Nikolas Sargeant
President Donald Trump is expected to sign the GENIUS Act into law Friday afternoon, marking a historic moment for cryptocurrency regulation in the United States. The Guiding and Establishing National Innovation for US Stablecoins Act passed the House on Thursday and will fundamentally reshape how stablecoin issuers operate in the American market. Trump has demanded swift passage of the legislation, posting on Truth Social that lawmakers should get the bill to his desk "ASAP — NO DELAYS, NO ADD ONS." The legislation will take effect 18 months after signing or 120 days after federal regulators issue final implementation rules, whichever comes first.
PASSED: The GENIUS Act will create a clear regulatory stablecoin framework for asset innovators to thrive in the U.S., bring our payment system into the 21st century, and preserve the dollar’s dominance as the world’s reserve currency.
— Tom Emmer (@GOPMajorityWhip) July 17, 2025
A massive WIN! pic.twitter.com/f9Wg4l8myx
The new law creates powerful incentives for stablecoin companies to pursue traditional banking licenses rather than the specialized stablecoin permits outlined in the act. Legal experts suggest most current issuers engage in activities beyond the scope of the GENIUS Act's limited licensing framework, making national trust bank charters more attractive. This shift could consolidate the industry around established financial institutions while requiring comprehensive state-by-state licensing for companies choosing the stablecoin-specific route.
One of the most controversial provisions eliminates yield offerings on stablecoins, effectively banning issuers from providing interest or returns to holders. This change will significantly impact marketing strategies that have driven adoption, forcing companies like Circle and others to restructure their reward programs. The legislation also introduces strict reserve requirements, mandating 1:1 backing with US dollars or Treasury securities, along with monthly public reporting and independent auditing of these holdings.
The regulatory framework establishes a dual federal-state system overseen by multiple agencies including the Treasury, Federal Reserve, and Office of the Comptroller of the Currency. Foreign stablecoin issuers face a three-year deadline to comply with US requirements or face prohibition from American markets, though exemptions exist for countries with comparable regulatory regimes. The law represents the most comprehensive attempt to regulate digital currencies at the federal level, potentially setting global standards for stablecoin governance.
Traditional Banks Position for Stablecoin Entry
The GENIUS Act's impending passage comes as major Wall Street banks accelerate their own stablecoin development efforts. Bank of America CEO Brian Moynihan revealed extensive preparation for the nation's second-largest bank to launch its own stablecoin, though he emphasized that timing depends on improved market conditions and client demand. Meanwhile, Citigroup is actively exploring stablecoin issuance as part of a comprehensive digital asset strategy that includes tokenized deposits and crypto custody services. The regulatory clarity provided by the GENIUS Act could accelerate these traditional banks' entry into the stablecoin market, potentially reshaping the competitive landscape currently dominated by crypto-native firms like Circle and Tether.
