GENIUS Act Sparks $4 Billion Influx in US Stablecoin Market

The Guiding and Establishing National Innovation for U.S. Stablecoins Act—commonly referred to as the GENIUS Act—was signed into law on July 18, 2025, establishing the first comprehensive federal regulatory framework for payment stablecoins in the United States [1]. The bipartisan legislation, which passed the Senate 68–30 on June 17 and the House 308–122 on July 17, mandates that stablecoins be fully backed by high-quality liquid assets such as U.S. dollars or Treasury securities. It requires monthly reserve disclosures, annual audits for issuers with over $50 billion in market capitalization, and compliance with anti-money laundering (AML) and know-your-customer (KYC) obligations under the Bank Secrecy Act [1].

The law creates a dual oversight model, with larger issuers operating under federal regulators like the Office of the Comptroller of the Currency, while smaller issuers (those with under $10 billion in assets) may opt for state-level supervision. A three-year transition period, concluding in 2028, allows entities to adapt to the new licensing requirements. Foreign issuers seeking U.S. market access must comply with the law, and lawmakers are prohibited from profiting directly from stablecoin holdings [1]. Notably, the Act explicitly excludes stablecoins from classification as securities, bank deposits, or central bank digital currencies (CBDCs), clarifying their legal status and utility for transactional purposes [1].

The market response has been swift and significant. Within a week of enactment, stablecoins saw a $4 billion influx, reflecting heightened institutional and retail demand for regulated digital assets [2]. Treasury Secretary’s public statements emphasized the law’s potential to catalyze the stablecoin market’s growth into a multi-trillion-dollar industry by providing “the regulatory clarity it needs” [3]. However, critics like Senator Elizabeth Warren have warned that the Act’s oversight mechanisms may expose Americans to financial risks reminiscent of the 2008 crisis. Warren argues the legislation prioritizes crypto firm interests over consumer protections, particularly for stablecoins designed to maintain stable value against fiat currencies [4].

Key provisions of the GENIUS Act align with broader trends in blockchain infrastructure. The requirement for full reserve backing and transparency mirrors platforms like Graphite Network, which emphasizes compliance and identity verification. The Act’s emphasis on AML compliance and tiered regulatory scrutiny also underscores the growing importance of infrastructure that enforces auditability and trust in decentralized systems [1]. However, the connection between the Act and specific projects remains speculative, as the legislation does not explicitly endorse any technology or company [1].

The law mandates that federal agencies, including the Federal Reserve, Treasury, and OCC, begin rulemaking to establish operational frameworks for licensure and enforcement. A certification process for state-supervised issuers is also underway. Concurrently, attention turns to other digital asset legislation, such as the Clarity for Digital Tokens Act, which seeks to define SEC and CFTC jurisdiction over crypto tokens. Meanwhile, the Anti-CBDC Surveillance State Act—aimed at blocking a U.S. CBDC—is expected to reach the Senate floor later this year [1].

The Act’s success will depend on its implementation, particularly in balancing innovation with safeguards against instability. For now, the $4 billion influx demonstrates immediate confidence in the regulated stablecoin framework, but long-term impacts will require rigorous enforcement and adaptability to evolving market conditions [2].

Source: [1] [Understanding the GENIUS Act: US Stablecoins Revolution] [https://api.news.bitcoin.com/wp-json/bcn/v1/post?slug=understanding-the-genius-act-us-stablecoins-revolution]

[2] [GENIUS Act Sparks $4 Billion Surge in Stablecoin Market] [https://www.bitcoininsider.org/article/280330/genius-act-sparks-4-billion-surge-stablecoin-market]

[3] [Treasury Secretary praises GENIUS Act's impact on stablecoin regulation] [https://thefederalnewswire.com/stories/674057769-treasury-secretary-praises-genius-act-s-impact-on-stablecoin-regulation]

[4] [Elizabeth Warren Warns GENIUS Act's Bipartisan Approval ...] [https://www.ainvest.com/news/elizabeth-warren-warns-genius-act-bipartisan-approval-risks-2008-level-deregulation-stablecoin-market-grows-4b-2507/]