Trump Signs GENIUS Act Ushering New Era for Stablecoins

The landmark bill sets a regulatory framework for stablecoins, signaling mainstream acceptance and tighter oversight of digital payments.

In a historic move for the cryptocurrency industry, President Donald Trump signed the Guiding and Establishing National Innovation for U.S. Stablecoins (GENIUS) Act into law on Friday, July 18, solidifying the most comprehensive federal framework for stablecoin regulation in the United States. The signing, held at the White House (watch the recording), was attended by key crypto executives and Republican lawmakers, marking a pivotal moment in the legitimization of digital assets in American financial policy.

A Milestone for Crypto Policy

With a crowd that included Coinbase CEO Brian Armstrong, Circle’s Jeremy Allaire, Tether’s Paolo Ardoino, and Kraken co-CEO David Ripley, the event symbolized crypto’s firm entry into the U.S. regulatory mainstream. Trump hailed the bill as a “very important act” and a “massive validation” of the work done by the crypto community, which he noted had long been dismissed by traditional financial institutions.

“The entire crypto community, for years, you were mocked and dismissed… but this signing is a massive validation,” Trump said during prepared remarks.

The GENIUS Act is the first of three crypto-related bills that Republicans aim to push through before Congress’s August recess, with the Digital Asset Market Structure (CLARITY) Act and the Anti-CBDC Surveillance State Act also progressing through the legislative pipeline.

What the GENIUS Act Does

The GENIUS Act sets out a federal licensing framework for stablecoin issuers while clarifying the roles of regulators such as the Treasury, Federal Reserve, and SEC. The law will take effect 18 months after the signing or 120 days after final regulatory guidance is issued, whichever comes first.

Key Provisions:

• 1:1 Reserve Requirement: Stablecoins must be fully backed by U.S. dollars or similar safe, liquid assets like Treasury bills.
• Monthly Public Disclosures: Issuers must publish detailed reserve breakdowns, verified by an independent accounting firm.
• National or State-Level Oversight: Issuers can be regulated federally or by states, provided they remain under the $10 billion issuance threshold for state-level oversight.
• Foreign Issuer Carve-Outs: Non-U.S. stablecoin issuers can serve U.S. customers if they meet comparable regulatory standards and hold sufficient reserves in U.S. banks.

Notably, the law creates a dual licensing pathway that allows both banks and nonbanks to issue stablecoins, provided they adhere to specific regulatory criteria. Agencies such as the Office of the Comptroller of the Currency (OCC), Federal Deposit Insurance Corporation (FDIC), and National Credit Union Administration (NCUA) will share supervisory responsibilities.

SEC Clarifies Its Role

The Securities and Exchange Commission (SEC) quickly responded to the law’s passage. Chair Paul Atkins emphasized the need for “clear rules of the road” to allow market participants to innovate confidently. Commissioner Hester Peirce, who leads the SEC’s crypto task force, stated that “payment stablecoins are not securities” under the Commission’s jurisdiction.

Peirce added that the GENIUS Act affirms the existing usage of stablecoins in the financial ecosystem, while aiming to “protect current and future users and the financial system.”

Impact on Stablecoin Issuers

While the law opens the door for clearer regulatory participation, it also introduces significant constraints—particularly around interest-bearing products.

Stablecoin Issuers May Shift to Bank Charters

Legal experts suggest the bill creates an incentive for major issuers to seek a national trust bank charter rather than operate under the narrower GENIUS license. According to Winston & Strawn attorney Logan Payne, the GENIUS license permits only stablecoin issuance, while most issuers conduct broader activities that fall outside its scope.

Applying for a national trust charter through the OCC, like Circle and Ripple have done, would allow issuers to operate across all U.S. states without having to obtain separate money transmission licenses.

Yield and Interest Now Prohibited

One of the most controversial elements of the bill is its ban on interest or yield offerings for stablecoin holders. This provision applies to both U.S.-regulated and foreign issuers operating within the United States.

Platforms like Coinbase and Kraken have previously offered yield on Circle’s USDC and similar tokens, often as a marketing strategy to attract users. These arrangements may need to be altered or phased out under the new law.

“I would be unsurprised to see a lot of those arrangements change or be modified moving forward,” Payne noted.

Legal Grey Zones for DeFi

The GENIUS Act does not directly address decentralized finance (DeFi), creating regulatory ambiguity for how DeFi platforms should treat stablecoins going forward. Payne characterized this as an “intentional gap” that regulators and lawmakers may look to fill in the future.

Much of that responsibility may fall to upcoming legislation like the CLARITY Act, which seeks to define digital asset classifications and delineate regulatory responsibilities across U.S. agencies.

Barriers for Non-Compliant Issuers

Three years after enactment, stablecoins issued by non-approved entities will be barred from the U.S. market. However, the bill provides a path for foreign stablecoins to operate domestically if they:

• Comply with GENIUS Act standards,
• Hold reserves at a U.S. financial institution,
• And register with the OCC, which must respond within 30 days.

This provision allows for international regulatory harmonization, especially with jurisdictions that have established crypto frameworks, such as the EU under MiCA.

Broader Legislative Context

The GENIUS Act is part of a larger Republican-led push to define the digital asset regulatory environment. While the GENIUS Act passed with significant bipartisan support—including over 100 House Democrats—the accompanying Anti-CBDC bill received backing from just two Democrats, indicating a tougher road ahead in the Senate.

Some Senate Democrats have raised concerns about potential conflicts of interest, noting that Trump has financial ties to the crypto industry, including a stake in World Liberty Financial and personal involvement in launching a memecoin prior to his presidency.

Despite the controversy, the GENIUS Act represents a strategic win for crypto supporters, who view regulatory clarity as critical to long-term growth and adoption.

Looking Ahead

Industry observers see the GENIUS Act as a foundational piece in the evolving global regulatory landscape for digital assets. Similar to the EU’s MiCA and Asia’s fast-moving regulatory strategies, the U.S. framework now signals a shift from enforcement-led crypto policy to infrastructure-based integration.

This could reduce jurisdictional arbitrage and enable cross-border compatibility for stablecoin usage in financial services and commerce. Still, much depends on how quickly U.S. agencies implement the rules and whether further legislation fills in remaining gaps—particularly around DeFi, asset classification, and interoperability.

As the dust settles, the crypto industry enters a new phase where legitimacy comes with obligations, and innovation must navigate the same regulatory scrutiny faced by traditional financial institutions.