Stablecoin reserve rules could upend crypto’s power structure

After years of erratic oversight, US policymakers are edging closer to imposing regulatory stability on digital assets – with stablecoins at the centre of their focus.

The Guiding and Establishing National Innovation for US Stablecoins of 2025 Act (GENIUS Act), which has passed the Senate, could redefine how stablecoins operate if passed by the House and signed by President Trump.

GENIUS

Stablecoin reserve rules could upend crypto

Under GENIUS, issuers must maintain cash or cash-equivalent reserves – such as short-term US Treasurys – held in segregated accounts, and subjected to monthly independent audits.

Furthermore, issuers would be banned from paying interest, preserving stablecoins as near-cash instruments rather than speculative yield products.

These rules represent a significant tightening of standards.

For leading issuer Tether, whose reserves have historically included precious metals, commercial paper and even crypto assets, compliance would require radical restructuring.

Tether could exit the US market, launch a compliant variant of its token, or move operations offshore entirely.

CLARITY

Alongside the GENIUS Act, lawmakers are attempting to bundle the CLARITY Act, which establishes a broader framework for digital asset markets, into the same legislative process.

Together, these bills seek to resolve decade-long uncertainties by drawing explicit lines between securities and commodities, thereby empowering federal oversight.

The implications extend beyond crypto-native players.

With compliance pathways defined, traditional institutions may be poised to dominate.

Large US banks, payments giants, and fintechs are already testing stablecoin pilots under existing experimental frameworks.

As Amias Gerety, former Assistant Secretary of the Treasury, has noted, banks are well-positioned to become the primary issuers.

However, the GENIUS Act’s timeline remains contentious.

The Senate bill proposes a three-year compliance window, while the House version demands transition within 18 months. This divergence will need to be resolved before the legislation reaches President Trump’s desk.

In parallel, regulatory bodies such as the Treasury, Federal Reserve, and FinCEN will bear responsibility for operationalising the new regime, defining audit standards, compliance protocols, and licensing processes.

Given the proliferation of illicit activity involving stablecoins, rigorous enforcement is expected.

Ultimately, if passed in its current form, the GENIUS Act could transform stablecoins from loosely regulated instruments into a core pillar of America’s digital financial infrastructure – reshaping both the crypto ecosystem and the future of tokenised money in the process.