Ethereum News Today: U.S. Congress enacts GENIUS Act for landmark stablecoin regulation sparking 50% Ethereum surge

The U.S. Congress has enacted the Guiding and Establishing National Innovation for U.S. Stablecoins (GENIUS) Act, a landmark regulatory framework for stablecoins, following its introduction by Senator Bill Hagerty on March 13, 2025, and subsequent passage by the Senate on June 17, 2025, and the House of Representatives on July 17, 2025. The bill was signed into law by the president on July 18, 2025 [1]. The act establishes a comprehensive regulatory structure for stablecoins, requiring them to be backed by high-quality reserves such as U.S. Treasury securities, government bonds, or cash equivalents. This measure aims to ensure stability and reduce systemic risks associated with algorithmic or composite asset-backed stablecoins, which have historically faced volatility and de-pegging issues [1].

Under the GENIUS Act, stablecoins are categorized into two types: payment stablecoins, which are dollar-pegged and require regulatory approval for issuance, and non-payment stablecoins, which face less stringent requirements. The law mandates that payment stablecoins must be issued by entities registered with federal and state governments, including banks, financial institutions, and major stablecoin providers like Tether and Circle. Annual audits are also required to verify compliance [1]. The act explicitly discourages algorithmic stablecoins, referencing the $60 billion collapse of TerraUSD in 2022 as a cautionary example of their risks [1].

The regulatory framework incorporates dual oversight by federal and state authorities, with the Federal Reserve tasked with identifying all stablecoin types within one year of the law’s enactment (by July 2026). This approach aims to prevent conflicting compliance standards and ensure a unified regulatory environment [1]. Taxation provisions classify stablecoins as property, requiring users to maintain detailed transaction records, though they may be treated as cash equivalents for certain transactions [1]. Additionally, the act reinforces anti-money laundering (AML) and know-your-customer (KYC) requirements, aligning stablecoin issuers with existing financial compliance standards [1].

The GENIUS Act has already influenced cryptocurrency markets. Following its Senate passage in July 2025, Ethereum experienced a 50% price surge within a month, attributed to the dominance of Ethereum-based stablecoins (over 90% of the market share) [1]. Analysts predict the stablecoin market cap could rise from $250 billion to $2 trillion as the act facilitates broader adoption in traditional finance, including applications in salary payments, cross-border transactions, and short-term investments [1]. However, critics argue the law could enable corporations to operate like banks without comparable safeguards, particularly as companies with sufficient U.S. Treasury holdings gain authority to issue stablecoins [1].

The legislation’s bipartisan support and alignment with the European Union’s Markets in Crypto-Assets (MiCA) regulation position it as a potential global benchmark for stablecoin governance. By addressing regulatory ambiguities and prioritizing stability over speculative innovation, the GENIUS Act seeks to balance innovation with financial system resilience [1].

Source: [1] Understanding the GENIUS Act for Stablecoin Regulations in the USA, [https://coinmarketcap.com/community/articles/6889cb00992943384be557d4/].