After almost two decades of near-unsupervised digital currency innovation, the United States has finally enacted legislation targeting one corner of the cryptocurrency (or “crypto”) ecosystem. In July 2025, President Trump signed the GENIUS (Guaranteeing National Infrastructure in U.S. Stablecoins) Act into law. Though limited only to the regulation of stablecoins (a particular type of cryptocurrency), the GENIUS Act marks a significant step in federal oversight of the crypto space. To understand the law’s significance, it helps to recall the origins of crypto and blockchain technology underlying it.
A Brief History of Cryptocurrency and Blockchain
Cryptocurrencies entered the global stage in 2008, when the pseudonymous “Satoshi Nakamoto” published the Bitcoin White Paper. Nakamoto proposed a digital ledger capable of securely recording transactions without reliance on a central intermediary such as a bank, resulting in blockchain. This blockchain technology would allow participants to transfer value directly among themselves by replacing institutional trust with cryptographic verification. Within months, Nakamoto’s theory had been developed into a functional cryptocurrency – Bitcoin.
Since then, blockchain technology has been adapted far beyond Bitcoin. It underpins smart-contract platforms like Ethereum, enables the sale of non-fungible tokens (NFTs), and even supports experimental property registries for real estate. As of April 2024, Bitcoin’s market cap exceeded $1.4 trillion, or roughly 0.3% of the world’s money supply. Stablecoins were valued at around $250 billion earlier this year.
As use of blockchain expanded, so did its risks. The crypto space’s early years were punctuated by high-profile failures and criminal misuse. United States v. Faiella exposed crypto’s role in money laundering, and hackers targeting the Japanese exchange Mt. Gox stole 850,000 bitcoins (worth $460 million at the time). More recently, the collapse of the algorithmic stablecoin TerraUSD erased nearly $60 billion in value. Each crisis underscored the same theme: as crypto markets began to mirror traditional financial systems in scope and complexity, the absence of clear oversight left investors and consumers vulnerable. This ultimately paved the way for legislation like the GENIUS Act.
What is Stablecoin?
Stablecoins are digital tokens pegged to real-world assets like gold or the U.S. Dollar. Unlike more volatile cryptocurrencies such as Bitcoin that behave more like speculative stocks than easily transactable currency, stablecoins maintain relatively steady value. This price stability makes stablecoins more like digital cash, useful for everyday transactions and decentralized finance (DeFi) operations like crypto lending and borrowing.
The GENIUS Act: Key Provisions and Implications
The GENIUS Act establishes a regulatory framework for oversight of stablecoins and their issuers. The following key requirements are set to come into effect in January 2027:
- Licensing and Supervision: Limits issuance of stablecoins only to insured depository institutions (or comparable state-chartered entities) approved by and subject to ongoing supervision by the Office of the Comptroller of the Currency.
- Reserve Mandate: Requires issuers to maintain 1:1 reserves (in physical currency, US treasury bills, and other low-risk assets), provide regular public attestations, and be subject to audits verifying those reserves.
- Anti-Money Laundering and Counter-Terrorism Financing: Brings stablecoin issuers under the Bank Secrecy Act, which imposes customer-identification, recordkeeping, and suspicious-activity reporting obligations to counter money laundering and the financing of terrorism.
- Interest and Yield Protections: Bars issuers from paying interest or offering yield on stablecoin holdings to preserve their characterization as payment instruments rather than investment products.
- Consumer and Insolvency Protections: Establishes redemption rights and priority claims for stablecoin holders in the event of issuer insolvency.
- Clarified Regulatory Status: Explicitly excludes stablecoins from classification as securities or commodities.
Implications
The GENIUS Act represents Congress’ first serious attempt to integrate cryptocurrency into the existing regulatory framework for financial institutions. While its focus on stablecoins leaves most of the crypto and blockchain landscape untouched, it clarifies that digital assets pegged to real-world value will now operate under much of the same regulatory scrutiny that govern traditional banking instruments.