In a significant move for digital assets, President Donald Trump has signed the Genesis Act (GENIUS Act), enacting legislation providing the first federal regulatory framework for stablecoins backed by the U.S. dollar.
GENIUS Act Enacted: Predicted Impact on Dollar Dominance
The bill establishes a central regulatory standard for US dollar-denominated stablecoins.
A senior official on the Treasury press call stressed the growing adoption of stablecoins, which possess a market capitalization of roughly $250 billion, will “have a profound effect” on dollar dominance and consequently, increased demand for dollar-denominated U.S. debt. The official also characterized the legislation as a benchmark for payments innovation and a signal of federal confidence, essentially endorsing permissionless blockchains for “permissionless issue” of dollar-backed tokenized money.
Background and Passage
The President’s signature followed its passage by the House of Representatives the prior day with a 307-122 vote. The Senate approved the measure back in January, with a 68-30 vote that included 18 Democrats.
Key Provisions and Oversight
The bill formally grants the Office of the Comptroller of the Currency (OCC) primary authority to oversee stablecoin issuers and their tokens.
Required Backing: Issuers must maintain fully-backed liquid reserves, such as cash and short-term Treasury securities.
Audit Requirements: Entities managing stablecoins exceeding $50 billion must undergo annual audits.
Federal Preemption: The GENIUS Act also mandates that state regulators adopt financial frameworks “substantially similar” to the federal standard, offering a uniform alternative to prior state-level, varied oversight efforts.
Recent Crypto Legislation
On Thursday, the House passed the Commodity and Liquidity Act for Trading Integrity of Assets and Yield Investments (CLARITY Act). This related measure defines “digital commodities” and outlines CFTC/SEC jurisdiction over derivatives but doesn’t directly define securities or stablecoins authorized by the GENIUS Act. The CLARITY Act now proceeds to the Senate.
Industry Reactions
Steve Kurz, Blockworks’s Global Head of Asset Management at Galaxy Digital, voiced strong support for the GENIUS Act, suggesting the legislation provides “hundreds of billions, potentially trillions, of reasons for institutions to take this fully seriously for the first time ever.” He indicated the law provides a clear mandate and creates competitive pressure to drive large institutional adoption of digital assets.
Market Perspective
The enactment follows a period of robust growth in the overall cryptocurrency market. Bitcoin has recently reached numerous price highs, touching around $123,000 this week. Stocks in Circle Technologies Inc (ticker: CRTL), the operator of Circle, the second-largest stablecoin issuer (behind Tether), have also seen gains, trading around $225 on Thursday afternoon, a 13% increase compared to the previous month.
