US Passes GENIUS Act
What is the GENIUS Act?
The GENIUS Act, short for Guiding and Establishing National Innovation for U.S. Stablecoins Act, was signed into law on July 18, 2025. It sets clear federal rules for stablecoins - a type of digital currency meant to stay at a fixed value, usually tied to the U.S. dollar. Before this law, stablecoins were only lightly regulated, making it harder to know if they were safe or backed by real assets.
Why the GENIUS Act Matters
1. Stablecoins must be backed by real assets: Issuers need to hold cash or U.S. Treasuries equal to every digital dollar they create. This ensures people can redeem them at full value.
2. Only approved issuers: The law limits stablecoin issuance to approved banks or licensed non-banks, ensuring accountability and oversight.
3. Transparency: Issuers must publish regular reports on reserves and comply with rules against money laundering and fraud.
4. Strengthening the U.S. dollar: By linking stablecoins to U.S. Treasuries, the Act supports demand for U.S. government debt and reinforces the dollar's global role.
5. Building trust: Clear rules make stablecoins safer for both institutions and everyday users, encouraging broader adoption.
Clear Rules from the GENIUS Act
The GENIUS Act also spells out clear operational requirements for stablecoin issuers:
Maintain a 1:1 reserve ratio at all times, holding assets such as cash, insured bank deposits, or short-term U.S. Treasury bills.
Store reserves with qualified custodians, keeping them separate from the company’s own funds.
Provide monthly public attestations from independent auditors confirming reserve levels.
Register with the Office of the Comptroller of the Currency (OCC) or relevant state regulators.
Comply with anti-money laundering (AML) and counter-terrorism financing (CFT) rules.
Allow redemption of stablecoins for U.S. dollars within two business days.
These steps aim to boost transparency, protect consumers, and safeguard the U.S. financial system
Extra Context
Stablecoins have been popular for moving money quickly and cheaply online, but without strong rules, some issuers failed to keep enough reserves, causing crashes and losses for users. The GENIUS Act addresses these risks by giving the U.S. a uniform approach to stablecoin oversight. It also aligns the U.S. with other countries that have already put digital asset regulations in place, making it easier for American companies to compete globally.
Recap
Before: Stablecoins didn’t always follow the same rules, so you couldn’t be sure they were safe.
Now: Only trusted issuers can make them, they must hold real money to back them, and they must follow strict laws.
Why it’s good: Protects people, helps the U.S. dollar, and makes digital money more trustworthy.
Additional Readings:
White House – Fact Sheet on the GENIUS Act
Fact Sheet: President Donald J. Trump Signs GENIUS Act into Law
The White HouseThe White House
MarketWatch – News Report on the GENIUS Act Signing - https://www.marketwatch.com/story/trump-signs-the-genius-act-into-law-in-significant-step-for-u-s-crypto-regulation-3d864a10
Paul Hastings – Detailed Legal Overview of the GENIUS Act - https://www.paulhastings.com/en-GB/insights/crypto-policy-tracker/the-genius-act-a-comprehensive-guide-to-us-stablecoin-regulation
Cointelegraph – Industry Analysis of the GENIUS Act’s Impact - https://cointelegraph.com/news/the-state-of-stablecoins-after-genius-act-expert-weighs-in
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