The GENIUS Act has officially been signed into law by President Donald Trump, marking a major shift in the regulation of stablecoins and digital assets in the United States.
Announced with claims of making the country the global centre for cryptocurrency, the law introduces strict new standards for stablecoin issuers, encourages demand for US Treasuries, and aligns federal oversight with consumer protection.
But beyond the political messaging, the effects are already being felt. From changes in banking strategies to new product development, the financial world is adjusting to the immediate consequences of this new legislation.
The First Regulatory Framework for Stablecoins Has Arrived
For the first time in the United States, stablecoins now operate under a defined federal framework. The GENIUS Act introduces clear rules for stablecoin issuers, including full backing requirements, audit obligations, marketing restrictions, and recovery protocols.
Stablecoins must now be backed one-to-one with liquid assets such as US dollars or short-term Treasury bills.
Issuers are required to make monthly public disclosures of their reserves, ensuring transparency and minimising the risk of another collapse similar to the one experienced with TerraUSD.
The law also introduces marketing controls, forbidding issuers from implying that their stablecoins are government-backed or insured. Additionally, it aligns federal and state regulations, providing consistent expectations across the country.
One important clause ensures that in the event of insolvency, stablecoin holders have priority over other creditors. This measure provides a backstop of protection that was previously unavailable to everyday users.
These new rules create pressure for both domestic and international stablecoin issuers. Large entities such as Circle, Paxos, and PayPal now have to comply or risk being excluded from the US market.
Foreign issuers, including those operating from less-regulated jurisdictions, must also follow the new rules if they wish to serve US-based users. The framework forces a shift from speculative issuance toward audited, compliant digital cash.
The Act does not only focus on structure. It also places stablecoin issuers under the Bank Secrecy Act. This inclusion brings full anti-money laundering and sanctions compliance responsibilities.
Issuers must now implement customer identity checks, conduct risk assessments, and maintain the technical ability to seize or freeze stablecoins when ordered by a court.
This requirement introduces serious operational overhead but also provides regulators with more tools to address illicit activity.
The early impact of this is already being felt. Large banks such as JPMorgan and BNY Mellon are exploring new products and services that comply with the Act.
JPMorgan has already taken steps toward offering crypto-backed loans using spot Bitcoin ETFs and is considering direct lending against Bitcoin and Ethereum.
This would be a major change for the institution and reflects the opportunities that the GENIUS Act now creates for regulated firms willing to offer secure and compliant exposure to digital assets.
How Financial Institutions Are Responding
The GENIUS Act is not only about rules for stablecoin issuers. It is also a tool for shifting the wider financial landscape, and institutions are beginning to adapt.
One of the Act’s key goals is to reinforce the global status of the US dollar. By requiring stablecoin issuers to hold reserves in dollars and Treasury bills, the law effectively generates sustained demand for US government debt.
This move has attracted attention from global financial analysts. UBS and others believe the law may start a new growth phase in short-term Treasury demand.
With issuers needing to hold billions in liquid assets, the US Treasury Department could gain more flexibility to manage interest-bearing instruments and reduce reliance on older or less liquid bonds.
In practice, this increases the presence of stablecoins in traditional financial strategy and further connects crypto to the existing capital markets.
Beyond the bond market, the GENIUS Act is also prompting practical changes in payment networks and financial services. For example, Western Union has already announced plans to integrate stablecoin support into its digital wallets.
The remittance provider is developing services that allow customers to buy, hold, and convert stablecoins, aiming to cut the cost and time of international money transfers.
The company also sees an opportunity to serve people in countries with unstable currencies by offering a more stable digital alternative.
The legal clarity offered by the GENIUS Act gives banks and service providers the confidence to explore digital assets without risking regulatory confusion. As a result, competition is increasing.
Traditional lenders such as Citibank and Bank of America are investigating stablecoin issuance or considering collateralised lending programs.
Meanwhile, some crypto-native platforms that once dominated these services, like Celsius and Genesis, have faded from relevance, leaving space for regulated banks to take their place.
This shift is particularly important for large investors. Crypto-backed loans, which once relied heavily on decentralised or offshore platforms, are now being considered by regulated financial institutions.
With $39 billion in outstanding crypto-backed debt reported earlier this year, the demand for on-chain lending is clear.
The GENIUS Act does not regulate crypto lending directly, but by creating legal pathways for stablecoins, it enables banks to use these assets more confidently within structured lending products.
There are also operational considerations that must now be addressed. Banks must ensure proper treatment of digital assets under bankruptcy law, enforceability of collateral pledges, and title transfers.
These are complex questions, but the Act’s clarity offers a starting point for working through them. The presence of a federal framework helps banks build products that comply with existing legal standards, while also encouraging new engagement with tokenised financial tools.
Conclusion
The GENIUS Act has only just become law, but its impact is already visible. By creating the first federal framework for stablecoins, the United States has given institutions and service providers a legal foundation to build on.
In response, banks are preparing new offerings, stablecoin issuers are adjusting operations, and payment companies are adopting digital assets more directly.
At the same time, demand for Treasury bonds and regulatory-compliant digital dollars is increasing.
While long-term effects will take time to play out, the immediate consequences suggest that the Act is already changing how digital assets interact with traditional finance in the United States.