The US stablecoin market's era of regulatory ambiguity is over. The GENIUS Act, signed into law on July 18, 2025, establishes the first comprehensive federal framework for payment stablecoins. The bill passed with strong bipartisan support: 68-30 in the Senate and 308-122 in the House.
The law permits nonbank fintech and crypto firms to issue stablecoins under federal and state oversight. Issuers must maintain 1:1 reserves in liquid assets like cash and short-term Treasuries. They are prohibited from paying interest on tokens.
The Office of the Comptroller of the Currency has granted conditional national trust bank charters to Circle, Paxos, and three other firms. The Treasury proposed AML and compliance rules in April 2026, and the FDIC is advancing its own proposals.
Traditional banks are concerned. They retain FDIC insurance and the ability to lend deposits- advantages stablecoin issuers lack. However, stablecoin issuers compete for the same consumer and business funds. Banks estimate up to $6.6 trillion in deposits could be at risk.
Before the law, issuers operated under a patchwork of state licenses and voluntary attestations. The new federal standard reduces uncertainty for institutional players.
For investors, the conditional charters awarded to Circle and Paxos signal a reshaping of competitive dynamics. The prohibition on interest payments is a key detail: future changes could intensify the threat to bank deposits.