The GENIUS Act (Guiding and Establishing National Innovation for US Stablecoins), passed by the US Senate on June 17, 2025, represents a pivotal moment in the regulatory landscape of crypto assets.
Many industry leaders, like Paolo Ardoino, the CEO of Tether, have lauded this legislation. They see it as a pathway toward achieving a clear and structured legal framework for stablecoin issuers.
Beyond setting forth technical prerequisites, this legislation might serve to recalibrate the dollar’s role in the digital economy and fortify the standing of crypto allies.
Until now, the US has been lagging behind in this area, while Europe has taken the lead, and the EUR USD forecast has been strengthening.
What is the GENIUS Act
The GENIUS Act seeks to govern stablecoins that are linked to the US dollar. It lays down a foundation of transparency and security in the crypto sector:
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Financial institutions licensing: Only entities approved by the state may issue stablecoins.
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Proof of reserves: Reserves must be backed by cash, short-term T-bills, and liquid money market funds.
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Strict transparency standards: Monthly audits by independent auditing firms and public reporting of reserves.
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Interest payment prohibition: Prevents issuers or platforms from paying interest to users who hold or deposit stablecoins.
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A ban on using stablecoins as collateral: To avoid risks, stablecoins cannot be used for lending and similar financial activities.
According to Paolo Ardoino, this law marks a major milestone toward regulatory maturity. It reassures institutional investors, attracts banks to stablecoins, and legitimizes established leaders like Tether and Circle.
The US is building on the dollar's foundation to make it the core currency of the global digital economy. It is doing this in a very specific way — by pushing for the emergence of digital dollars.
An opportunity for compliant issuers
The law establishes new barriers to entry, excluding companies that are either unregulated or not subject to US jurisdiction.
The direct beneficiaries of this are the companies that are already regulated or easily able to comply, as they will practically have market dominance in the US market.
Tether could profit from a clearer regulatory framework and adapt its structure, which would enable it to meet these standards and secure its position.
The Act will allow banks to issue stablecoins. This move might create a hybrid ecosystem in which both banks and retail crypto enthusiasts can collaborate. Such strengthening of the sector's credibility might benefit both regulators and investors.
Stablecoins that don't comply with regulations (such as DAI or some types of algorithmic tokens) might be banned from operating on US platforms. This could limit market diversity. Still, this establishes the foundation for the crypto finance system long-term.
Long-term implications for the crypto sector
The GENIUS Act ushers in a new era for stablecoins. It paves the way for a digital ecosystem where the dollar is programmable, traceable, and interoperable on a global scale:
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Widespread adoption might accelerate stablecoin use in commerce, cross-border payments, and decentralized finance.
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It may become a model for other jurisdictions.
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Opens channels for dialogue between regulators and innovators.
Crypto markets have responded with cautious optimism. While stablecoins remain the focal point, major altcoins like Solana (SOL USD) and Ripple (XRP USD) have shown moderate gains as investors price in the potential for clearer compliance frameworks and increased institutional interest. The GENIUS Act doesn't only regulate stablecoins, but also reconfigures the digital dollar's role across geopolitical, monetary, and technological dimensions. For the major players in the sector, it is both an acknowledgement and an opportunity.
