The following is a guest post and opinion of Innokenty Isers, Chief Executive Officer at Paybis.
After years of uncertainty, stablecoin regulation is finally gaining momentum on Capitol Hill. Three competing bills—the GENIUS Act, the STABLE Act, and an unnamed proposal from Rep. Maxine Waters (D-CA)—are vying to define the future of digital dollars in the U.S. This long-overdue push for clear rules could determine whether stablecoins could become a mainstream financial tool or remain stuck in regulatory limbo.
Earlier this month, the Senate Banking Committee advanced the GENIUS Act with an 18–6 bipartisan vote, marking the most significant step toward a federal framework for stablecoins. The bill defines a “payment stablecoin” as any crypto asset used for payments or settlements, where the issuer is obligated to redeem it for a fixed amount of U.S. dollars.
Both GENIUS ACT and STABLE ACT establish the first federal licensing frameworks for stablecoins in the U.S. The GENIUS Act, establishes licensing, reserve, and disclosure requirements while prioritizing consumer claims in bankruptcy. It regulates both bank and nonbank stablecoin issuers, balancing state and federal oversight.
Issuers exceeding a $10 billion market cap, like Tether and Circle, must comply with OCC and Federal Reserve regulations, while smaller issuers can opt for state-level oversight.
However, a key distinction here is that the STABLE Act enforces a two-year moratorium on issuing new “endogenously collateralized stablecoins”—those backed solely by other digital assets—unless they existed before the bill’s passage.
As Washington moves forward with regulatory efforts, the U.S. stablecoin industry is undergoing important changes. If these regulations are enacted, they could play a meaningful role in shaping the broader economy.
Stablecoins as a Digital Extension of the U.S. Dollar
Notably — the GENIUS ACT designates payment stablecoin issuers as financial institutions under the Gramm-Leach-Bliley Act, requiring them to uphold customer privacy and protect nonpublic personal information.
Under the GENIUS ACT, stablecoins that receive regulatory approval will need to be backed by high-quality liquid US assets –treasury bills and insured deposits.
The dual regulatory framework established by these bills are crucial. By balancing federal and state-level oversight, the legislation allows industry players to innovate at their own pace while maintaining regulatory safeguards.
Beyond that, in recent months, traditional financial institutions have increasingly acknowledged the role of stablecoins, with companies like Stripe and Bank of America exploring their integration. Clear regulations will help reduce risks and facilitate adoption, contributing to a stronger financial infrastructure around the US dollar.
Implications for USD Dominance
Under the new regulations, any issuer operating in the U.S. market must back its stablecoin with dollar-denominated reserves. This means that many large-scale issuers will now have to convert their assets into dollar-denominated capital and reserves. So, by default, it will lead to increased adoption and reliance on USD.
As global demand grows, the US government can make sure that any crypto or stablecoin ecosystem developed in the country remains closely tied to USD. This alignment can help prevent foreign stablecoins or digital currencies from diminishing the dollar’s role in international trade.
If the US creates an environment where digital dollars are both innovative and secure, global investors and companies may favor US-based stablecoin issuers. Enhanced interoperability standards, as outlined in the legislation, could drive smoother cross-border transactions and integration into international payment networks.
In the long run, this could shift market liquidity toward US-backed stablecoins, further solidifying the dollar’s dominance. Critics have warned that lax oversight could enable Big Tech to potentially privatize the dollar. However, by enshrining strict reserve and transparency standards, the bill minimizes this risk.
What lies ahead?
The GENIUS Act brings stablecoins closer to mainstream financial integration, boosting demand for U.S. Treasury bills. When these bills are passed in the near term, they will likely cause a surge in institutional adoption. More traditional banks and payment providers will offer stablecoin services, and we will see more settlement and liquidity management through stablecoins. So, the stablecoin market cap will only become bigger as domestic usage surges in the US.
Once the stablecoin framework is in place, we could see the emergence of ancillary services – such as digital wallets, custody solutions, and interoperable payment networks. These services will further enhance the usability of US-backed stablecoins. These developments would create a broader ecosystem around the digital dollar.
Over time, the US stablecoin market can reduce transaction friction and lower costs for cross-border payments. It could lead to higher velocity in digital transactions and broader financial inclusion, reinforcing the dollar’s utility.
The ability of US regulation to set global standards could also indirectly pressure other nations to align with US practices – further strengthening dollar dominance.
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