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The Vault
July 15, 2025
Stablecoins to Stabilize Transactions: A GENIUS Idea
UPDATE – the GENIUS Act was signed into law by President Trump on July 18, 2025.
The Guiding and Establishing National Innovation for U.S. Stablecoins Act, which is referred to as the GENIUS Act, was passed by the United States Senate on June 17, 2025. [1] Its purpose is to provide an established regulatory framework that is clear regarding payment of stablecoins in order to enhance transaction efficiency, ensure that the dollar’s position as the world reserve currency is strong through creating more demand for U.S. Treasuries and to include more individuals into our financial ecosystem. [2]
Purpose and Goals of the GENIUS Act:
The GENIUS Act’s purpose and goals are to: (1) clarify that a payment stablecoin is a digital asset that is pegged to a fixed monetary value, which is the U.S. dollar here in the GENIUS Act; (2) delineate clear processes regarding the licensure needed for institutions to be stablecoin issuers; (3) enforce reserve requirements and institute regulatory provisions that are tailored for stablecoin issuers which are not heavy handed; (4) for issuers of more than $10 billion of stablecoins the Federal Reserve’s regulatory framework to depository institutions and the Office of the Comptroller of the Currency’s framework for nonbank issuers will apply; (5) permit States to regulate issuers of stablecoin(s) under $10 billion in market capitalization and offer a waiver process in which issuers who supersede the $10 billion threshold can request to be subject to State regulations; and (6) institute mechanisms that allow for supervisory, examination and enforcement regimes which have clear limitations. [3] Furthermore, the GENIUS Act mandates that issuers of stablecoins must hold reserves of actual dollars, Treasurys, or other assets which are deemed to be equivalent in safety and value of the issuer’s stablecoins. [4] Additionally, the GENIUS Act enforces that issuers of stablecoins must prioritize coin holders over other claim holders in the event of insolvency proceedings. [5] The issuers of stablecoins will also have the obligation of publishing monthly reserve disclosures and being subject to regular audits. [6] The GENIUS Act requires issuers of stablecoins to maintain and enforce a robust anti-money laundering program [7] in addition to requiring that issuers of stablecoins follow anti-money laundering along with anti-terrorism mandates. [8] Overall, the GENIUS Act is focused on igniting an era of crypto innovation, in which consumers have protections and the stablecoin industry can operate, function and grow since they will now have, through the GENIUS Act, a clear federal regulatory framework to adhere to while they create stablecoins for issuance. [9]
What’s Next for the GENIUS Act?
President Trump voiced his support for the GENIUS Act by celebrating the GENIUS Act being passed by the Senate and he encouraged the House to move swiftly in passing the GENIUS Act so that President Trump can sign it at his desk and America can become the undisputed leader in digital assets. [10] The CEO of Tether, the largest stablecoin by market capitalization [11], stated Tether is grateful to see that the Senate has passed the GENIUS Act. [12] The CEO of VISA stated VISA has been embracing stablecoins and is preparing for the GENIUS Act to be passed by the House. [13] Since the GENIUS Act has been passed by the Senate, the GENIUS Act must now, and likely will be, passed by the House, then it will go to President Trump where it appears likely that the GENIUS Act will be signed and become law. [14]
This article was written with assistance of summer associate Shail Desai.
[1] https://www.congress.gov/bill/119th-congress/senate-bill/1582/all-actions
[2] https://www.banking.senate.gov/newsroom/majority/scott-hagerty-lummis-gillibrand-introduce-legislation-to-establish-a-stablecoin-regulatory-framework
[3] https://www.hagerty.senate.gov/wp-content/uploads/2025/02/GENIUS-Act-One-Pager-2.4.25.pdf
[4] https://www.investopedia.com/senate-passes-crypto-friendly-genius-act-11757122
[5] https://www.congress.gov/bill/119th-congress/senate-bill/1582/text
[6] https://www.msn.com/en-us/news/politics/genius-act-passing-is-a-big-win-for-the-crypto-community-trumps-agenda-david-sacks/vi-AA1H5Yhp?ocid=BingNewsVerp
[7] https://www.congress.gov/bill/119th-congress/senate-bill/1582/text
[8] https://www.goodmorningamerica.com/news/story/genius-act-crypto-regulation-bill-121981442
[9] https://www.hagerty.senate.gov/wp-content/uploads/2025/02/GENIUS-Act-One-Pager-2.4.25.pdf
[10] https://truthsocial.com/@realDonaldTrump/posts/114707090627277644
[11] https://www.forbes.com/advisor/investing/cryptocurrency/what-is-tether-usdt/
[12] https://www.msn.com/en-us/money/other/tether-ceo-paolo-ardoino-on-the-passage-of-genius-act-future-of-stablecoins/vi-AA1H5DiQ?ocid=BingNewsSerp#details
[13] https://www.msn.com/en-us/money/other/visa-ceo-on-genius-act-weve-been-embracing-stablecoins/vi-AA1HkkQe?ocid=BingNewsVerp
[14] https://www.congress.gov/bill/119th-congress/senate-bill/1582/all-actions
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