US stablecoin jumps $4 billion new crypto laws

US stablecoin supply has seen a significant jump of $4 billion recently, pushing its total value beyond $264 billion. This surge is directly attributed to the Guiding and Establishing National Innovation for US Stablecoins (GENIUS) Act, which President Donald J. Trump signed into law on July 18, 2025.

Here’s a breakdown of the key aspects and impacts:

Key Provisions of the GENIUS Act:

Clear Federal Regulatory Framework: The GENIUS Act establishes the first federal regulatory framework specifically for “payment stablecoins.” This eliminates much of the prior regulatory uncertainty that had hindered stablecoin growth in the US.

Definition of “Payment Stablecoin”: The Act defines a payment stablecoin as a digital asset designed for payment or settlement, with an issuer obligated to redeem it for a fixed monetary value. Crucially, it clarifies that payment stablecoins are not considered securities or commodities under federal law, thus avoiding oversight from the SEC or CFTC.

Reserve Requirements and Transparency: Issuers of payment stablecoins are now mandated to hold 100% reserve backing with liquid assets like US dollars or short-term Treasuries. They must also provide monthly, public disclosures of the composition of these reserves.

Licensing and Oversight: The Act creates both federal and state pathways for obtaining a license as a “permitted payment stablecoin issuer.” Federal oversight will apply to federally licensed non-bank issuers and approved bank subsidiaries, while state-level regulation is possible for smaller issuers if their state regime is deemed “substantially similar” to the federal framework.

Consumer Protection: The law includes provisions for consumer protection, such as strict marketing rules to prevent deceptive practices and a prohibition on claiming stablecoins are backed by the US government, federally insured, or legal tender. In case of issuer insolvency, stablecoin holders’ claims are prioritized over other unsecured creditors.

Anti-Money Laundering (AML) and Sanctions: Permitted stablecoin issuers are now treated as financial institutions under the Bank Secrecy Act (BSA), requiring them to implement AML compliance programs and coordinate with the Treasury Department on sanctions enforcement. Issuers must also have the technical capability to seize, freeze, or “burn” stablecoins when legally required.

Prohibition on Interest/Yield: The Act prohibits stablecoin issuers from offering interest or yield directly to holders for simply holding or using the stablecoin.

Impact on Stablecoin Supply and Market:

Increased Confidence and Investment: The regulatory clarity provided by the GENIUS Act has instilled greater confidence among institutional investors, banks, asset managers, and crypto firms. This has led to an influx of capital and a willingness to launch new fiat-backed stablecoins.

Boost to Dominant Stablecoins: Tether (USDT) and Circle (USDC), which already dominate the fiat-backed stablecoin market with a combined market cap of over $227 billion, are expected to benefit from this clearer environment.

Entry of Traditional Finance: Major banks like Bank of America, JPMorgan, and Citigroup are reportedly preparing to enter the stablecoin market, signaling a broader engagement of traditional financial institutions.

Demand for US Treasuries: The requirement for 100% reserve backing, largely in short-term US Treasuries, is expected to increase demand for US government debt, further cementing the US dollar’s global reserve currency status. Tether, for instance, was already a significant buyer of US Treasuries in 2024.

Potential for Payment Innovation: Stablecoins are seen as having the potential to revolutionize payments by enabling faster and cheaper international transactions, and by providing financial services to underserved populations.

Timeline:

The GENIUS Act takes effect either 18 months after its enactment or 120 days after primary federal stablecoin regulators issue final regulations, whichever comes earlier. This staggered implementation allows for the necessary regulatory infrastructure to be built.

Overall, the GENIUS Act marks a pivotal moment for the US cryptocurrency market, particularly for stablecoins. It aims to foster innovation while establishing robust safeguards, positioning the US as a leader in the digital asset space.