GENIUS Act signed into law: Americans can soon store their wealth in riskier stablecoins

President Trump has signed the GENIUS Act (Guiding and Establishing National Innovation for U.S. Stablecoins Act of 2025), also known as Senate Bill 1582, into law.

Stablecoins can potentially reduce payment processing costs while speeding up merchant payments when purchasing goods. The current processing system for credit and debit cards involves a slew of intermediaries that impede quick, low-cost payment processing.

The Act allows people to own US dollars in stablecoins, a form of cryptocurrency that is backed by actual assets, including the US dollar and short-term US Treasuries. Their value to the dollar is pegged at 1-to-1, which helps reassure stablecoin holders that the value of their holdings does not unexpectedly decline. Common cryptocurrencies that are not pegged to the dollar and fluctuate wildly include Bitcoins and Ethereum.

Critically, these stablecoins are not sovereign coins issued by the US government and do not come with any form of loss protection, such as FDIC bank insurance in case of issuer collapse. The Act only prioritizes stablecoin holders over other creditors in case of issuer bankruptcy or collapse. An example of a recent collapse was the Terra UST fiasco of 2022, which wiped out $45 billion in one week. Holders also cannot receive interest or yield on their savings for simply retaining or using these stablecoins, unlike cash in a bank savings account.

Issuers are required to report on their holdings monthly while complying with anti-money laundering laws such as the Bank Secrecy Act. They are also prevented from deceptive marketing of these coins. Issuers are regulated by either the State or Federal payment stablecoin regulator until they have issued more than $10 billion, in which case they are Federally regulated unless they obtain a State waiver. Banks and other non-financial institutions can be authorized to issue stablecoins, but three years from now, those not authorized cannot. Due to the complexity, full implementation of the Act may take several years.

Readers owning cybercoins can safeguard them from online thieves by storing them in an offline wallet, like this Trezor sold on Amazon.