Here’s what you should know about this area of the crypto industry.
Wednesday marked a fresh milestone for the cryptocurrency industry, with the Senate passing the GENIUS Act to create a federal regulatory framework for stablecoins.
Passing in a 63-30 vote, the GENIUS Act, short for Guiding and Establishing National Innovation for US Stablecoins, will create new guidelines for the issuance and usage of stablecoins.
The Act paves the way for banks, fintech firms, and big-name retailers to issue their own stablecoins or weave them into their current payment platforms.
2025 has been a breakout year for crypto. President Donald Trump’s vocal support, stablecoin issuer Circle’s IPO, and now, stablecoin legislation have all pushed digital assets further into the spotlight.
Here are five things to know about what’s going on with stablecoins.
Stablecoins are a type of crypto meant to hold a steady value to a fiat currency like the dollar. The biggest stablecoins, such as Tether and USD Coin, are “pegged” to the dollar and are backed 1:1 by reserves of cash or cash equivalents like short-term Treasurys.
Unlike volatile cryptocurrencies like bitcoin, stablecoins aim for, as the name suggests, price stability. This makes them useful for everyday transactions and digital payments, as well as easily converting other crypto into fiat.
The GENIUS Act outlines requirements for issuing stablecoins.
Issuers must back each stablecoin with safe assets at a 1:1 ratio. The Act limits reserves to coins and currency, government money market funds, and other highly liquid assets.
Issuers are also required to publish monthly reserve disclosures and comply with anti‑money‑laundering rules. Issuers with over $50 billion in market capitalization are required to provide annual audited financial statements.
In the event that a stablecoin issuer goes bankrupt, the legislation ensures that holders of stablecoins would be given priority claims on the issuer’s reserve assets.
The bill faced hurdles earlier, though. Democrats were concerned that the legislation didn’t do enough to prevent conflicts of interest among Congress and members of the executive branch. It took weeks of negotiation before the bill advanced out of the House.
Stablecoins aren’t just for crypto enthusiasts — some of the biggest names in the S&P 500 are leaning in as well. Meta and Walmart recently announced plans to explore using stablecoins to streamline payments and reduce transaction fees for consumers.
Traditional payment companies like Mastercard and Visa have been integrating stablecoins into their systems for years. Both payments companies have developed blockchain technology that enables settlement in the stablecoin USD Coin and partnered with crypto exchanges.
The president campaigned on a crypto-friendly platform and has remained a vocal supporter of digital assets so far in his term.
In addition to minting meme coins and pushing for less stringent regulation, Trump also has ties to a stablecoin issued earlier this year.
World Liberty Financial, a cryptocurrency firm backed by Trump and his sons, launched the USD1 stablecoin in March of this year. The token is backed by short-term Treasurys, dollar deposits, and cash equivalents.
Mark Cuban theorized this week that the new Trump smartphone launched this week could include a built-in crypto wallet for the president’s $Trump memecoin and USD1.
Since stablecoins are largely pegged cash and cash equivalents, an increase in their use could spike demand for Treasurys as issuers build up their reserves.
An uptick in demand for short term government debt could lead to a steepening of the yield curve and increased volatility in the Treasury market. Bank of America predicts that each $1 that leaves traditional banks in favor of stablecoins will lead to $0.90 of incremental demand for US Treasurys.
