With the imminent approval of the GENIUS Act (Guaranteed Electronic National Income and Utility Stablecoin Act), the United States is preparing to radically redefine the regulatory framework of stablecoins.
In an increasingly digital and multipolar economic context, this legislative proposal aims to fill existing regulatory gaps, strengthen consumer protection, and ensure financial stability.
GENIUS Act: a clear definition for stablecoin
The GENIUS Act introduces a precise definition of payment stablecoin: these are digital assets pegged to a fiat currency, such as the US dollar, used for transactions and settlements, and guaranteed by a fixed-value redemption right.
The bill allows the issuance of stablecoin to subsidiaries of banks, credit unions, and non-bank institutions, provided they are registered and approved by the relevant federal or state authorities. The system is dual-track: licenses can be issued at the federal level (for example, by the OCC) or by states with equivalent regulatory standards.
Even the Big Tech are not excluded: they can participate in the stablecoin market, but only through regulated entities dedicated exclusively to these activities. A direct response to the concerns raised by projects like Facebook’s Libra.
One of the pillars of the GENIUS Act is the obligation of 100% reserve coverage. Every dollar of stablecoin issued must be backed by a dollar in highly liquid and safe assets, such as cash, insured deposits, U.S. Treasury securities with a maturity of less than 90 days, or government money market funds.
Algorithmic stablecoins, which rely on internal mechanisms or other digital assets to maintain their value, are excluded from the definition of payment stablecoins. The law does not explicitly prohibit them, but it strongly limits their use, requiring further studies and monitoring by regulators.
Rights of reimbursement and protection in case of bankruptcy
The GENIUS Act strengthens the rights of stablecoin holders, imposing monthly transparency on the circulation and composition of reserves, with certification by the issuer’s CEO and CFO. Companies with over 5 billion dollars in stablecoin circulation must also submit certified annual financial statements.
In case of the issuer’s failure, stablecoin holders have absolute priority in accessing the reserves, which are legally separated from the company’s other assets. A measure that fills an important gap in consumer protection.
Operational restrictions: no interest for holders
The bill prohibits issuers from paying interest or dividends to stablecoin holders. This is to prevent them from being perceived as investment instruments, with the risk of attracting regulations on securities or bank deposits.
The interest generated by the reserves remains the property of the issuer, unless there are voluntary decisions to share. Issuers can only engage in activities strictly related to the management of stablecoins, unless specific authorizations are granted.
AML obligations and freezing capacity
The issuers are classified as financial institutions under the Bank Secrecy Act and must implement comprehensive AML (anti-money laundering) programs, including KYC and reporting of suspicious activities.
Furthermore, they must possess the technical ability to freeze, seize, or block stablecoin transactions on order of federal authorities, thus providing a direct interface for law enforcement even in the context of decentralized applications.
Limitations for foreign issuers
Three years after the law comes into effect, unauthorized foreign stablecoins can no longer be sold or distributed to the U.S. public. However, the Treasury Department can recognize stablecoins from jurisdictions with equivalent regulations, provided they comply with U.S. orders and maintain sufficient reserves in the USA.
Non-compliant foreign stablecoins will not be considered equivalent to cash and cannot be used as capital or collateral by regulated institutions in the United States.
Federal and State Regulation: A Dynamic Balance
The GENIUS Act adopts a federal-state hybrid model, with well-defined thresholds. Non-bank issuers with less than 10 billion dollars in stablecoin can remain under qualified state regulation. Once this threshold is exceeded, they must move under federal supervision within 360 days.
Both at the state and federal level, issuers must comply with uniform requirements: 1:1 reserves, monthly transparency, capital standards, liquidity, risk management, and cybersecurity.
The bill introduces the concept of a national passport: issuers with certified federal or state licenses can operate throughout the United States without having to obtain multiple licenses, drastically reducing costs and barriers to entry.
Responses to the historical problems of regulation
The GENIUS Act directly addresses many of the issues that have emerged over the years:
- Protection in case of bankruptcy: the reserves are legally separated from the issuer’s assets.
- Legal clarity: payment stablecoins are neither securities nor commodities.
- Transparency of reserves: audit obligations and strict limits on the use of reserves.
- AML obligations and freezing capacity: full compliance with anti-money laundering regulations.
- Exclusion of algorithmic stablecoins: only stablecoins with real reserves are allowed.
- Limitations for Big Tech: obligation to create regulated and separate entities.
- Closing loopholes for foreign issuers: end of regulatory arbitrage.
The banche e le unioni di credito can issue stablecoin through subsidiaries, access the Fed’s clearing systems, and offer digital services in line with regulations. However, they will have to compete with non-bank giants like PayPal or Meta, which now have access to the same regulatory regime.
For the non-banking entities like Circle or Paxos, the bill imposes high standards but also offers advantages: national access, legal clarity, and the possibility to expand into sectors such as B2B payments and cross-border settlements.
Compliant stablecoins will see greater liquidity and transparency, facilitating integration with DEX, on-chain lending, and yield tools. However, they will need to support freezing and blacklisting functions, leading to a possible bifurcation of the DeFi ecosystem:
- A compliant branch, suitable for institutions and regulated users.
- A branch fully decentralized, which avoids regulated stablecoins and targets non-U.S. markets.
GENIUS Act: a new paradigm for the digital dollar
Stablecoins like USDT will have to choose: comply with the new US regulations or exit the US market. In either case, the result will be a redistribution of market share in favor of stablecoins regulated in the United States, strengthening American regulatory control over global digital finance.
With the GENIUS Act, the United States lays the foundation for a secure, transparent, and competitive stablecoin ecosystem, capable of supporting innovation without sacrificing stability. In a world where digital finance is increasingly central, this law represents a decisive step towards a regulated and reliable digital dollar, ready to maintain its centrality even in the era of criptovalute.