GENIUS Act Explained: Everything You Need to Know About the Bill

President Trump tweeted yesterday that he has struck a deal with the congressmen necessary to pass the Genius Act in the House. The voting is expected to go on today, and the decision could have serious repercus sions for the U.S., potentially positioning the nation as a leading force in the global digital economy.

A lot has been said about the bill, primarily how it focuses on establishing a federal regulatory framework for the issuance and widespread adoption of stablecoins in America. But do you know what actually changes? So let’s get down to the nitty and gritty of it:

The GENIUS Act

The Guiding and Establishing National Innovation for U.S. Stablecoins Act, also known as the GENIUS Act of 2025, sets several federal guardrails for how dollar-pegged digital assets can be issued, managed, and regulated in the United States

At 57 pages deep, the legislation rewires how crypto companies and fintechs interact with digital dollars. It also defines who is allowed to mint stablecoins, by how much, and what the necessary reserve backings are for companies to issue digital dollars

Who’s Allowed to Issue — and Who’s Getting Cut Off

Only three types of entities are allowed to issue stablecoins under the new GENIUS Act: Subsidiaries of regulated banks, nonbank entities approved at the federal level, and state-licensed issuers with less than $10 billion in market cap

Anyone outside those categories, including unapproved cryptocurrency projects issuing stablecoins, could face a fine of up to $100,000 per day for every token issued

This effectively bans most DeFi projects from independently circulating dollar-pegged currencies, unless they request approval from Federal or State licensing.

No Yield, No Speculation

The GENIUS Act preemptively bans stablecoin issuers from providing any sort of action that would resemble financial rewards to holders. This includes lending, staking, or generating yield from said coins, making dollar-pegged cryptocurrencies focus solely on utility as they’d serve primarily as payment tools

Dollar Peg at All Costs

Approved issuers must maintain their 1:1 peg with the U.S. dollar at all times. To guarantee that these companies are able to keep stablecoins “stable”, the GENIUS Act requires strict backing limited to short-term treasuries, cash, demand deposits, and specific money market funds

Moreover, these reserves are to be audited monthly by a registered public accounting firm and annually by qualified public accountants. The bill strictly prohibits companies from using reserves for anything other than providing liquidity to the issued digital currency

State vs Federal, a $10 Billion Cap

State-licensed issuers will have a limit of $10 billion in market capitalization. If a company surpasses that amount, it will be required to either transition to a federal license or simply stop producing new coins

Stablecoins as NOT Securities

A long-lasting debate involving digital assets may have come to an end, at least for stablecoins, under the GENIUS Act. The bill strictly clarifies that stablecoins are neither considered securities nor commodities, as long as they’re properly in line with the proposed regulatory framework

This move accomplishes two things: First, it further reinforces stablecoins as payment providers, and secondly, it effectively removes the SEC from the conversation

Algorithmic Stablecoins In Question

The GENIUS Act requests a detailed study about “endogenously collateralized stablecoins.” These are currencies backed not by stable assets like cash, but by another volatile digital asset. A prime example is the Terra/Luna debacle, where TerraUSD (UST) catastrophically collapsed after its sister token, Luna, lost significant value, demonstrating the inherent instability of this design.

Precisely a year after the bill is passed, the Secretary of the Treasury will provide a detailed study about these types of stablecoins, including details about non-payment stablecoins, their participants, utilities, and the nature of reserve compositions

A Global Push For Stablecoin Regulation

The bill also requests the Fed and the Treasury to push for reciprocal agreements with foreign jurisdictions, potentially creating similar stablecoin regulations all across the globe. That would also facilitate stablecoins issued abroad to integrate the U.S. markets

If approved, regulators must finalize implementation rules within 180 days. The law itself goes live after either 18 months or 120 days post-rulemaking, whichever comes first. Pending applicants get a 12-month safe harbor once the law is active.

The bill sets the precedent for stablecoin regulation in the United States. While some celebrate the proposal as a major step toward innovations, others have harsh criticism of the porposed legislation. The GENIUS Act is expected to have another go at the House today, so stay tuned for new updates.

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