How The GENIUS Act 2025 Could Redefine Global Dollar Dominance Through Stablecoins

Edward Brathwyn
Jul 15, 2025
How The GENIUS Act 2025 Could Redefine Global Dollar Dominance Through Stablecoins

In an era where digital currencies are reshaping the financial landscape, the United States is taking significant steps to maintain its economic leadership. The Guiding and Establishing National Innovation for U.S. Stablecoins Act, commonly known as the GENIUS Act, is at the forefront of this effort. Introduced in the 119th Congress, this landmark legislation aims to establish a comprehensive regulatory framework for payment stablecoins—digital assets designed to maintain a stable value by being pegged to the U.S. dollar. As of July 16, 2025, the GENIUS Act 2025 has passed the Senate but faced a significant procedural setback in the House of Representatives. If enacted, it has the potential to redefine global dollar dominance by fostering innovation and trust in dollar-pegged stablecoins, while also facing significant debate over its implications.

What is the GENIUS Act?

The GENIUS Act, officially titled the "Guiding and Establishing National Innovation for U.S. Stablecoins Act of 2025," was introduced to address the growing need for regulation in the stablecoin market. Stablecoins, such as Tether (USDT) and USD Coin (USDC), are cryptocurrencies pegged to the U.S. dollar, offering stability compared to volatile assets like Bitcoin. The GENIUS bill seeks to create a clear regulatory environment to ensure these digital assets are safe, reliable, and beneficial to the U.S. economy.

Key provisions of the GENIUS Act stablecoin framework include:

       
  • Permitted Issuers: Only specific entities, such as subsidiaries of insured depository institutions, federal-qualified nonbank payment stablecoin issuers, or state-qualified payment stablecoin issuers, can issue stablecoins.
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  • Reserve Requirements: Issuers must maintain reserves backing the stablecoins on a one-to-one basis with U.S. currency, short-term Treasuries, or similarly liquid assets.
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  • Regulatory Oversight: Issuers are subject to regulation by appropriate federal or state authorities, with state regulation limited to those with stablecoin issuance of $10 billion or less.
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  • Consumer Protections: The act requires monthly public disclosure of reserve composition, annual audited financial statements for larger issuers, and prohibits misleading marketing about government backing.

The bill passed the Senate on June 17, 2025, with a vote of 68-30, marking a significant milestone in cryptocurrency regulation. However, its path through the House has encountered an immediate challenge, with a crucial procedural vote failing on July 15, 2025, leaving its final passage uncertain and subject to further legislative maneuvering. House leadership is currently working on next steps.

Latest Data and Status

As of July 16, 2025, the stablecoin market has a total market capitalization of approximately $250.7 billion, with major players like USDT (approx. $158.9 billion) and USDC (approx. $62.6 billion) accounting for a significant share (WSIU, July 15, 2025). The GENIUS Act is seen as a response to this growth, aiming to provide regulatory clarity. Recent reports suggest the House Committee on Rules reported the bill on July 14, 2025, with a record vote of 8-4, setting the stage for a floor vote. However, on July 15, 2025, the bill unexpectedly failed a crucial procedural vote (196-223) in the House, casting doubt on its immediate future and prompting House leadership to consider next steps. Its final passage remains uncertain.

Effects of the GENIUS Act

The enactment of the GENIUS Act 2025 is poised to have profound effects on the stablecoin market and the broader financial ecosystem:

