What is known about the new stablecoin laws

The need to develop a regulatory framework for stablecoins has arisen due to the widespread adoption of such assets, whose total market capitalization exceeded $247 billion as of May 2025.

What is the STABLE GENIUS Act?

The STABLE GENIUS Act, also known as the GENIUS Act, is a new bill designed to regulate the stablecoin market. According to the GENIUS bill, a stablecoin is "a digital asset used for payments and settlements, pegged to the value of fiat currencies such as the U.S. dollar, and fully backed by fiat currency or other approved liquid assets at a 1:1 ratio."

The STABLE GENIUS Act stands for "Standardizing Testing and Accountability Before Large Elections Giving Electors Necessary Information for Unobstructed Selection."

The name STABLE GENIUS references a famous tweet by the current U.S. president, Donald Trump, in which he called himself a "stable genius," thereby accusing his opponents of questioning his mental abilities.

According to the published provisions of the GENIUS bill, stablecoin issuers will be required to:

Fully maintain liquid reserves consisting of one or a pool of traditional assets to ensure the safety of stablecoin investors. Such reserves include fiat currencies, U.S. Treasury bonds, and cash equivalents;
Obtain the necessary licenses either at the federal or state level, without which issuers will be prohibited from issuing stable assets if their market value exceeds $10 billion;
Ensure transparency of their reserves and regularly conduct independent audits by authorized firms;
Comply with consumer protection provisions, under which stablecoin holders will have priority in bankruptcy and legal proceedings.

The GENIUS bill also allows issuers to issue algorithmic stablecoins, whose peg is maintained through complex algorithms but only under certain conditions.

This provision likely stems from incidents involving algorithmic stablecoins such as Terra USD (UST) and Neutrino USD (USDN), which lost their peg to the U.S. dollar and collapsed.

What is the STABLE Act?

The STABLE Act, also known as the STABLE Act of 2025, is a bill that aims to establish a well-developed legal framework regulating the issuance, circulation, and oversight of payment stablecoins in the U.S.

The STABLE Act officially stands for "Stablecoin Transparency and Accountability Boosting Ledger Economy Act of 2025." Like the GENIUS Act, it requires issuers to fully back stablecoins with reserves at a minimum 1:1 ratio and disclose information about them monthly.

However, unlike the GENIUS Act, the STABLE Act imposes a two-year ban on issuing algorithmic stablecoins from when the law comes into effect.

Also, according to the STABLE Act of 2025:

Stablecoins may only be issued by bank subsidiaries, as well as non-bank subsidiaries or issuers that have undergone special state registration;
Issuers will be required to publish monthly reserve reports, ensuring transparency;
Stablecoins issued by these issuers will not be insured by the U.S. Federal Deposit Insurance Corporation (FDIC);
Issuers of stable assets will be subject to the Bank Secrecy Act requirements and must comply with sanctions.

Penalties for violations of the STABLE Act of 2025 can reach up to $100,000 per day, and criminal liability applies for providing false information about reserves. Intentional falsification of reports can result in fines of up to $5 million or imprisonment for up to 20 years.

What will change once the new bills come into effect?

Technically, little will change: stablecoin issuers like Tether and Circle already comply with legal requirements and cooperate with government agencies like the Office of Foreign Assets Control (OFAC).

Stablecoin issuers block transactions related to illegal activities and freeze addresses of suspected criminals involved in money laundering and other financial crimes upon OFAC's request.

However, with a comprehensive regulatory framework, investors and active users of stablecoins will gain legal protection, making interaction with digital assets safer.

From the crypto industry and decentralized finance (DeFi) market perspective, the STABLE Act of 2025 and GENIUS bills have both positive and negative aspects.

On the one hand, legalizing stablecoins will strengthen investor protection and reduce the risks of asset manipulation and fraud. Furthermore, a clear legal framework will open the door for new institutional investments, potentially driving growth in the crypto market.

On the other hand, tighter regulation could negatively affect the technological development of the Web3 industry, slowing innovation in this field. This especially concerns DeFi projects, which may either cease operations or have to relocate jurisdiction.