GENIUS Act and Its Impact on Stablecoins

This technical report discusses the implications of the Guiding and Establishing National Innovation for US Stablecoins Act (GENIUS Act), enacted in July 2025, which establishes a regulatory framework for payment stablecoins in the United States. The Act aims to provide clarity on the issuance, reserve requirements, and oversight of stablecoins, marking a significant shift in their regulation. It mandates that stablecoins be fully backed by fiat US dollars and imposes strict capital and liquidity requirements on issuers. The report outlines the macroeconomic implications of this regulatory change, including its effects on financial architecture, capital flows, and the potential for increased dollarization in emerging markets. It highlights the challenges policymakers face in balancing innovation with systemic risk management and discusses the potential for stablecoins to alter monetary policy transmission mechanisms. The report emphasizes the need for adaptive policymaking as stablecoins reshape the global financial landscape.