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GENIUS ACT BECOMES LAW. STABLECOINS ARE FOR REAL

IT'S NOT YOUR MOTHER'S BITCOIN
IT'S NOT YOUR MOTHER'S BITCOIN

AS of today, Friday, July 18, 2025, the Genius Act has been signed into law by President Trump. The entire US will now want to know what Stablecoins are and what they can do with our economy. We have assembled an outline with "Pro's and Con's" for you to better understand this new aspect of US finance.


Firstly,


What are "Stablecoins"?


Stablecoins are a type of cryptocurrency designed to maintain a stable value by being pegged to a reserve asset such as a fiat currency (e.g., U.S. dollar), commodity (e.g., gold), or even a basket of assets.


Key Characteristics of Stablecoins:

  1. Price Stability: Unlike Bitcoin or Ethereum, whose prices can fluctuate wildly, stablecoins aim to stay close to a fixed value—usually $1.00 for dollar-pegged coins.

  2. Backing Assets:

    • Fiat-backed (e.g., USDC, USDT): Backed 1:1 by cash or short-term government bonds.

    • Crypto-backed (e.g., DAI): Overcollateralized by volatile crypto assets like ETH.

    • Algorithmic (e.g., UST—now collapsed): Use code to maintain a peg without real-world backing—often highly risky.

  3. Redeemability: Users can generally exchange stablecoins for their backing asset (e.g., $1 worth of USD per token).

  4. Use Cases:

    • Fast, cheap international payments

    • DeFi transactions and yield farming

    • Hedging against crypto market volatility

    • Remittances and stable value storage


In Summary

Stablecoins are crypto assets that act like digital dollars, combining the stability of traditional currencies with the speed and programmability of blockchain technology. They play a foundational role in modern crypto markets and financial innovation.

Now, let's talk about the law surrounding the "Genius Act"


The GENIUS Act is a landmark step toward legitimizing stablecoins in the U.S. — it delivers much-needed regulatory clarity, consumer safety, and strategic economic benefits. Yet, it brings with it significant costs in terms of innovation barriers, centralized control, privacy concerns, and glaring ethics loopholes—especially around executive power.

Its success will depend heavily on how regulators implement the law, the transparency of those processes, and whether additional reforms close ethical loopholes and rebalance privacy vs. surveillance.


Big-Picture Description & Purpose

  • What it is: The GENIUS Act (Guiding and Establishing National Innovation for U.S. Stablecoins Act) is the first comprehensive federal legislation defining a legal and regulatory framework for payment-quality stablecoins in the U.S.—cryptocurrencies pegged to assets like the dollar. WilmerHale+13The Verge+13CBS News+13

  • Authority & structure: Raises stablecoins to a regulated status, allowing issuance only by approved entities—federally insured banks, OCC‑chartered nonbanks, state‑regulated issuers, or registered foreign issuers under comparable rules. WilmerHale+1Pillsbury Law+1

  • Reserve & disclosure rules: Mandates 100% backing of outstanding tokens with U.S. dollars or short-term Treasuries, segregated custody, monthly public disclosures, and annual independent audits for large issuers. The Verge+5The White House+5McMillan LLP+5

  • Consumer & systemic protections: Treats stablecoin issuers under the Bank Secrecy Act, enforcing anti-money-laundering (AML) and sanctions compliance, prioritizes redemption claims during insolvency, and bans misleading marketing. The White House

  • Strategic goals:

    1. Enhance financial stability and consumer trust by reducing volatility and elevating transparency. New York Post+2AP News+2Wikipedia+2

    2. Boost U.S. dollar and Treasury demand, reinforcing dollar dominance globally. The Daily Beast+6The White House+6CBS News+6

    3. Support U.S. leadership in the crypto sector, aiming to attract innovation and private-sector investment.Investopedia


Key Benefits (Pros)

  1. Regulatory clarity and predictabilityProvides stablecoin issuers a clear, unified federal/state roadmap, reducing confusion and legal uncertainty.MarketWatch+1McMillan LLP+1Congress.gov+15McMillan LLP+15Pillsbury Law+15

  2. Consumer & investor protectionsThrough full collateralization, segregated assets, audit/disclosure rules, and bankruptcy safeguards—this protects token-holders. The Daily Beast+4MarketWatch+4The Verge+4

  3. Anti‑money laundering and national securityBSA coverage plus AML and sanction enforcement aligns stablecoins with existing financial regulations.Investopedia+3The White House+3The Verge+3The Daily Beast+6WilmerHale+6MarketWatch+6

  4. Reinforces U.S. financial dominanceBy tying stablecoin reserves to Treasuries, the Act supports demand for U.S. debt and likely strengthens the dollar’s global reserve position. New York Post+9The White House+9McMillan LLP+9

  5. Promotes industry growthSignals political support and aims to make the U.S. a “crypto capital”—encouraging firms to launch digital asset products domestically. AP News+3McMillan LLP+3New York Post+3Fox News


Drawbacks & Red Flags (Cons)

  1. Potential over-regulation and stifled innovationCritics argue that the stringent rules, high compliance costs, and limited issuance pathways may crowd out smaller startups or novel crypto designs. Investopedia+3The Daily Beast+3Fox News+3

  2. Excessive regulatory discretion & oversightAgencies like the OCC, Fed, FDIC, and Treasury gain broad powers—raising fears of centralized control and regulatory capture. MarketWatchWilmerHale

  3. Privacy and surveillance concernsWith AML/KYC mandates baked in, user transactional data might be accessible to government agencies, sparking worries over financial privacy. MarketWatchAP News

  4. Conflict-of-interest & ethics gapsWhile members of Congress and their families are barred from profiting, the President and immediate family are exempt—notably relevant given Trump’s financial ties to stablecoin ventures like USD1 and World Liberty Financial. The Daily BeastThe Verge+3AP News+3AP News+3

  5. Risk of entrenching Big Tech / Big Bank dominanceThe Act allows large institutions to dominate issuance—a concern raised by figures like Sen. Josh Hawley and Sen. Elizabeth Warren—including the possibility of creating a “cashless society” controlled by dominant players. New York Post+15The Verge+15McMillan LLP+15 Outstanding Pros

  6. Legal clarity and consumer protection

  7. Enhanced financial-system stability

  8. Global competitiveness

  9. U.S. Treasury demand support

  10. National security AML alignment


Major Cons

  • High barriers for small players

  • Expanded regulatory oversight

  • User privacy and surveillance concerns

  • Ethics issues due to presidential exemption

  • Risk of centralized control (Big Tech/Bank influence)


Red Flags to Monitor

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