The GENIUS Act Explained: What Congress Just Did on Crypto

The USA now has its first crypto regulatory framework. Here's what that means in normal person speak.

Congress just did something that’s almost unthinkable in this political era: it passed a major piece of legislation with broad support from both parties. The GENIUS Act, which creates the first-ever federal regulatory framework for stablecoins, sailed through the Senate with a 68–30 vote and passed the House 308–122. And just like that, the U.S. has finally entered the global race to regulate crypto.

This breakthrough couldn’t come at a more important time. Crypto, once the wild west of internet finance, is trying to go mainstream—used not just for speculation or digital art, but as a stable, everyday currency for payments and transactions. But there’s been one massive roadblock: a total lack of clear, federal rules for a fast-growing part of the cryptocurrency world: stablecoins.

If you’ve never heard the word “stablecoin” before, you’re not alone. But chances are, you’ve used one without realizing it—or you soon might.

First Things First: What’s a Stablecoin?

Stablecoins are a type of cryptocurrency designed to act more like real money. Unlike Bitcoin or other tokens that can swing wildly in price, stablecoins are supposed to be… well, stable. Nearly all stablecoins are pegged to the U.S. dollar, so one coin equals one dollar. The idea is that you can use them to send money, buy things, or move funds quickly without the price jumping up or down.

The problem? Until now, there were no real national rules about who could create these coins, how they had to be backed, or what happened if something went wrong.

That’s where the GENIUS Act comes in.

So What Does This Law Actually Do?

The GENIUS Act lays out the first official U.S. rules for stablecoins—and especially for the companies that create them. Here are the big takeaways:

• Only approved institutions can issue them.
  If you want to make and sell a stablecoin in the U.S., you now need to be either a licensed bank or a nonbank company approved by the Federal Reserve.

• Every coin has to be backed by real money.
  Stablecoin issuers have to keep enough cash, U.S. Treasuries, or other safe assets on hand to back every coin they issue—no funny business allowed. They also have to publicly report those reserves every month.

• No interest, no insurance, no false promises.
  Stablecoins can’t pay interest like a savings account, and companies can’t pretend their coins are federally insured or “legal tender” like cash.

• Foreign companies can participate too—if their home country has similar rules.

• And if a stablecoin company goes under, holders of the coin get paid first.
  That part is meant to protect consumers, just in case.

This law only covers a specific kind of stablecoin: the kind that’s pegged to the dollar and used for payments. It doesn’t cover things like algorithmic stablecoins, crypto-backed tokens, or Bitcoin and Ethereum.

Why Should You Care?

Because stablecoins are quietly becoming a huge part of the financial system. In 2024, people used stablecoins to send over $10 trillion in payments—more than Mastercard or Visa. Some major U.S. companies, like PayPal and JPMorgan, are already issuing their own.

But until now, they’ve been operating without clear federal rules. That made it hard for banks and investors to get involved, and it made it easier for bad actors to mislead users or cut corners.

The GENIUS Act gives companies a roadmap: “Here’s how to do this legally in the U.S.” That could help crypto go more mainstream—but it also gives regulators more control over a part of the market that’s been running loose.

How Does the U.S. Stack Up Globally?

The U.S. has been behind when it comes to crypto rules. The European Union already passed a major law called MiCA that covers stablecoins and other digital assets. Singapore, Hong Kong, the UK, and others have also created rules about who can issue these tokens and how they’re regulated.

Compared to those countries, the GENIUS Act is:

• Narrower (it only covers payment stablecoins),

• Stricter about who can participate (mainly banks or Fed-approved firms),

• And more industry-friendly in some ways (it avoids labeling stablecoins as securities or commodities, which would trigger tougher rules).

Still, it’s a big step forward—and one that puts the U.S. back in the global game.

What the Law Doesn’t Do

The GENIUS Act doesn’t cover the rest of the crypto world. That means tokens like Bitcoin, trading platforms like Coinbase, and things like NFTs are still in a legal gray area. It also doesn’t create a backstop like FDIC insurance or offer any help from the Federal Reserve if something goes wrong in a crisis.

Some critics say the law leans too far toward helping companies without doing enough to protect consumers or the financial system. Others say it’s a good first step that opens the door for more serious regulation down the line.

The Bottom Line

The U.S. now officially has a playbook for stablecoins. That alone is a big deal. It gives companies more clarity, helps regulators keep an eye on things, and offers consumers at least some protections.

But it’s just one chapter in a much bigger story about how we handle crypto in the future. The next few chapters—on broader crypto rules, investor protections, and financial stability—are still waiting to be written.