The United States has taken a major step toward regulating digital finance. On July 18, 2025, the president signed the GENIUS Act into law. This marks the first time the federal government has created a full legal framework for payment stablecoins.
The new law passed with strong support. The Senate approved it last month. The House followed on July 17. The vote showed clear bipartisan backing for clear rules in the digital asset sector. The GENIUS Act defines payment stablecoins as digital tokens meant to track the value of the U.S. dollar.
These are not securities, bank deposits, or digital dollars issued by the central bank. The law separates them from other forms of money and assets. That clears up long-standing confusion. Under the new rules, only licensed issuers can offer stablecoins after 2028.
Stablecoin law opens path for small issuers
These include federally regulated banks, licensed fintech firms, and some state-approved players. The Act gives small issuers another route. They can choose state oversight if they meet federal standards. The law sets strict rules on reserves.
Issuers must back every coin with cash or U.S. Treasuries. They must hold these funds in separate accounts. They cannot use these reserves for lending or trading. Each issuer must prove their reserves monthly. They also need to pass an annual audit.
To protect users, the law enforces strong compliance standards. All issuers must follow anti-money laundering and know-your-customer rules. These fall under the Bank Secrecy Act. Issuers must collect customer data, keep records, and report any suspicious activity.
New Stablecoin law protects users in court
The law also bans paying interest on stablecoin holdings. Lawmakers say this protects financial markets from instability. It ensures that stablecoins remain tools for payments, not investment vehicles. In a major shift, the law gives stablecoin holders extra protection.
If a firm fails, customers will stand ahead of other creditors in court. That gives users more confidence in holding digital dollars. The GENIUS Act creates a clear legal path for banks and fintechs.
It also preserves the U.S. dollar’s strength in global digital finance. For the first time, stablecoins have a national rulebook. This new law sets the tone for future regulation. It reflects growing support for digital assets, balanced with strong consumer safeguards.
