BlackRock: GENIUS Act reclassifies $266B stablecoins as regulated payment tools 7% of crypto market

BlackRock’s recent analysis positions stablecoins at the forefront of financial innovation, asserting they are transitioning from speculative assets to foundational infrastructure for global payments. The firm attributes this shift to the enactment of the GENIUS Act on July 18, 2025, which reclassifies payment stablecoins as regulated tools rather than commodities or securities. Under the law, issuers must maintain full reserve backing using U.S. Treasury bills, cash, or short-term repos, alongside bank-level audits and anti-money laundering compliance. By prohibiting interest on stablecoin balances, the legislation emphasizes transactional use, aligning with BlackRock’s view that stablecoins are evolving into “programmable money” for real-time cross-border settlements [1].

The firm highlights a $266 billion stablecoin market, representing 7% of the total crypto market, with major issuers like Tether and Circle holding over $120 billion in U.S. Treasury reserves. This institutional backing, combined with regulatory clarity, is seen as stabilizing the market without disrupting Treasury yields. BlackRock argues the reserve requirements mitigate systemic risks while reinforcing the dollar’s role in liquidity infrastructure, noting that stablecoin capital is likely to rotate from similar short-term asset classes, minimizing impact on bill yields [2].

Globally, the U.S. approach under the GENIUS Act is framed as a response to competing strategies in Europe and Hong Kong. While Europe’s MiCA framework and Hong Kong’s permissive stance aim to attract institutional adoption, the U.S. prioritizes consumer protection and banking safeguards. Jurisdictional differences—such as the U.S. ban on stablecoin interest—will shape the dominance of dollar-backed digital currencies in cross-border trade. Analysts from KPMG and McKinsey note the Act is accelerating innovation in tokenized money market funds and real-time settlement systems, supported by a stable legal framework [3].

Despite optimism, challenges persist. Regulators caution about depegging risks, issuer concentration, and potential Treasury market disruptions during redemption surges. Analysts also warn that banning interest on stablecoins could dampen adoption in deposit-rich economies. However, BlackRock emphasizes that regulatory clarity has positioned stablecoins at the intersection of payments, treasury operations, and cross-border finance, aligning with broader megatrends reshaping institutional portfolios.

The firm envisions a hybrid monetary system where stablecoins coexist with fiat, enhancing programmatic efficiency and liquidity resilience. By enabling real-time value transfers, stablecoins could underpin a new layer of financial infrastructure. While hurdles remain, the U.S. is competing globally for digital monetary leadership, with BlackRock asserting that the GENIUS Act has established a legal pathway for stablecoins to become a core component of the financial ecosystem.

Sources:

[1] BlackRock Investment Institute, [https://coinmarketcap.com/community/articles/688a035c88079a5c3275dc22/](https://coinmarketcap.com/community/articles/688a035c88079a5c3275dc22/)