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The US Senate has passed legislation establishing the first federal regulatory framework for dollar-pegged stablecoins, competing with traditional payment rails.
The Guiding and Establishing National Innovation for US Stablecoins Act, or GENIUS Act, was passed yesterday, on Tuesday, 17 June. It has created regulated pathways for banks, fintech companies and major retailers to issue their own digital dollars under federal oversight.
Stablecoins offer instant settlement capabilities that bypass conventional correspondent banking relationships and clearing systems that have underpinned global commerce for decades. “The GENIUS Act is a meaningful step forward, particularly as it acknowledges that stablecoins are not just speculative instruments, but emerging infrastructure in cross-border payments,” said Shane Riedel, Founder and CEO of Elucidate, the risk decision platform for financial crime.
The legislation sets comprehensive requirements, including full reserve backing with liquid assets such as US dollars and short-term treasury bills (t-bills), monthly public audits of reserves, and anti-money laundering (AML) compliance.
“The GENIUS Act is well-named. It is a very welcome step along the road to robust and secure stablecoin development and adoption,” said Professor Sarah Green, Independent Arbitrator and Mediator, specialising in tech disputes, at Newmans Row. “Hopefully, it will provide a sound example for other jurisdictions to consider when drawing up their own regulatory frameworks.”
Treasury Secretary Scott Bessent, who receives sweeping authority under the act, has projected the US stablecoin market could grow nearly eightfold to exceed $2 trillion within years.
As shown in Deutsche Bank research, stablecoin transactions reached $28 trillion last year, surpassing the combined volumes of Mastercard and Visa. Given that 99% of stablecoin market capitalisation is pegged to the US dollar, these assets have instigated new demand for US treasuries.
The regulatory clarity is already spurring activity amongst major payment processors and financial institutions. Shopify has deployed USDC-powered payments through Coinbase and Stripe, whilst Bank of America’s chief executive revealed last week that the bank is exploring stablecoin issuance following industry discussions. JPMorgan Chase has taken a different approach, launching JPMD, a deposit token designed to function like a stablecoin but remain tightly integrated with traditional banking systems.
However, the bill includes provisions designed to prevent large technology companies from directly entering the stablecoin market without establishing or partnering with regulated financial entities — a measure aimed at addressing monopoly concerns.
The restriction reflects broader anxieties about Big Tech’s expansion into financial services, though the legislation could fail to provide sufficient safeguards against dominant platforms leveraging stablecoins to further entrench their market positions.
“The bill sends a strong signal: responsible innovation is welcome, but it must come with embedded, auditable risk controls,” explained Riedel. “My hope is that it catalyses a shift from compliance as a reporting exercise to compliance as infrastructure, where rules, risk logic, and dynamic risk models are built into the rails. That is how we make programmable money safe, scalable, and trusted.”
