March 28, 2025
By Anjali Kochhar
The United States is making significant strides in regulating stablecoins, aiming to establish a framework that balances innovation with consumer protection. The proposed Guiding and Establishing National Innovation for U.S. Stablecoins (GENIUS) Act is designed to provide clear rules for stablecoin issuers, ensuring financial stability while reinforcing the U.S. dollar’s dominance in the digital economy.
Introduced by Senators Bill Hagerty (R-TN), Tim Scott (R-SC), Kirsten Gillibrand (D-NY), and Cynthia Lummis (R-WY), the GENIUS Act defines payment stablecoins as digital assets pegged to a fixed monetary value. It sets licensing procedures for issuers, enforces reserve requirements, and establishes oversight mechanisms. Stablecoin issuers with holdings above $10 billion would fall under the Federal Reserve’s supervision, while the Office of the Comptroller of the Currency (OCC) would regulate smaller nonbank issuers.
Senator Hagerty has emphasised that stablecoin regulation could enhance transaction efficiency and increase demand for U.S. Treasuries. Meanwhile, Senator Lummis has highlighted the importance of bipartisan collaboration in maintaining U.S. financial leadership, stating that regulatory clarity is essential for preserving dollar dominance while fostering responsible financial innovation.
With the GENIUS Act advancing to the full Senate for debate, bipartisan support is evident. The bill was passed by the Senate Banking Committee with an 18-6 vote, including backing from five Democrats. Key amendments include regulatory reviews for stablecoin issuers and prioritizing customer claims in bankruptcy proceedings. Senator Tim Scott has stressed that fostering innovation within the U.S. is necessary to maintain the country’s global financial competitiveness.
Industry Reactions: Regulation as a Game-Changer
Edul Patel, Co-founder and CEO of Mudrex, sees the GENIUS Act as a sign that the U.S. is catching up to other major economies, such as the EU, Hong Kong, and Singapore, which have already implemented strict stablecoin regulations. He notes that “as the stablecoin market cap surpasses $230 billion, U.S. leadership in regulation could set global standards, influencing policies worldwide and helping move the needle for crypto regulations.” He believes that these regulations will drive institutional adoption among banks and governments, integrating stablecoins into mainstream finance. However, he also acknowledges that the U.S.’s push for regulation could be a strategic move to maintain the dollar’s dominance in an increasingly digital economy.
Siddharth Ugrankar, CEO & Co-founder of Qila.Io, points out that the GENIUS Act introduces explicit reserve requirements and prohibits algorithmic stablecoins, making the space more transparent and secure. While these rules could enhance consumer confidence and institutional adoption, they may also create hurdles for smaller players. “Such regulatory clarity will bring in stability, consumer confidence, and institutional adoption, making stablecoins a central bridge between traditional finance and crypto,” Ugrankar says. However, he warns that “greater issuance control and reserves will be potentially viewed as raising concerns of surveillance, constraining decentralisation, and undermining innovation by smaller players.”
Vikram Subburaj, CEO of Giottus Crypto Platform, believes that stablecoin regulation is not just about oversight it is also about enabling innovation while protecting consumers. He explains, “the growing focus on stablecoins is akin to what we saw with Bitcoin earlier an attempt to understand, regulate, and ultimately integrate.” Subburaj anticipates that as regulatory clarity improves, stablecoins will be added to the balance sheets of major institutions, signaling trust and maturity in the market. He also sees expanding retail adoption as a key outcome, with stablecoins playing a broader role in payments, remittances, and settlements.
The Roadblocks: Concerns Over Big Tech’s Role
Despite the bipartisan momentum behind the GENIUS Act, some lawmakers and industry observers remain concerned about its implications. Senator Elizabeth Warren and other Democrats argue that the bill could allow large tech corporations to gain disproportionate control over the financial system. They worry that letting stablecoin issuers choose between state or federal oversight might weaken consumer protections and introduce financial stability risks. Warren has warned that a lack of uniform federal safeguards could enable tech giants to dominate segments of the digital dollar ecosystem, creating new regulatory and security challenges.
Some experts in the industry also fear that the regulatory framework, while enhancing stability, could stifle innovation. High compliance costs might favor large institutions over decentralized finance (DeFi) startups, potentially limiting competition and innovation. This concern is particularly relevant as the stablecoin market continues to grow, with various players including ranging from crypto-native companies to traditional financial institutions—vying for a foothold in the space.
Financial Institutions Enter the Stablecoin Market
As regulatory developments unfold, major financial institutions are actively expanding into the stablecoin sector. Fidelity Investments is reportedly planning to launch its own stablecoin as part of its broader push into digital assets. This move aligns with Fidelity’s longstanding involvement in the cryptocurrency industry and its recent filing to offer a digital U.S. money market fund. By entering the stablecoin space, Fidelity joins financial giants such as BlackRock and Franklin Templeton, both of which have already launched tokenized assets.
Additionally, World Liberty Financial, a company backed by former President Trump, has announced plans to introduce its own stablecoin. This highlights the shifting stance of political figures toward digital assets, contrasting with the previous administration’s skepticism. While stablecoins have faced scrutiny over potential financial stability risks, the current regulatory push suggests a growing acceptance of their role in the evolving financial landscape.
Conclusion: A Defining Moment for Stablecoins
The U.S. government’s push for stablecoin regulation marks a turning point for the cryptocurrency industry. The GENIUS Act aims to bring much-needed clarity and legitimacy to stablecoins, but it also raises concerns about regulatory overreach, centralisation, and potential barriers to innovation.
For industry leaders, the evolving regulatory landscape presents both opportunities and challenges. While stablecoin issuers may initially face hurdles adapting to new compliance requirements, the long-term benefits greater stability, increased adoption, and integration into mainstream finance could outweigh the short-term disruptions.
As the bill moves through the Senate, its final provisions will determine how stablecoins fit into the broader financial system. Whether the legislation fosters innovation while protecting consumer interests remains to be seen. However, one thing is clear: the U.S. is no longer on the sidelines. With stablecoins surpassing a $230 billion market cap and institutional interest rising, the country is taking decisive steps to shape the future of digital assets on a global scale.
About the author
Anjali Kochhar covers cryptocurrency and blockchain stories in India as well as globally. Having been in the field of media and journalism for over four years now, she has developed a sharp news sense and works hard to present information that goes beyond the obvious. She is an avid reader and loves writing on a wide range of subjects.
