GENIUS Act

Implications on Stablecoins

June 19, 2025 • Estimated Reading Time: 3 minutes

Last week, the U.S. Senate passed the GENIUS Act (Guaranteed Electronic Negotiable Instruments for the U.S. dollar), marking the first major federal stablecoin legislation to gain traction in Washington. And while it still needs to clear the House, the signal is clear: U.S.-regulated stablecoins are about to get a serious boost.

Let’s break down what’s in the bill, how this could reshape the stablecoin landscape, and what it means for market positioning.

🧠 What the GENIUS Act Actually Does

  • Creates clear federal oversight of fiat-backed stablecoins under the Fed.

  • Requires full 1:1 reserve backing — no rehypothecation, no funny business.

  • Gives licensed nonbanks (like Circle) the green light to operate across state lines.

  • Empowers the U.S. dollar to compete digitally against alternatives like China’s e-CNY or algorithmic stablecoins.

This isn't just about regulation. It's a blueprint for institutional adoption, embedded into the traditional financial system.

🥊 USDC vs. USDT: Who Wins?

This bill is a direct tailwind for USDC, Circle’s U.S.-regulated dollar-backed stablecoin:

  • Circle is already aligned with transparency requirements (monthly attestations, U.S.-based reserves).

  • Major financial firms (Visa, Stripe, Robinhood) already integrate with USDC infrastructure.

  • Tether (USDT), which operates from offshore jurisdictions, faces increased regulatory uncertainty and potential delistings from U.S. platforms in a GENIUS Act world.

Expect a narrative shift: USDC as “the compliant stablecoin,” while USDT becomes more of a trading engine in emerging markets and offshore venues.

💣 What to Watch For

  • House version of the bill: Passage likely won’t be as smooth. Expect political noise and lobbying.

  • Exchange responses: U.S.-domiciled exchanges may prioritize USDC pairs.

  • Capital flows: If institutions shift stablecoin treasuries from USDT → USDC, we could see volatility and arbitrage in DeFi pools.

🛡️ Hedging the Transition

While USDC looks like the likely long-term winner in the U.S., don’t ignore short-term risk:

  1. Diversify stablecoin exposure across USDC, USDT, and DAI (where appropriate).

  2. Use DeFi platforms like Curve or Uniswap to spot flows and imbalances between stables.

  3. Avoid getting stuck in lower-liquidity stablecoins on CEXs if regulation accelerates.

🧠 Final Take

The GENIUS Act is the closest the U.S. has come to saying, “We’re going all in on dollar-backed stablecoins.” It’s bullish for mainstream crypto adoption and payment rails — but it also sets the stage for a realignment in stablecoin dominance.

Circle and USDC may be the biggest beneficiaries — but for now, hedging across multiple stables is still smart. This game isn’t over.