GENIUS Act Enacted to Regulate Stablecoins with $10B-$50B Caps

The enactment of the GENIUS Act in the United States, signed into law by President Trump on July 18, 2025, marks a significant turning point in the regulation of stablecoins, with potential ripple effects across the global digital finance landscape [9]. This legislative action introduces a structured regulatory framework that differentiates between state and federally regulated banks in stablecoin issuance, allowing the former to issue up to $10 billion and the latter up to $50 billion in stablecoins [1]. The Act positions stablecoin issuers under the oversight of both state and federal banking regulators, requiring them to comply with the Bank Secrecy Act, including anti-money laundering (AML) and know-your-customer (KYC) protocols [6]. This alignment with traditional financial standards aims to enhance transparency and institutional confidence in the sector.

Fabian Dori, Chief Investment Officer at Sygnum Bank, emphasized that the GENIUS Act’s regulatory clarity is likely to encourage institutional adoption and innovation [1]. However, the Act also imposes a notable restriction by banning yield-bearing stablecoins, a move that could redefine their role in decentralized finance (DeFi) ecosystems. Dori noted that this provision draws a clear line between non-yielding stablecoins and tokenized money market funds, reshaping market dynamics [1]. While the legislation aims to foster financial stability and responsible innovation, analysts caution that the inherent risks of stablecoins, such as exposure to crypto volatility, remain [4].

The White House has underscored the urgency of implementing the Act, with a compliance-focused report released in late July detailing the obligations for systemic stablecoin issuers [8]. In parallel, the executive branch has reinforced its commitment to digital asset leadership through a presidential order aimed at promoting responsible innovation in financial technology [9]. This regulatory momentum is further supported by the CLARITY Act, passed in July 2025, which complements the GENIUS Act by advancing a more structured approach to cryptocurrency oversight [3]. Together, these legislative efforts reflect a strategic shift from ambiguity to a compliance-driven framework, potentially encouraging greater innovation and investor confidence.

Industry observers, including major financial firms like Visa and Mastercard, view the Act as a pivotal moment in the integration of digital currencies into traditional payment systems [7]. Yet, the Act’s success will depend on the effectiveness of enforcement mechanisms and the ability of regulators to keep pace with technological advancements. Professional services firms such as KPMG have already begun preparing to support clients in navigating the new regulatory environment, offering services like AML program design and digital asset investigations [9]. This proactive industry response highlights expectations that the GENIUS Act will become a foundational regulatory model for stablecoins in the U.S.

The implications of the Act extend beyond domestic markets, as international stablecoin issuers may seek to align their operations with U.S. standards to access the world’s largest digital currency market [2]. The U.S. regulatory approach contrasts with Europe’s more cautious stance on digital currencies, potentially prompting regulatory reconsideration in the EU to maintain competitive balance [1]. As stablecoins continue to evolve, the GENIUS Act’s role in shaping their future remains central to both market participants and global regulatory efforts.

Source:

[1] https://www.forbes.com/sites/vipinbharathan/2025/07/31/stablecoin-certification-review-committee-mandated-by-the-genius-act/

[2] https://www.ainvest.com/news/passes-genius-act-regulate-stablecoins-asset-backing-licensing-requirements-2508/

[3] https://www.womblebonddickinson.com/us/insights/alerts/update-2025-us-stablecoin-legislation

[4] https://www.mitrade.com/insights/news/live-news/article-8-1004482-20250801

[6] https://www.lexology.com/library/detail.aspx?g=fbc5b570-08d4-4c88-a3d3-63513e510262

[7] https://www.reuters.com/commentary/breakingviews/stablecoin-buzz-vexes-visa-mastercards-repose-2025-07-31/

[8] https://www.trmlabs.com/resources/blog/white-house-releases-report-on-digital-assets

[9] https://kpmg.com/us/en/articles/2025/rapidly-changing-regulatory-landscape.html