoins. These are the ones used for payments or settlements. They can be redeemed for a fixed amount of money. They are designed to hold a steady value. These stablecoins might not be the biggest part of the crypto world in terms of numbers, but they’re a vital part of the infrastructure. They account for over $240 billion in issuance and are used a lot in crypto trading and, increasingly, in everyday transactions, especially in countries with unstable currencies.

The main takeaway is that after a three-year transition period it will be illegal to issue or sell payment stablecoins in the US without getting the proper authorization. There are some exceptions for personal use – things like peer-to-peer transfers, moving money between your own accounts, and using self-custody wallets are still okay.

To get the green light to issue stablecoins, companies need to be based in the US and get approval from the Office of the Comptroller of the Currency (a major bank regulator). Smaller issuers (less than $10 billion in value) can operate under a certified state regulatory system. Banks can also issue stablecoins. Non-US issuers can get in on the action if their home country’s rules are considered equivalent by the US Treasury.

If you are an approved issuer, you’ve got to play by some strict rules. You need to hold reserves that match the value of your stablecoins, and those reserves need to be in safe, liquid assets like cash and short-term government bonds. Your business has to be mostly about issuing, redeeming, and managing those reserves. You also have to publish monthly reports on your reserves, get regular audits, clearly explain your redemption terms and fees, and you’re not allowed to pay interest or yield on your stablecoins. Messing up can lead to fines of up to $1 million per violation and even prison time.

The big picture and what’s next

The “Genius Act” is a significant step towards creating a clear regulatory framework for crypto. It sets some ground rules for a key part of the crypto world and adds protections for consumers and the financial system. It aims to prevent the kinds of meltdowns we saw with FTX and Terra Luna by ensuring that stablecoin holders get priority claims on reserve assets if an issuer goes bankrupt.

A few things stand out. The ban on paying yield effectively makes stablecoins more like cash, which could make them more stable, but it also limits opportunities to earn passive income without investing in other things. The law doesn’t create any specific privacy rights for users, and issuers have to follow anti-money laundering (AML) rules, including “know your customer” (KYC) procedures.

The “Genius Act” also touches on decentralized finance (DeFi). It carves out exceptions for things like peer-to-peer transfers and states that just operating on a decentralized network isn’t enough to disqualify a payment stablecoin from getting authorized. However, it’s still a bit fuzzy how a fully decentralized stablecoin could meet all the issuer requirements. And while issuers have to disclose their redemption policies, the law doesn’t say exactly what those policies have to include.

It’s also important to remember that this law doesn’t solve everything. It doesn’t cover algorithmic stablecoins or those that aren’t backed by fiat currency. It also doesn’t give us clear guidance on how to classify other digital assets – are they securities, commodities, or something else entirely? Those questions are still up in the air and will likely be addressed in future legislation and regulatory decisions.

Other bills in the pipeline

Besides the “Genius Act,” there are a couple of other bills in Congress that are worth keeping an eye on:

• The Digital Asset Market Clarity Act (the “Clarity Act”): This would create a broader regulatory framework for digital assets and shift some of the oversight from the SEC to the Commodity Futures Trading Commission (CFTC).
• The Anti-CBDC Surveillance State Act (the “Anti-CBDC Act”): This would prevent the Federal Reserve from issuing its own central bank digital currency (CBDC).

A closer look at those bills

• The “Clarity Act”: The House passed this one on July 17, and it’s now in the Senate. It aims to divide crypto oversight between the CFTC and the SEC. The CFTC would primarily regulate “digital commodities” (assets tied to a blockchain system), and regulated entities would have to register with the CFTC. The SEC would still have anti-fraud authority and jurisdiction over certain digital commodities, like payment stablecoins. The bill also calls for the CFTC, SEC, and other agencies to create new rules and submit reports to Congress within a year.
  
  The “Clarity Act” would override state laws regulating digital commodities, but it’s unclear how companies previously regulated by the SEC would be affected by CFTC oversight. Some people worry that it doesn’t provide enough protection for the market and consumers, so it might face some resistance in the Senate.
  
• The “Anti-CBDC Act”: The House also passed this on July 17 and it’s now headed to the Senate. It would block the Federal Reserve from issuing a CBDC, either directly or indirectly and prevent the Fed from studying, testing, or using a CBDC for monetary policy. Supporters of the bill argue that a CBDC would lead to increased government control and surveillance. Opponents argue that blocking a CBDC would put the US behind in the global race for digital currency innovation.