       
  • Increased Adoption: By providing regulatory clarity, the act could encourage more financial institutions and companies to issue and use GENIUS Act stablecoins, leading to greater adoption. Analysts offer varied predictions for stablecoin market growth. While some, like JPMorgan (July 3, 2025), project a more modest expansion to $500 billion by 2028, others, such as Standard Chartered (April 15, 2025), are significantly more bullish, predicting the total stablecoin supply could surge to $2 trillion by the end of 2028 if the GENIUS Act is enacted.
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  • Enhanced Trust: Strict reserve requirements and oversight, such as 100% reserve backing and monthly disclosures, will build trust among users, making stablecoins a more reliable medium for transactions.
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  • Global Dollar Dominance: As stablecoins are predominantly pegged to the U.S. dollar, their widespread use could extend the dollar’s influence in the global digital economy. Over 99% of circulating stablecoins are dollar-denominated (Investopedia, July 15, 2025; Galaxy, May 5, 2025). By requiring reserves in U.S. Treasuries, the act could also increase demand for U.S. debt, further solidifying the dollar’s reserve currency status.
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  • Innovation in Financial Services: The GENIUS bill could spur innovation in payment systems, remittances, and other financial services, offering faster and cheaper alternatives to traditional methods. For instance, stablecoins are already being used for remittances, with platforms like Coins.ph in the Philippines piloting a Philippine Peso-backed stablecoin and Circle launching a cross-border payments network using USDC (CoinDesk, May 14, 2024; PYMNTS.com, April 21, 2025).

Unique Perspective: Competition with Other Digital Currencies

The GENIUS Act is not just about regulating stablecoins; it’s also about maintaining the U.S.’s competitive edge in the global financial arena. While the U.S. deliberates on the GENIUS Act 2025, other regions like the European Union have already implemented regulations through the Markets in Crypto-Assets (MiCA) framework, effective from June 30, 2024, for stablecoins. MiCA requires issuers to maintain full reserves, undergo regular audits, and secure EU approval, aiming to protect monetary sovereignty and financial stability (Legal Nodes, July 11, 2025). This could give the EU a head start in the digital currency race.

Moreover, China’s digital yuan (e-CNY) is rapidly advancing, with plans to internationalize it and reduce reliance on the U.S. dollar. The People’s Bank of China has established an international operations center in Shanghai, highlighting its confidence in the digital yuan as a geopolitical counterweight (Cointelegraph, June 18, 2025). By establishing a robust framework for dollar-pegged GENIUS Act stablecoins, the act could counter these efforts and ensure that the U.S. remains at the forefront of digital finance innovation, particularly in international trade and remittances where stablecoins offer significant cost and speed advantages.

Criticisms and Concerns

Despite its potential benefits, the GENIUS Act has faced criticism from various quarters, reflecting the complexity of regulating a rapidly evolving sector:

       
  • Weak Consumer Protections: Some argue that the regulations are not stringent enough to protect consumers from potential risks associated with stablecoins, such as de-pegging events seen in past crashes like Terra in 2022, which wiped out approximately $45 billion to $50 billion in market value (PYMNTS.com, May 16, 2025; MIT Sloan, June 2025).
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  • Financial Stability Risks: There are concerns that integrating stablecoins into the traditional financial system could lead to instability, especially if not properly managed. Critics warn that allowing corporations to issue large amounts of stablecoins could trigger selloffs of backing assets, spiking interest rates and causing global financial crises, similar to historical examples like Argentina’s peso peg crisis (The Conversation, July 10, 2025).
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  • Conflicts of Interest: Critics, including Sen. Elizabeth Warren, have pointed out potential conflicts of interest, particularly regarding President Trump’s cryptocurrency ventures, such as the USD1 stablecoin launched by World Liberty Financial. Warren has warned that the bill could facilitate corruption, stating, “The bill as it currently stands still has numerous issues that must be addressed, including adding stronger provisions on anti-money laundering, foreign issuers, national security, preserving the safety and soundness of our financial system, and accountability for those who don’t meet the act’s requirements” (Banking Committee, May 19, 2025).
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  • National Security and Illicit Activities: Stablecoins account for over 60% of illicit crypto transactions, and critics argue the bill includes loopholes, such as for Tether, that could ease access to money for terrorists and cartels (Banking Committee, May 19, 2025).

On the other hand, supporters like Sen. Bill Hagerty emphasize the bill’s role in cementing U.S. dollar dominance and fostering innovation. He stated, “This bill will cement US dollar dominance, protect customers, increase demand for US treasuries, and ensure that innovation in the digital asset space is in the hands of the United States of America, not our adversaries” (Hagerty Senate Press Release, May 17, 2025). Similarly, Sen. Kirsten Gillibrand noted, “A product of months of bipartisan negotiations, the GENIUS Act will protect consumers, enable responsible innovation, and safeguard the dominance of the U.S. dollar” (Gillibrand Senate Press Release, June 18, 2025). It is important to note that earlier, on May 8, 2025, Senator Gillibrand had stated that "developments over the past week made it clear that there were a number of outstanding issues that needed to be addressed before this bill could pass the full Senate."

