The US has created its first regulatory framework for stablecoins after President Donald Trump signed the GENIUS Act into law on Friday.
The law requires stablecoins to be backed by liquid property resembling U.S. {dollars} and short-term Treasury payments. Issuers may even have to publicly report their reserve holdings each month.
Stablecoins are digital tokens that intention to hold a set worth, often pegged to the U.S. greenback. They’re used primarily by crypto merchants to transfer funds shortly between tokens, however the business hopes they’ll quickly be used extra broadly for funds.
The law handed the Home of Representatives by a vote of 308 to 122 after it was earlier accredited by the Senate. Practically half of Home Democrats and most Republicans supported the invoice.
Crypto corporations say the law will improve belief in stablecoins and make it simpler for banks, companies and shoppers to undertake them. A number of crypto corporations, together with Circle and Ripple, are in search of banking licenses to decrease prices and achieve direct entry to the monetary system.
The stablecoin market is presently valued at over $260 billion. Supporters of the law consider it’s going to improve demand for U.S. authorities debt, as issuers will want to maintain Treasury payments to assist their tokens.
The law follows an extended lobbying effort by the crypto business, which donated greater than $245 million within the 2024 elections to assist candidates backing crypto-friendly insurance policies.
On the signing occasion, Trump mentioned the brand new law would assist strengthen the greenback and promote U.S. management in digital finance. He additionally thanked crypto executives for his or her assist throughout his marketing campaign. Trump has beforehand launched his personal digital coin and owns a part of a crypto agency known as World Liberty Monetary.
Critics say the law ought to have included stronger protections in opposition to cash laundering and positioned limits on stablecoin issuance by giant tech corporations or overseas entities. They argue the present guidelines depart gaps that may very well be utilized by criminals or hostile governments.
Trump additionally signed an govt order earlier this 12 months to create a strategic bitcoin reserve.
