Trump Signs GENIUS Act to Regulate Stablecoins with 100% Asset Backing

President Donald Trump signed the Guiding and Establishing National Innovation for U.S. Stablecoins (GENIUS) Act into law on July 18, 2025, marking a pivotal shift in U.S. digital asset regulation [3]. The legislation, which applies specifically to payment stablecoins, requires that they be fully backed by highly liquid assets such as U.S. dollars or short-term Treasury securities, aiming to enhance stability, protect consumers, and promote innovation in the digital asset ecosystem [1].

The act excludes payment stablecoins from being classified as securities, providing a clearer legal framework for both issuers and users. It mandates licensing and compliance requirements for all U.S.-related stablecoin issuers, ensuring legal and financial stability within the market [1]. This regulatory clarity is expected to stabilize the industry and encourage greater institutional participation [2].

The White House has underscored the strategic importance of the GENIUS Act in reinforcing the global dominance of the U.S. dollar. By promoting the adoption of digital currencies, the legislation is seen as a means to increase demand for U.S. Treasuries and solidify the dollar’s role in the global financial system [1]. David Sacks, the White House’s "Crypto Czar," highlighted that the act aligns with broader economic policy goals, positioning the U.S. as a leader in the digital finance space amid global competition.

The impact of the legislation has already begun to materialize. In the month following its enactment, major corporations and financial institutions—such as Amazon, Meta, Uber, and JPMorgan—have accelerated their integration of stablecoins into their platforms [1]. Innovations in blockchain infrastructure, including new platforms like Circle’s Arc and Stripe’s Tempo, also signal a growing embrace of regulated stablecoins in commercial and financial ecosystems.

The U.S. Treasury has initiated a public comment period to evaluate the effectiveness of the GENIUS Act in detecting and mitigating illicit activities involving stablecoins [2]. This reflects the administration’s commitment to refining the regulatory framework based on stakeholder input and real-world performance. The feedback process underscores the government’s intention to maintain a flexible yet robust regulatory environment.

Industry experts have expressed cautious optimism. Nic Carter, a cryptocurrency writer and investor, noted that the GENIUS Act mitigates the historical risks of unregulated currencies by enforcing mandatory 100% asset backing and redemption rights. He emphasized that regulatory clarity, rather than excessive control, has historically contributed to market stability [1]. Matt Hougan, CIO at Bitwise, added that the act introduces mechanisms such as daily redemption options and exchange-based price discovery, which help reduce the risks associated with past financial models [1].

While the act has generated momentum and innovation in the stablecoin sector, its long-term success will depend on the consistency of regulatory support and the evolution of market confidence [1]. As stablecoins continue to mature, their broader acceptance will be shaped by ongoing developments in both policy and economic conditions.

Sources:

[1] GENIUS Act Was Signed into Law One Month Ago. What Did It Change? (https://coinmarketcap.com/community/articles/68a429069150483864f59cb0/)

[2] U.S. Treasury Starts Work on Stablecoin Law, Gathering Views on Illicit Activity (https://www.coindesk.com/policy/2025/08/18/u-s-treasury-department-starts-work-on-genius-gathering-views-on-illicit-activity)

[3] Trump Signs GENIUS Act, Launching U.S. Into Global Lead on Stablecoin Regulation (https://www.msn.com/en-us/money/markets/trump-signs-genius-act-launching-u-s-into-global-lead-on-stablecoin-regulation/ar-AA1IWcEL?apiversion=v2&batchservertelemetry=1&domshim=1&noservercache=1&noservertelemetry=1&ocid=finance-verthp-feeds&renderwebcomponents=1&wcseo=1)