The Senate passed the GENIUS Act on Wednesday, which established a federal regulatory framework for stablecoins, marking a new milestone for the cryptocurrency sector.
The GENIUS Act, which stands for Guiding and Establishing National Innovation for US Stablecoins, was passed by a vote of 63-30 and would establish new rules for stablecoin issuance and use.
The Act makes it possible for banks, fintech companies, and prominent retailers to either issue their own stablecoins or incorporate them into their existing payment systems.
Crypto has had a tremendous year in 2025. Stablecoin legislation, the IPO of stablecoin issuer Circle, and President Donald Trump’s outspoken backing have all increased awareness of digital assets.
Here are five facts concerning stablecoins that you should be aware of.
What is a stablecoin?
The purpose of stablecoins, a kind of cryptocurrency, is to maintain a constant value relative to fiat money, such as the dollar. Cash reserves or cash equivalents, such short-term Treasurys, provide a 1:1 backing for the largest stablecoins, like Tether and USD Coin, which are “pegged” to the dollar.
Stablecoins strive for price stability, as the name implies, in contrast to volatile cryptocurrencies like bitcoin. They are therefore helpful for routine transactions, digital payments, and the simple conversion of other cryptocurrencies into money.
What does the Genius Act do?
The GENIUS Act specifies the conditions for stablecoin issuance.
Issuers are required to provide a 1:1 ratio of secure assets to each stablecoin. The Act restricts reserves to government money market funds, coins and currencies, and other assets that are extremely liquid.
In addition to complying with anti-money-laundering regulations, issuers must disclose monthly reserve statements. Issuers with market capitalizations more than $50 billion must provide audited financial statements every year.
In the event that a stablecoin issuer goes bankrupt, the legislation guarantees that stablecoin holders will have priority rights on the issuer’s reserve assets.
However, the law had several difficulties in the beginning. Democrats expressed worry that the law did not go far enough to avoid conflicts of interest between members of Congress and the executive branch. The measure passed out of the House after weeks of negotiations.
Stablecoins are being adopted by large corporations
Some of the largest companies in the S&P 500 are also investing in stablecoins, so they’re not only for cryptocurrency aficionados. Walmart and Meta recently revealed their intentions to investigate the use of stablecoins to simplify payments and lower transaction costs for customers.
Stablecoins have long been included into the systems of conventional payment corporations like as Visa and Mastercard. Both payment providers have collaborated with cryptocurrency exchanges and created blockchain technology that permits settlement in the stablecoin USD Coin.
Trump has connections to the stablecoin industry
The president has been an outspoken advocate for digital assets during his presidency and ran on a platform that was supportive of cryptocurrencies.
Trump is also associated with a stablecoin that was established earlier this year, minting meme coins and advocating for less strict regulation.
In March of this year, World Liberty Financial, a cryptocurrency company supported by Trump and his sons, introduced the USD1 stablecoin. The token is supported by dollar deposits, cash equivalents, and short-term Treasurys.
A crypto wallet for the president’s $Trump memecoin and USD1 may be included into the new Trump smartphone, according to a theory put out by Mark Cuban this week.
Treasury market volatility might be caused by stablecoins
The demand for Treasurys may rise as issuers expand their reserves due to the fact that stablecoins are mostly based on cash and cash equivalents.
Increased demand for short-term government debt may cause the yield curve to steepen and the Treasury market to become more volatile. According to Bank of America, every $1 that leaves traditional banks in favor of stablecoins will result in an additional $0.90 in demand for US Treasurys.
