GENIUS Act Heads to Trump’s Desk: Here’s What Will Change
The U.S. is on the verge of enacting its first comprehensive stablecoin regulation. The GENIUS Act—short for Guiding and Establishing National Innovation for US Stablecoins—has passed both chambers of Congress and now awaits President Donald Trump’s signature, expected Friday at 2:30 PM during a formal signing ceremony in Washington, DC.
The bill is poised to transform how stablecoins operate in the U.S., creating new rules for issuers, mandating transparency in reserves, and reshaping DeFi and yield offerings.
When Will the Law Take Effect?
- 18 months after Trump signs it, or
- 120 days after federal regulators (including the Treasury and Federal Reserve) publish final implementation rules
1. Stablecoin Issuers May Seek Banking Licenses
Legal experts say the bill creates strong incentives for stablecoin issuers to become banks.
“Pretty much every stablecoin issuer in the U.S. right now engages in activities outside the scope of the GENIUS license,” said Logan Payne, crypto attorney at Winston & Strawn.
The new GENIUS license permits only pure stablecoin issuance, pushing firms to seek national trust bank charters from the Office of the Comptroller of the Currency (OCC)—as Circle and Ripple have already done—allowing them broader operating authority without needing state-by-state money transmission licenses.
2. Stablecoin Interest and Yield Will Be Banned
One of the most controversial provisions of the bill is a ban on paying interest or yield to stablecoin holders—whether foreign or U.S.-regulated.
- This could eliminate rewards offered by stablecoins like USDC, which currently pays yield through platforms like Coinbase and Kraken
- Payne warns that many current reward models will be “modified or discontinued”
This change is expected to reshape user incentives across centralized platforms and impact DeFi integrations reliant on interest-bearing stablecoins.
3. DeFi Faces Uncertainty
The GENIUS Act leaves decentralized finance (DeFi) largely unaddressed—for now.
“How GENIUS will impact DeFi is intentionally a bit unaddressed,” Payne said, adding that further regulation will likely arrive alongside future bills like the CLARITY Act, which aims to define digital asset classes and regulatory jurisdiction.
Expect “a lot of uncertainty” for DeFi platforms as the legal landscape evolves over the next few years.
4. Mandatory Monthly Reserve Reports
All approved issuers must maintain 1:1 reserves backing their stablecoins, consisting of:
- U.S. dollars or equivalents (e.g., Treasury bills)
- Reserve composition must be publicly disclosed
- Reports must be audited by a registered public accounting firm
- Issuers must certify reserve accuracy to their regulators
These transparency requirements aim to prevent future collapses like TerraUSD by ensuring full backing and public accountability.
5. Ban on Unlicensed and Non-Compliant Stablecoins
Three years after enactment, the law will ban any stablecoin that:
- Is not issued by a federally or state-approved entity, or
- Cannot comply with GENIUS Act standards
Foreign-issued stablecoins will be exempt only if:
- Their home countries maintain comparable regulatory frameworks, and
- They register with the OCC and hold sufficient U.S. reserves to serve domestic customers
This provision tightens control over stablecoins entering the U.S. market while offering limited pathways to compliance for global players.
6. A New Federal-State Oversight Framework
The GENIUS Act establishes a multi-agency regulatory approach, authorizing banks, credit unions, and nonbanks to issue stablecoins.
Regulatory authority will depend on issuer type:
- Federal Reserve
- Treasury Department
- OCC
- FDIC
- National Credit Union Administration
Entities with under $10 billion in stablecoin circulation may choose state-level regulation—but states are not required to create a stablecoin regulator.
What’s Next?
With the GENIUS Act all but certain to become law, attention turns to the CLARITY Act, which now moves to the Senate. If passed, it would complement the GENIUS framework by defining digital asset classifications and clearly delineating SEC and CFTC oversight.
The passage of both bills would represent the most significant legislative advancement in U.S. crypto policy since the industry’s inception.
@ Newshounds News™
Source: Cointelegraph
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