Future Outlook

If the GENIUS Act 2025 is enacted, it could lead to a significant expansion of the stablecoin market. With clear regulations in place, more companies might enter the space, offering new and innovative financial products. Analysts' forecasts for global stablecoin circulation vary, largely depending on the certainty of regulatory frameworks like the GENIUS Act. Optimistic projections, such as those from Standard Chartered (April 15, 2025), foresee the market growing to $2 trillion by 2028, particularly if clear U.S. regulations are established. Others, like JPMorgan (July 3, 2025), maintain a more conservative outlook, predicting around $500 billion by the same year. This could also accelerate the use of GENIUS Act stablecoins in international trade and remittances, making cross-border transactions faster and cheaper, with fees potentially dropping from 5-10% to minimal costs (Damex.io, April 3, 2025). Real-world examples include Coins.ph’s pilot of a Philippine Peso-backed stablecoin for remittances and Circle’s cross-border payments network using USDC, which could see increased adoption under the GENIUS bill (CoinDesk, May 14, 2024; PYMNTS.com, April 21, 2025).

However, if the bill faces delays or is not passed, the U.S. risks falling behind other jurisdictions that have already established regulatory frameworks for digital assets, like the EU with MiCA and China with the digital yuan. This could result in innovation and capital flowing to other countries, potentially diminishing the U.S.’s influence in the global financial system, as seen with Europe’s MiCA driving euro-pegged stablecoin growth (Cointelegraph, June 26, 2025).

Conclusion

The GENIUS Act represents a critical step towards integrating stablecoins into the U.S. financial system while maintaining the dollar’s global dominance. By providing a clear regulatory framework, the GENIUS Act 2025 aims to foster innovation, protect consumers, and ensure that the U.S. remains a leader in digital finance. As the GENIUS bill progresses through the legislative process, it is essential for stakeholders to stay informed and engaged in shaping the future of digital currencies, especially given the ongoing debates about its potential benefits and risks. Share your thoughts in the comments below or join the conversation on social media to discuss how the GENIUS Act stablecoin framework could shape the future of finance!

Frequently Asked Questions (FAQs)

    What is the GENIUS Act?    

The GENIUS Act is legislation aimed at establishing a regulatory framework for payment stablecoins in the United States, ensuring they are safe and reliable by setting rules for issuers, reserves, and oversight.

    When was the GENIUS Act passed by the Senate?    

The GENIUS Act 2025 passed the Senate on June 17, 2025, with a vote of 68-30.

    How does the GENIUS Act affect stablecoins?    

It sets rules for who can issue GENIUS Act stablecoins, requires full reserve backing with U.S. dollars or Treasuries, and establishes regulatory oversight to protect consumers and maintain financial stability, potentially boosting adoption.

    What are the criticisms of the GENIUS Act?    

Critics argue it has weak consumer protections, poses risks to financial stability, may enable conflicts of interest (especially with Trump’s crypto ventures), and could facilitate illicit activities, with concerns about potential economic crises.

    How does the GENIUS Act compare to MiCA?    

MiCA is the EU’s regulatory framework for crypto-assets, including stablecoins, implemented from June 30, 2024, while the GENIUS bill has passed the Senate but is currently facing legislative hurdles in the U.S. House. MiCA bans algorithmic stablecoins and requires strict reserves, potentially giving the EU a competitive edge if the U.S. delays.

References

Edward Brathwyn

Edward Brathwyn

I’m Edward Brathwyn, business and financial expert, digital marketer, with over a decade of experience. I hold a PhD in Business and Economics and a Masters in Marketing, which give me a strong foundation in both theory and practice. I’ve had the privilege of working with multiple companies as a consultant and marketer, helping them refine their strategies and achieve their goals. I also have experience as a formal teacher, where I taught business and economics at the university level. I continue to consult, write, and focus my primary work in the fields of digital marketing.

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