Last week, U.S. President Donald Trump signed the Guiding and Establishing National Innovation for U.S. Stablecoins Act (GENIUS Act). This is the first federal US law dedicated to regulating stablecoins. The legislation establishes a national framework for dollar-backed stablecoins, aiming to enhance transparency and regulatory certainty in the digital dollar market. Its passage came during “Crypto Week” on Capitol Hill.

Stablecoins have attracted increasing global attention due to their rapid adoption and growing transaction volumes, which, according to the World Economic Forum, surpassed those of Visa and Mastercard combined in 2024. Over the past year, stablecoin usage has increased by 28 per cent, yet fewer than ten major economies have implemented dedicated legislation for them.

In response to this growing market and regulatory gap, President Trump emphasised that the GENIUS Act “is going to make America the undisputed leader in Digital Assets.” The Act targets explicitly issuers that are insured depository institutions, including banks, credit unions, bank subsidiaries, and certain nonbank financial entities approved by the Federal Reserve.

Some key provisions of the Act include mandates that issuers must maintain a 1:1 reserve ratio, with reserves held in cash or U.S. Treasury securities. Issuers are required to disclose the composition of these reserves, undergo regular audits by registered public accounting firms, and comply with the Bank Secrecy Act to enforce anti–money laundering (AML) and counter–terrorism financing (CTF) measures. Additional requirements include full backing by U.S. dollars or short-term Treasury bills, monthly reserve disclosures, annual audits for issuers with more than USD 50 billion in circulation, legal protections granting stablecoin holders senior claims on reserves in the event of insolvency, and oversight from both federal and state regulators.

 Similar regulatory efforts have emerged internationally. The European Union’s Markets in Crypto-Assets (MiCA) Regulation, which took effect in December 2024, governs stablecoins under two categories: e-money tokens (EMTs), which are backed by a single fiat currency, and asset-referenced tokens (ARTs), which are supported by a basket of assets. Under MiCA, only licensed e-money or credit institutions are permitted to issue EMTs, while ART issuers must be based in the EU and authorised by their respective regulators.

 In Hong Kong, the Stablecoin Ordinance, enacted in May 2025, mandates licensing for issuers of Hong Kong dollar–backed stablecoins, requires full reserve backing with high-quality liquid assets, imposes AML and CFT compliance, and enforces regular audits and disclosures.

 Implications for Institutions

The GENIUS Act aligns the U.S. with other jurisdictions such as the EU and Hong Kong that have established stablecoin regulations. Clear legal rules are expected to enhance trust among investors, consumers, and institutions, making U.S.-regulated stablecoins more competitive globally due to strong oversight and legal protections. However, the heightened operational, reporting, and audit requirements could raise compliance costs,  potentially limiting market participation to financially robust issuers.

 For financial institutions, the Act also enhances their ability to deliver Crypto-as-a-Service at scale, enabling institutions to integrate custody, financing, trading, staking, tokenisation, and payment capabilities directly with USDC. 

 For payment service providers (PSPs), the legislation strengthens the legal foundation for real-time settlement, low-cost payments and borderless commerce. This enables PSPs to confidently offer USDC-based payments with reduced fees, faster settlement, and expanded global reach, while ensuring compliance. 

Implications for Consumers

For retail users, the GENIUS Act reinforces the transparency, safety, and regulatory oversight of USDC by ensuring that stablecoins remain fully backed and regularly audited under federal law. Greater legal certainty is expected to expand its availability at checkouts, in online transactions, and across financial applications. Consumers can have increased confidence that USDC is a secure and regulated digital dollar option.

 The U.S. move comes as Kenya advances its regulatory efforts in the virtual asset space through the Virtual Asset Service Providers (VASP) Bill. Like the GENIUS Act, the VASP Bill seeks to bring clarity, consumer protection, and systemic safeguards to the digital asset sector, positioning Kenya to meet emerging global standards while enabling responsible innovation in its domestic market.