The GENIUS Act: A New Era of U.S. Stablecoin Regulation

Abstract

The Guiding and Establishing National Innovation for U.S. Stablecoins (GENIUS) Act introduces a structured regulatory framework for stablecoins, addressing key concerns related to oversight, reserve backing, and compliance. By establishing federal oversight for large stablecoin issuers while allowing smaller ones to remain state-regulated, the Act seeks to enhance financial stability while encouraging innovation. This paper evaluates the Act's key provisions, its impact on stablecoin issuers such as Tether (USDT) and USD Coin (USDC), and its broader implications for banking, financial innovation, and the U.S. dollar's global position. While the Act seeks to provide regulatory clarity, challenges remain, including compliance burdens, risks of market concentration, and unintended consequences for decentralized finance (DeFi). The paper concludes that while the GENIUS Act is a step toward regulatory modernization, its effectiveness will depend on implementation, adaptability, and international coordination.

Keywords: Stablecoins, regulation, digital assets, innovation, cryptocurrencies, blockchain, decentralized finance

JEL Classification: G18, G21, E42, K22, L51, F33