US Enacts GENIUS Act Creating $200B Stablecoin Market

The United States has established a federal regulatory framework for payment stablecoins through the GENIUS Act, signed in July 2025, which classifies stablecoin issuers as financial institutions subject to banking regulators. This law requires stablecoins to be fully backed by cash or short-term U.S. Treasury bills, mandates monthly public audits of reserves, and includes consumer protections such as prohibiting interest payments on stablecoins and prioritizing holders in case of issuer insolvency. The GENIUS Act aims to bring stability and trust, potentially fueling a market valued in the hundreds of billions and integrating stablecoins firmly into the U.S. financial system, with projections of market capitalization surpassing $3 trillion by 2030. Despite these safeguards, economists warn of systemic risks including liquidity shifts from traditional bank deposits to Treasury instruments, which could affect monetary policy effectiveness and increase interest rate risks. Globally, regulatory approaches vary: while regions like the EU, Singapore, UAE, Hong Kong, China, and South Korea have developed or are developing their own frameworks reflecting local financial realities, there is ongoing movement toward harmonizing international standards to reduce regulatory arbitrage and systemic vulnerabilities. The rapid growth of stablecoins presents challenges such as systemic risk exposure, investor protection concerns, and the need for coherent global regulation to ensure safe innovation and financial stability.