The world has seen no shortage of would-be financial revolutions in recent years. But an emerging type of cryptocurrency now arrives bearing the full force and endorsement of the federal government. The Genius Act, signed by President Donald Trump in July, lays out the playing field for stablecoin currencies — cryptocurrencies based on underlying assets that make them, at least theoretically, less volatile. The act aims to set in motion what many see as a new era in finance.
Like all cryptocurrencies, stablecoins have the potential to change the way banks and consumers transact business dealings. The general concept is for funds to travel more quickly through financial systems, eliminating pockets of downtime in the money supply. The new legislation attempts to provide a step-up introduction in order to ease banks and consumers into the broader landscape of digital assets.
The new rules clear a path for more banks and financial services players to offer their own brand-specific stablecoin currencies. JPMorgan and Wells Fargo are exploring a joint stablecoin currency. Visa and Mastercard are putting in place stablecoin transaction agreements with partners including crypto company Circle Internet Group.
But more than a few questions stand between the Genius Act and a stablecoin revolution. They start with the basics: How fast is any real change likely to happen?
Like artificial intelligence, cryptocurrencies — and stablecoins specifically — seem as if they have long been arriving but are never really quite here. But the financial services industry is beginning to embrace the emerging legal tender. Helped by the attention from Congress and the White House and an improved stance toward digital assets by the Securities and Exchange Commission, cryptocurrencies are happening now — and on a grand scale.
Matt Higginson, a partner at McKinsey, wrote in a July research article that, "as we speak, stablecoins are transforming payment systems across the globe," and "tailwinds may cause a material shift across the payments industry in 2025."
"Incumbents and disruptors alike must make urgent preparations," he added.
What Is The Genius Act?
The Genius Act lays out a clear U.S. regulatory framework for stablecoin currencies. It brings permitting for stablecoins under direct federal and state control and imposes harsh penalties for those who sidestep the permitting rules. The bill requires full-reserve backing for the currencies, as well as audits and routine disclosures. It also sets out rules for sanctions compliance and money laundering curbs.
To protect consumers, the Genius Act prioritizes stablecoin holders in bankruptcy cases.
"Genius allows enterprises of all sizes — from small businesses to the biggest retailers in the country — to realize the transformative benefits of stablecoins," said Kevin Wysocki, head of policy at crypto bank Anchorage Digital. "This is all about unlocking American innovation and efficiency."
Wysocki said the long-term vision is for stablecoin to become "as simple as paying from your peer-to-peer app of choice or using the credit card you have on your cellphone." He added that financial institutions will promote these changes because stablecoins provide "instantaneous settlement, potentially lower costs to move funds and can be used to leverage smart contracts to execute payments."
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Those benefits apply to most cryptocurrencies. The primary difference with stablecoins is their link to underlying assets, such as the dollar and gold. This severely limits the value swings common to other cryptocurrencies. Rather than a speculative asset, stablecoins behave more like legal tender.
The Genius Act fortifies this distinction by requiring a mandatory minimum one-to-one reserve requirement. It also explicitly excludes stablecoins from securities and commodities classifications.
Current applications include business-to-business transactions, and online payments for content creators and gig workers. They are also seen as highly desirable in cross-border remittances, because they enable near-instant payouts to overseas families and other payees.
Stablecoin Transactions Boom
McKinsey research indicates that global stablecoin circulation doubled over the 18 months through July, to $250 billion in total value, at which point they facilitated more than $30 billion in daily transactions.
For perspective, that represents less than 1% of the total global daily money transfer volume. In all, $5 trillion to $7 trillion in global money transfers are processed each day, according to data from the Society for Worldwide Interbank Financial Telecommunication and the Bank for International Settlements.
| Top Stablecoins | |||||
|---|---|---|---|---|---|
| Name | Symbol | Creator | Issuer | Custodian | Market Cap (in bil) |
| Tether | USDT | Tether Holdings | Tether Limited | Cantor Fitzgerald | $168.87 |
| USDC | USDC | Circle Internet, Coinbase | Circle | BNY Mellon | $72.57 |
| Ethena USDe | USDe | Ethena Labs | Ethena Labs | n/a | $12.70 |
| Dai | DAI | MakerDAO | MakerDAO | n/a | $5.36 |
| World Liberty Financial USD | USD1 | World Liberty Financial | World Liberty | BitGo | $2.66 |
| First Digital USD | FDUSD | First Digital Labs | FD121/First Digital | First Digital | $1.45 |
| PayPal USD | PYUSD | PayPal | Paxos Trust | Paxos | $1.17 |
| Source: Creator Company Reports |
McKinsey expects the total value of issued stablecoins to reach more than $400 billion by year-end and $2 trillion by 2028. Daily transaction volumes for stablecoins could reach $250 billion or more in the next three years at the current growth rate, McKinsey forecasts.
