Key takeaways 

• The GENIUS Act would require stablecoins to be backed 1:1 by cash or U.S. Treasuries, with audits and disclosures.
• Big names like PayPal, Amazon, and Walmart are exploring stablecoin use to reduce costs and speed up payments.
• New rules could drive demand for U.S. Treasury bonds and expand access to digital dollars across the financial system.

The U.S. Senate just took a big step toward bringing crypto into the U.S. financial system.¹ The Senate has passed the Guiding and Establishing Innovation for U.S. Stablecoins (GENIUS) Act, a major federal proposal which aims to regulate stablecoins — cryptocurrencies that are tied to a traditional currency, such as the U.S. dollar.² The House of Representatives may vote on the act as soon as this week, with presidential sign-off expected soon after.³

Stablecoins are designed to keep a fixed value, usually one dollar per coin, while backed by real-world assets like cash or government bonds.⁴ This stands in contrast to more volatile digital currencies such as Bitcoin or Ethereum. Unlike other crypto assets, stablecoins are meant to act more like money that can actually be used like money, rather than as investment vehicles.

The GENIUS Act (“the Act”) would require stablecoins to be backed 1:1 by cash or U.S. Treasury bonds. Only approved issuers, such as banks or financial technology (i.e., fintech) companies, could offer them. The Act also adds consumer protections and oversight that could help people and businesses feel more secure about using these digital dollars. 

GENIUS Act’s guardrails, greenlights, and stamp of approval

The GENIUS Act calls for issuers (financial firms and payment platforms like PayPal) to keep full reserves in cash or U.S. Treasuries against the stablecoins they issue.⁵ This is designed to guarantee that every token can be redeemed for a fixed, dollar-based equivalent from the reserves on-hand. The Act also includes requirements for regular audits to ensure issuers are holding reserves consistently.⁶ This helps support confidence in these coins as a reliable cash alternative.

The act also includes rules around transparency aimed at increasing trust. Under the act, issuers would need to share what assets back their coins (e.g. cash or U.S. Treasury bonds) and explain the risks involved. If something goes wrong with the stablecoin, such as a lack of adequate reserves or the issuer becomes insolvent, the holders would have priority over other groups (like the company’s creditors) when claiming potentially recoverable funds.⁷ Although these coins will not have Federal Deposit Insurance Corporation (FDIC) insurance, which covers up to $150,000 per bank account, the new rules could help offer consumer protections that are not currently required for speculative cryptocurrencies.⁸ 

The Act isn’t designed — nor intended — to replace the dollar. But it does aim to offer a digital version that feels similar and secure. If it becomes law, the GENIUS Act could set a clear standard for how stablecoins are treated in the U.S.

Read more: Cryptocurrency: Who’s investing?

GENIUS Act: A turning point for the crypto-curious investor

Stablecoins have traditionally operated in a gray area: They are popular in some corners of the crypto world, but traditional finance companies have explored other elements of crypto’s infrastructure (like blockchain). This act seeks to offer something new — a clear path forward that could take stablecoins from niche to mainstream.⁹

The bill sets real standards that could make stablecoins usable within the broader financial system. It specifies how issuers would interact with banking regulators, how audits must be conducted, and what information customers need to have about the issuer’s reserves. These are details that matter for the issuer's risk management, as well as its users’ trust.

Those clearer rules are already spurring movement. PayPal’s stablecoin, PYUSD, is being rolled out across its 20 million small-to-midsize merchants. Four in five “crypto-aware” small businesses are interested in using stablecoins to tackle financial challenges.^10,11 This may include managing cash flow, lowering transaction fees, and accepting payments from around the world without high fees.

It’s not just small businesses that are interested in stablecoins. Walmart and Amazon are exploring the idea of launching their own stablecoins.¹² In these cases, retailer-issued stablecoins function similarly to digital gift cards: They carry a dollar value but are limited to use within one retailer’s system.

There is a financial angle in how stablecoins affect the broader market. Issuers would need to hold large volumes of low-risk assets, such as U.S. Treasury bonds, in reserve. The potential added demand for U.S. Treasuries could influence market liquidity and government bonds — two things that could potentially move markets if the bill were to pass.¹²

Read more: 10 varying risk investments

Ready, willing, and stablecoin

Stablecoins aim to combine the speed of crypto with the reliability of traditional currencies. The GENIUS Act could be a key step toward bringing regulated stablecoins into broader use. By creating a regulated home for stablecoins, this bill could support the development of new tools for spending, saving, and transferring funds — particularly for people who have taken a wait-and-see approach to crypto. 
Whether stablecoins serve as a digital payment option, a way for businesses to conduct transactions faster, or a financial tool built around tokenized cash, the future of money may be closer — and more decentralized — than it appears.

Cryptocurrency investments are highly unpredictable and speculative. These investments come with unique risks including, but not limited to, the following: susceptibility to hacks, fraud and mismanagement of private keys, potential network integrity issues, reliance on third-party networks, and the possibility there may be obstacles to converting digital assets to cash, especially during market downturns.