Breakthrough Legislation for Stablecoins
Thomas P. Gross, B.S., M.S., J.D.
Partner, Cogent Law Firm
On July 18, 2025, President Donald Trump signed into law the GENIUS Act—short for Guiding and Establishing National Innovation for U.S. Stablecoins—marking a major milestone in the regulation of digital assets in the United States. The law creates, for the first time, a federal regulatory structure for privately issued stablecoins backed by the U.S. dollar or equivalent liquid assets. These stablecoins may now serve as digital equivalents to the U.S. dollar under a unified federal regime.
SEC Paved the Way
The GENIUS Act follows the April 4, 2025, announcement by the Securities and Exchange Commission (SEC), which significantly reshaped the regulatory landscape for stablecoins. In a Statement issued by the SEC's Division of Corporate Finance, the agency clarified that stablecoins backed on a one-to-one basis by U.S. dollars do not constitute the offer or sale of securities under the Securities Act of 1933 or the Securities Exchange Act of 1934. Therefore, such stablecoins are not required to be registered as securities.
Read the SEC Statement: https://www.sec.gov/newsroom/speeches-statements/statement-stablecoins-040425
Industry Reaction and New Offerings
In the wake of the SEC’s Statement, major institutions moved quickly. Société Générale launched USDCV, a stablecoin backed by reserves held at Bank of New York Mellon, and Standard Chartered worked with Animoca Brands, a Web3 leader based in Hong Kong, to issue a Hong Kong-licensed stablecoin. These moves signaled a rapid acceleration in private stablecoin development and highlighted the growing need for a consistent regulatory framework—one that the GENIUS Act now seeks to provide.
Key Provisions of the GENIUS Act
According to a Fact Sheet released by the U.S. Senate Committee on Banking, Housing, and Urban Affairs, the GENIUS Act establishes a comprehensive set of rules for U.S. dollar-backed payment stablecoins.
Reserve and Disclosure Requirements
Under the Act, all approved payment stablecoins must:
- Be 100% backed by U.S. dollars, short-term U.S. Treasuries, or similarly liquid assets as defined by their primary federal regulator.
- Publicly disclose their reserve composition on a monthly basis.
- Submit annual audited financial statements if the issuer’s market capitalization exceeds $50 billion.
Strict Marketing and Consumer Protection Rules
The GENIUS Act imposes rigorous marketing standards to protect consumers and prevent misrepresentation. Among other things, the Act :
- Prohibits any claim that stablecoins are backed by the full faith and credit of the U.S. government, guaranteed by the government, or covered by FDIC insurance.
- Forbids marketing stablecoins as legal tender, or implying they are issued or approved by the U.S. government.
- Makes it illegal to advertise a digital asset as a payment stablecoin unless it fully complies with the GENIUS Act.
A New Era for Digital Dollars
The GENIUS Act represents a critical and pivotal moment in digital asset regulation, creating a clear pathway for compliant, privately issued, U.S. dollar-backed digital assets. While it does not establish a central bank digital currency (CBDC), the Act signals that the federal government is open to innovation—provided it operates under a transparent and secure regulatory framework.
As the market responds, the Act is expected to catalyze a wave of new stablecoin products issued by banks, fintechs, and global institutions alike—reshaping how digital dollars are created, used, and trusted in both domestic and international finance.
Read the full Senate Banking Fact Sheet Here: U.S. Senate Committee Banking, Housing, & Urban Affairs Fact Sheet: https://www.banking.senate.gov/imo/media/doc/genius_fact_sheet_-_consumer_protectionpdf.pdf
Contact Thomas Gross for more information: tgross@cogentlaw.com