US optimism flourishes with the introduction of the GENIUS Act, yet international voices emphasize the need for caution
The GENIUS Act, recently signed into law, marks a significant turning point in the regulation of stablecoins in the United States. This comprehensive federal framework establishes strict standards for stablecoin issuance, operational integrity, and consumer protections, reshaping the stablecoin landscape both domestically and globally.
Niall Dennehy, co-founder of Nestifi, views the GENIUS Act as a long-overdue turning point in fintech regulation. He believes it will promote safer market participation and broader institutional involvement, bringing much-needed regulatory clarity to the U.S. stablecoin market.
Silvina Moschini, co-founder of Unicoin and SheWorks!, feels a sense of vindication with the passing of the GENIUS Act. She has spent years navigating an uncertain regulatory landscape, and this new law signals the start of a broader era of financial inclusion.
The GENIUS Act requires fully backed, licensed US stablecoin issuance and mandates that issuers hold liquid U.S. assets like Treasuries, similar to traditional banking rules. This enhances trust and transparency in U.S. payment stablecoins, solidifying the U.S. dollar’s role in digital payments and trade.
Jillian Godsil, Blockleaders CEO and Founder, describes the Genius Act as both a milestone and a mirror, reflecting America's intent to lead in digital money on its own terms, with the outcome depending on what happens next, onshore, offshore, and deep in the code.
The Act introduces transparency as a core feature, positioning regulated stablecoins as the backbone for cross-border payments, embedded finance, and programmable money. It is argued to enhance trust, drive mainstream adoption, and bolster the dollar's status as the global reserve currency.
However, the GENIUS Act also imposes robust compliance obligations, including Bank Secrecy Act (BSA), Anti-Money Laundering (AML), Know-Your-Customer (KYC), and sanctions adherence. Issuers must also have technological measures to freeze or burn tokens if legally necessary, tackling concerns about illicit financial activity through stablecoins. Consumer data privacy is protected by prohibiting targeted advertising or sharing data without permission.
Issuers must be insured depository institutions or meet stringent federal-state regulatory approvals, excluding non-financial companies without special approvals. The Act also prohibits false claims around stablecoin legal status or government backing, thus protecting consumers against misrepresentation.
Rodney Prescott, Head of Industry Relations at Zekret, sees the Act as a tool of monetary influence rather than a neutral rulebook. He warns that the Genius Act reinforces U.S. dollar dominance, potentially replacing local currencies in countries with weak or unstable ones.
Yevheniia Broshevan, co-founder of blockchain security firm Hacken, warns that the Genius Act leaves a critical security gap, as it says little about the digital foundations of the stablecoin ecosystem, including code integrity, operational resilience, and incident response.
Stablecoins, now gaining traction in global finance, could potentially benefit the developing world, attract institutional interest, and drive a resurgence in decentralized finance (DeFi). However, issuers outside the U.S., such as European startups or smaller market issuers, face steep barriers in complying with the Genius Act, including holding U.S. treasuries and potentially meeting U.S. banking requirements.
In sum, the GENIUS Act creates a robust, transparent, and secure regulatory environment that not only stabilizes and legitimizes the U.S. stablecoin ecosystem but also sets rigorous standards poised to influence global stablecoin regulation, boosting confidence in these instruments as reliable digital payment methods tied to the U.S. dollar. However, its effective implementation by issuers, regulators, and in the code itself will determine its true impact.
- Niall Dennehy views the GENIUS Act as a long-awaited turning point in fintech regulation, believing it will promote safer market participation and broader institutional involvement, bringing much-needed regulatory clarity to the U.S. stablecoin market.
- Silvina Moschini believes that the passing of the GENIUS Act marks the start of a broader era of financial inclusion, as it requires fully backed, licensed US stablecoin issuance and mandates issuers to hold liquid U.S. assets, enhancing trust and transparency in U.S. payment stablecoins.
- Jillian Godsil describes the Genius Act as both a milestone and a mirror, reflecting America's intent to lead in digital money on its own terms, with the outcome depending on what happens next, onshore, offshore, and deep in the code.
