In a landmark move that could redefine the global stablecoin landscape, the U.S. Congress has formally approved the GENIUS Act (Guiding and Establishing National Innovation for U.S. Stablecoins), paving the way for a new regulatory era in digital finance. With overwhelming bipartisan support in both the House and the Senate, the bill now awaits the President’s signature to become a law. For the first time, the United States is poised to introduce a comprehensive legal framework governing the issuance, backing, and oversight of stablecoins, regarded as a crucial step towards legitimizing their role in mainstream finance.
Also read: U.S. Moves Closer to Stablecoin Regulation as Senate Passes GENIUS Act
Congress Pushing Stablecoin Rules Closer to Reality
The GENIUS Act is now just one step away from becoming law, following its passage in the U.S. House of Representatives on July 17. With the Senate having already given its approval last month, the legislation is now headed to President Trump’s desk. A formal signing ceremony is expected in Washington, D.C., where the bill will be officially enacted.
The legislation marks a pivotal shift in how the U.S. intends to govern stablecoins. The Act requires stablecoin issuers to fully back their tokens with reserves held in U.S. dollars or similarly secure, liquid assets, effectively barring the use of algorithmic or insufficiently backed models. Oversight responsibilities will be shared between federal regulators, such as the Office of the Comptroller of the Currency, and state financial authorities. This dual oversight model aims to balance national consistency with local accountability.
In a broader move toward regulating stablecoins, the House also advanced two other crypto-related bills on the same day, reinforcing the government’s growing commitment to bringing structure and safeguards to the evolving crypto economy.
What Is the GENIUS Act?
The GENIUS Act is a first-of-its-kind federal framework aimed specifically at the regulation of stablecoins in the United States. It lays out clear enforceable rules for how these digital assets can be issued, backed, and supervised, all with the goal of safeguarding both consumers and the financial system.
The law also mandates transparency, requiring regular reserve audits and public disclosures. Importantly, it restricts interest-bearing stablecoins, meaning issuers cannot offer yields simply for holding their tokens – a move intended to prevent stablecoins from functioning like unregulated savings accounts. Algorithmic stablecoins, which rely on code-based balancing mechanisms rather than real-world reserves, are explicitly excluded from the definition of permissible payment stablecoins under this Act.
In essence, the GENIUS Act aims to bring stablecoins into the fold of the regulated financial system, not to stifle innovation, but to ensure it’s built on a foundation of trust, security, and accountability.
Also read: What is a Stablecoin: A Complete Guide
Conclusion
The GENIUS Act emphasizes a major shift in how the U.S. regulates stablecoins, introducing a structured and enforceable framework for their issuance, backing, and supervision. By mandating full-reserve backing and excluding algorithmic and interest-bearing models, the Act aims to protect consumers while fostering responsible innovation. As the digital asset space matures, this legislation could serve as a blueprint for other nations seeking to bring stability and trust to the crypto economy.
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