Because their value is strictly tied to underlying assets characterized by comparatively low volatility, stablecoins aim to avoid the speculative value swings typical of other cryptocurrencies.
So what, then, is the attraction? Rather than an investment vehicle, owning a stablecoin is somewhat like holding a very versatile debit card. It allows, according to the pitch, the holder to put their capital to use in innovative and efficient new ways.
"It's this first wave of tokenization of traditional assets. You're literally tokenizing the U.S. dollar, and that has huge implications not only for institutions and retail but also the U.S. government," Wysocki said.
What Are Stablecoin Benefits?
Consumer benefits are not, at least not yet, a leading element of the stablecoin sales pitch. And it appears that banks are among the most anxious to implement the new tools, seeing them as an opportunity to accelerate the flow of capital through their systems.
That means faster settlement times and less lag time for assets moving in and out of accounts. It now takes one to three business days for credit and debit card transactions to settle, Wysocki said. With stablecoins, those transactions settle immediately.
"Near instantaneous settlement is a win for both consumers and institutions," Wysocki contends, reducing the risk of failed transactions. The efficiencies of blockchain technology, the digital ledger-keeping systems on which cryptocurrencies like stablecoins are based, can also lower the costs of payment systems.
The stablecoin discussions between JPMorgan Chase and Wells Fargo have involved Early Warning Systems, which operates Zelle as well as the real-time Clearing House Payments network, the WSJ reported in May. EWS is co-owned with Bank of America, Citigroup and other large commercial banks. The discussions were reportedly in early stages and subject to change.
In addition, Coinbase and JPMorgan on July 30 announced a partnership to bring new crypto offerings to JPMorgan's 80 million customers. Starting next year, Chase customers will be able to link their accounts directly to Coinbase. Chase members will be able to redeem their Ultimate Rewards points for the stablecoin USDC.
JPMorgan also plans a token like stablecoin for institutional clients, called JPMD, to accelerate complex transactions, according to reports in June.
Mastercard, Visa Prepare For Stablecoin
Mastercard and Visa are preparing for a wave of stablecoin adoption. The payment giants already have partnerships with crypto exchanges and stablecoin issuers, including recent IPO Circle, Fiserv and Paxos.
"Consumers and merchants adopt solutions that are convenient, secure and dependable," Jorn Lambert, chief product officer of Mastercard, wrote in a June blog post. "We don't see stablecoins disrupting this dynamic — in fact, they reinforce it."
Lambert and Mastercard expect consumers and businesses to continue to use fiat currency for most uses because "it just works." Yet he believes "regulated stablecoins are undoubtedly part of the evolution of digital payments."
Visa, during its April earnings report, said it has processed more than $200 million in stablecoin settlements. Although the payments processor did not provide a specific stablecoin update with its July results, CEO Ryan McInerney said he is "genuinely optimistic" about the potential opportunities for stablecoins.
Visa notes a role for stablecoins in two key areas. One is in emerging markets where local fiat currency is volatile. The other is in cross-border money movement, for both B2B transactions and consumer remittances.
McInerney added that stablecoins could accelerate Visa's progress in digitizing consumer and commercial payments.
Visa also offers stablecoin-linked cards. Since 2020, the company has enabled crypto users to spend more than $25 billion on bitcoin, ethereum, cryptocurrencies and now stablecoins, McInerney said in the earnings call.
Role For Small Banks In Stablecoins
Stablecoins unlock a "whole universe full of use cases" for banks of all sizes, according to Wysocki. Regional and small banks may launch new product lines or stablecoins tailored to the needs of their customers.
"For a regional bank in the Southwest, that might look like a cross-border payment solution powered by stablecoins," he said. "For a community bank in the heartland, that might be issuing a stablecoin for more efficient commodity trading settlements."
Financial tech firm Fiserv plans to launch a stablecoin, as well as a digital asset banking and payments platform, for use by its roughly 3,000 regional and community bank clients, the Wall Street Journal reported in June. The platform is expected to be compatible with a range of stablecoins and allow connection with the 10,000 financial institutions and merchants that Fiserv serves.
The company plans to partner with Circle and Paxos, as well as blockchain platform Solana on the rollout, which is expected to launch by the end of the year. Besides its new FIUSD stablecoin offering, Fiserv could work with banks to create their own branded stablecoins.
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Retailers Explore Stablecoin Options
"As Genius is implemented, it's going to unlock substantial investments in stablecoins for retail uses," Wysocki predicted. "Soon people are going to be making retail purchases in stablecoins and paying their friends back for pizza in stablecoins."
Down the road, he said, the process "will be so seamless most people will probably not even realize they are using stablecoins."
