On July 18, President Trump signed the Guiding and Establishing National Innovation for U.S. Stablecoins (GENIUS) Act into law.
The GENIUS Act established regulations for stablecoins: cryptocurrencies pegged to “stable” assets such as the U.S. dollar. It specified “permitted payment stablecoin issuers” including both banks and nonbank entities. The law also clarified reserve requirements — the underlying assets held in reserve by the issuer to back the stablecoins, such as U.S. dollars or Treasury bills.
So, how might the GENIUS Act impact retirees?
Some stablecoins are designed to generate a yield, despite being spendable like cash. That yield could come from the underlying reserve asset, or from lending out the underlying asset.
“For retirees, stablecoins could offer higher-yielding, low-volatility cash instruments,” explained David Materazzi, CEO of Galileo FX. “In effect, owners could get the performance of a money market fund with something as spendable as cash. That makes holding liquidity more rewarding without increasing exposure to risk assets.”
Owners can transfer stablecoins internationally for pennies, and near-instant speeds. That could make life far easier for family members to support one another across borders and currencies.
Magnus Larsson, founder of fintech company MAJORITY, sees huge advantages for international transfers. “Stablecoins, when properly backed and transparent, offer a more efficient way to move money globally without the delays and fees traditional systems impose, transforming money movement much like VoIP transformed telecom.”
Cryptocurrencies allow for smart contracts, in which the owner can set up self-executing orders within the blockchain technology. In other words, owners can set up automated transfers within the cryptocurrency itself — without needing a human intermediary such as a trustee.
“Smart contracts allow more transparent and controlled gifting, even from beyond the grave,” noted financial planner Christina Lynn of Mariner Wealth Advisors. “While this remains speculative, regulated stablecoins could someday support innovative estate planning tools that automate distributions to beneficiaries and reduce traditional trust administration costs.”
Blockchain technology stores every transaction in its history. That transparency is useful, but it also makes the owner’s spending public.
“Every transaction becomes traceable, timestamped and stored,” observed Materazzi. “Retirees used to cash will lose financial privacy entirely. If stablecoins become the default for Social Security or Medicare reimbursements, then spending data becomes a public-private asset.”
Nonbank entities can now issue stablecoins — without being FDIC-insured.
Crypto exchanges have failed in the past, or suffered theft. Remember the Mt. Gox heist in 2014? Hackers made off with 850,000 Bitcoins — worth over $100 billion today.
Retirement planning counselor Jake Falcon of Falcon Wealth Advisors sees huge risk among issuers. “Without FDIC insurance or SIPC protections, losses could be permanent,” he said. “Allowing nonbank entities to issue digital currencies without uniform oversight could echo the 19th-century wildcat banking era, where unregulated banks issued their own notes, often leading to collapse.”
Stablecoins offer both opportunities and risks to retirees. Proceed with caution after speaking with your financial advisor.
