Trump Signs GENIUS Act to Regulate Cryptocurrency

TLDR

• GENIUS Act mandates 100% reserve backing for stablecoins.
• US aims to lead in digital assets with new regulations.
• Legislation expected to boost institutional investment in crypto.

President Donald J. Trump has signed the GENIUS Act into law, a move that marks a significant shift in US policy on cryptocurrency regulation. This legislation aims to establish the United States as a leader in the crypto sector, fulfilling Trump’s promise to bolster American leadership in this fast-growing industry.

Throughout his previous presidency, Trump was known for his skepticism toward cryptocurrencies. However, in recent months, he has reversed his stance and embraced blockchain technology. The GENIUS Act is designed to provide a clear regulatory framework for digital assets, specifically targeting dollar-backed stablecoins.

White House Statements Highlight Policy Goals

According to the official White House fact sheet, the GENIUS Act will make the United States the “undisputed leader in digital assets.” The legislation focuses on mandating 100% reserve backing for stablecoins, ensuring their stability through strong reserve requirements. This regulatory clarity is expected to attract substantial institutional investment in the US.

“The Genius Act creates a clear and simple regulatory framework to establish and unleash the immense promise of dollar-backed stablecoins.”

Donald J. Trump, President of the United States

The new law establishes the first federal regulatory system for stablecoins. The US government aims to encourage innovation while ensuring consumer protection, leading to a more robust digital asset infrastructure.

Impact on Dollar-Backed Stablecoins

The primary focus of the GENIUS Act is on dollar-backed stablecoins, such as USDC, USDT, and DAI, along with any other compliant stablecoins. These assets will be directly affected by the law’s compliance requirements. The act may also influence Ethereum and Layer 1/Layer 2 protocols, as these networks support significant stablecoin activity.

While immediate on-chain data changes remain unreported, historical precedents suggest that stablecoin Total Value Locked (TVL) and liquidity on compliant blockchains may grow. Such regulatory clarity could lead to increased participation by US and global institutions, boosting overall crypto market activity.

Historical Context and Future Expectations

Similar regulatory developments, like the EU’s Markets in Crypto-Assets Regulation (MiCA), have encouraged greater regulatory compliance and increased on-chain transaction volumes. The US’s GENIUS Act is broader in scope and may drive significant institutional flows, further solidifying the US dollar’s role in the crypto market.

Assets affected by these regulations include USDC, USDT, and DAI stablecoins, as well as DeFi protocols reliant on these stablecoins, such as Aave, MakerDAO, and Compound. Networks that facilitate stablecoin use, such as Ethereum and various Layer 1/Layer 2 assets, are also likely to see changes in investment patterns.

For further information and detailed insights into the Genius Act, visit the White House’s official release.

Updates and additional insights could be monitored from Congressional reports on the act’s economic impacts and provisions, as well as the full text of House Bill 5403.