As in the early promises made by the metaverse and nonfungible tokens, stablecoin proponents tend to dream big.
Wysocki sees a near future in which big box stores experiment with launching their own stablecoins. Smaller businesses and startups could turn to their existing payment and credit providers for similar solutions, as ways to save money and streamline transactions, he said.
The Wall Street Journal reported in June that Walmart, Amazon.com, Expedia and other major corporations were exploring how stablecoins could help merchants avoid costly credit card fees.
Some of Amazon's discussions have centered around having its own coin for online purchases. Those efforts are also in early stages, sources told the WSJ. Other companies are weighing the use of outside stablecoins if they don't issue their own. One example mentioned was having a consortium of merchants led by one stablecoin issuer.
The Merchants Payments Coalition, a trade group representing retailers, pushed lawmakers to support the Genius Act in the months leading to its passage, the WSJ reported.
In June, Uber Technologies CEO Dara Khosrowshahi announced the ridesharing company was studying stablecoins as a payments solution.
Blue Origin, Jeff Bezos' space outfit, on Aug. 11 announced that it partnered with Shfit4 Payments to allow customers to pay for trips to space with stablecoins and cryptocurrencies. The USDC and USDT stablecoins will be accepted, as well as bitcoin, ethereum and solana.
What's Next For Crypto Bills?
The Genius Act wasn't the only major piece of crypto legislation in July. The Clarity Act, a crypto market structure bill, passed the House in a 294-134 vote on July 17. A bill prohibiting the Federal Reserve from issuing a central bank digital currency also passed the House.
The Clarity Act defines which cryptocurrencies are securities, commodities or investment contracts. It establishes the jurisdiction and regulatory authority of the Commodity Futures Trading Commission (CFTC) and the SEC with regard to cryptocurrencies.
The Clarity Act must still pass the Senate. The Senate Committee on Banking, Housing and Urban Affairs released a discussion draft on the legislation in late July that builds on the Clarity Act and adds other steps to address key issues.
The SEC has already started issuing guidelines to support the administration's digital asset goals as part of its "Project Crypto" initiative launched at the end of July.
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Of the three pieces of legislation, LMAX Group market research analyst Joel Kruger believes the Clarity Act will have the most impact.
"People have been waiting a long time on the topic of securities," he said, noting longtime confusion about which digital assets are securities and whether they are regulated by the SEC or CFTC.
"There are so many projects within crypto that need to understand where they fall," he said. Once that clarity is provided, "we're likely to see a number of projects able to move forward."
The Trump administration hasn't let its foot off the gas, either.
The White House in July released a digital asset report outlining the administration's recommendations for a crypto policy framework. The report shares many of the priorities found in the Genius and Clarity acts.
In early August, Trump signed an executive order that allows 401(k) accounts to invest in alternative assets, including digital assets.
Community Bankers Voice Concerns On Crypto Legislation
Not everyone is on board with all the changes. The Independent Community Bankers of America group has raised concerns about both the Genius Act and the Clarity Act. Their concerns revolve around Federal Reserve Master Account access, yield-bearing stablecoins and mixing commerce and banking.
Rebecca Rainey, the banking group's CEO, noted in a July 21 blog post that the group worked "closely" with lawmakers to ensure the legislation addressed high-priority concerns.
Sen. Elizabeth Warren (D-Mass.) warned during a July 9 committee meeting that the Clarity Act may allow loopholes for some public companies like Meta Platforms or Tesla to tokenize their assets to avoid SEC regulations.
Bitcoin Price, Other Cryptocurrencies React
In the meantime, enthusiasm has built for cryptocurrencies. Bitcoin on Aug. 13 surged to a record near $124,500, powered higher by the 401(k) order and SEC rulings. The move surpassed BTC's previous high around $123,100 from mid-July, during the "crypto week" legislation news. Bitcoin tumbled near $112,000 on Aug. 24 after an unnamed "whale" investor reportedly off-loaded a sizable holding. Still, the world's top crypto is up 18% this year and is trading around $110,700 as of Sept. 5.
"Despite the short-term pullback, institutional conviction remains strong, with ETF inflows and corporate treasury allocations continuing to support long-term appeal," LMAX Group's Kruger said. He expects markets will remain focused on the Fed's next moves, as Powell's less dovish undertone left markets jittery despite the rate cut hint.
"In short, the crypto market is grappling with macro pressures — shifting Fed signals, dollar strength, and risk reduction — while structural tailwinds from institutional engagement and adoption continue to hold," Kruger said.
LMAX's bitcoin forecast remains "highly constructive," he said. "As long as bitcoin holds above $110k on a weekly close basis, we expect the market to hold well into the dips," according to Kruger.
