The new law for stablecoins could change how you pay for things, send money, and even bank. President Donald Trump recently signed the Guiding and Establishing National Innovation for US Stablecoins Act, or GENIUS Act, into law, setting the first federal regulations for this type of cryptocurrency. This move is seen by many as a clear path for stablecoins to become a mainstream payment option, potentially changing your shopping experience.
What Are Stablecoins?
Stablecoins are a form of digital money that runs on a blockchain network, but they are designed to be much more stable than other cryptocurrencies like Bitcoin and Ethereum. Unlike those highly volatile assets, stablecoins are pegged to a stable asset, most commonly the U.S. dollar. For example, one token of the popular stablecoin USDC is always worth exactly one U.S. dollar.
This price stability makes stablecoins a practical way to pay for goods and services or transfer money. They also offer key advantages over traditional banking and payment cards:
- Low Fees: Stablecoin transactions can cost just pennies, regardless of the amount of the transaction. This is a massive savings compared to the 2% to 3.5% fees merchants typically pay for credit card processing.
- Instant Settlement: Payments using stablecoins can settle almost instantly, instead of taking days to clear like traditional bank transfers.
- 24/7 Access: You can move your money at any time, without being limited by traditional banking hours.
How the GENIUS Act Changes Things
The GENIUS Act is the first major federal law to regulate crypto. It creates a clear framework to make stablecoins safer and more reliable.
The law dictates who can issue stablecoins and requires a 1:1 reserve backing. This means that for every stablecoin you buy, the issuer must hold a dollar in cash or short-term U.S. Treasury securities in reserve. It also sets up strict anti-money laundering regulations and prohibits stablecoin issuers from advertising that their assets are federally backed or insured.
This clarity and oversight are expected to build consumer trust and encourage broader adoption.
What This Could Mean for You
If the GENIUS Act helps stablecoins go mainstream, here are a few ways it could affect your daily life.
Faster and Cheaper Payments
Because merchants can save a lot on processing fees by accepting stablecoins, more businesses are expected to embrace them. Over time, you might see merchants pass these savings on to you through discounts for paying with stablecoins.
This new payment technology could also enable micro-payments for the first time. For instance, you could easily pay a few cents for a single article online, or instantly tip a content creator, as fees would no longer be a barrier.
Drastically Improved International Transfers
Sending money abroad is often expensive and slow. Traditional remittance services can cost over 6% of the transfer amount and take days to complete. Stablecoins, on the other hand, can make international transfers instant and nearly free, saving you a significant amount of money and time.
The Trade-Offs
While stablecoins have many benefits, they do come with important differences from traditional banking that you should be aware of:
- No Federal Insurance: Funds held in stablecoins are not protected by the FDIC or NCUA, unlike money in a savings or checking account.
- No Interest: The law explicitly prohibits stablecoin issuers from paying interest on the funds held in reserve.
Your Experience May Not Change Much
Despite the big changes, you might not even realize you’re using stablecoins. In many cases, the technology is expected to be implemented in the background. Your payment might move over a stablecoin network to settle instantly, but your experience would be similar to how you use other digital payment apps. The only difference would be near-instant, near-free transactions.