This article is part of:Centre for Financial and Monetary Systems

• The GENIUS Act (Guaranteeing Essential National Infrastructure in US-Stablecoins) is the United States' first comprehensive legislation on stablecoins.
• The EU and Hong Kong have also introduced stablecoin regulations.
• While the GENIUS Act brings regulatory clarity, global coordination, consumer protection and broader crypto regulation are still needed.

Last week US President Donald Trump signed the GENIUS Act, the first major crypto legislation ever passed by Congress. This bill focuses on stablecoins, setting up regulatory guidelines for this form of digital currency across the United States.

Stablecoins have quickly become one of the most closely watched topics among global financial institutions and governments. Their usage and impact are growing rapidly, increasing 28% since this time last year, with transaction volumes surpassing that of Visa and Mastercard combined in 2024. However, fewer than 10 major economies around the world have adopted stablecoin-specific legislation.

What is the GENIUS Act?

The GENIUS Act marks the United States' first major legislative step towards regulating stablecoins. With this bill, it joins a growing list of countries seeking to bring oversight and stability to the rapidly expanding digital asset ecosystem. This act aims to provide clear regulatory guardrails for the industry.

The GENIUS Act contains three significant provisions:

• Stablecoin issuers are limited to insured depository institutions, e.g. banks, credit unions, subsidiaries of banks and nonbank financial institutions that receive approval from the Federal Reserve and demonstrate the ability to comply with the relevant law.

• Stablecoin issuers must hold 1:1 reserves for any stablecoins issued. These reserves can be held in physical currency, US treasury bills, repurchase agreements and other low-risk assets approved by regulators. Issuers are required to report reserve composition and are subject to regular audits by registered public accounting firms.

• The act provides that all stablecoin issuers must comply with the Bank Secrecy Act, ensuring all stablecoin issuers implement measures protecting against money laundering (AML) and the financing of terrorism (CFT) and bolstering consumer protection.

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How does the GENIUS Act compare to other stablecoin regulations around the globe?

Stablecoin regulation has been in the works in several jurisdictions around the world. For example, in December 2024, the European Union’s Markets in Crypto-Assets Regulation (MiCA) came into effect and Hong Kong recently released its Stablecoin Ordinance.

In the EU, the MiCA framework addresses stablecoin regulation. The legislation does not refer specifically to stablecoins, but rather to e-money tokens (EMT) and asset-referenced tokens (ART). EMTs refer to digital tokens backed by a single fiat currency, while ARTs are digital tokens backed by a basket of assets, which could include physical assets, cryptocurrencies, or others. Under MiCA, only e-money institutions or credit institutions can issue an EMT, while ART issuers must be EU-based and authorized by regulators.

Meanwhile, Hong Kong’s Stablecoin Ordinance, passed in May 2025, is one of the more recent pieces of stablecoin legislation passed worldwide. Under the law, all issuers of stablecoins backed by the Hong Kong dollar will need to obtain a license from the Hong Kong Monetary Authority. All stablecoins must be backed by high-quality, liquid reserve assets, and the market value of the reserve pool must be equal to the par value of the stablecoins in circulation. All issuers are subject to strict requirements, including AML and CFT, as well as regular audits and disclosure.

How is the World Economic Forum promoting the responsible use of blockchain?

The World Economic Forum's Platform for Shaping the Future of Blockchain and Digital Assets ensures equity, interoperability, transparency, and trust in the governance of this technology for everyone in society to benefit from blockchain’s transformative potential.

• The Forum helped central banks build, pilot and scale innovative policy frameworks to guide the implementation of blockchain, with a focus on central bank digital currencies.
• The Redesigning Trust with Blockchain in the Supply Chain initiative is helping supply chain decision-makers implement blockchain, while ensuring that this technology is utilized in a secure, responsible and inclusive way.
• The Centre for the Fourth Industrial Revolution UAE is testing the application of digital assets and tokenization to improve financial systems.

Contact us for more information on how to get involved.

How has the GENIUS Act been received?

The GENIUS Act has had reactions domestically and around the globe. President Trump has stated that the bill “is going to make America the UNDISPUTED Leader in Digital Assets.” Professor Barry Eichengreen of the University of California, Berkeley noted that: “If panicked customers force [stablecoin issuers] to sell [treasuries backing stablecoins], Treasury prices could collapse, sharply increasing interest rates and destabilizing other financial markets and our entire economy.”

Globally, Chinese state media called for yuan-backed digital currencies to be pursued “sooner rather than later.” Wary of the GENIUS Act’s potential to proliferate the US dollar worldwide and thereby increase dollarization, Zhou Xiaochuan, former governer of the People’s Bank of China, stated: “Unless facing extreme, dire circumstances – such as [fighting] high inflation or heavy debt burdens – pursuing dollarization could bring many adverse side effects.”

In the EU, European Central Bank President Christine Lagarde shared similar concerns, emphasizing US dollar-denominated stablecoins’ threat to monetary policy and European autonomy and pushing for the development of a digital euro.

What’s next?

While the GENIUS Act is a step forward in creating regulatory clarity, there is more progress to be made. Here are three recommendations to ensure consistent and thorough stablecoin regulation around the world:

1. Emphasis on consumer protection

Clear and consistent global guidelines to protect consumers are critical to gaining the trust of the public.

2. Global standards for stablecoin regulation

In 2020, the G20 published the Crypto-Asset Policy Implementation Roadmap, which was updated by the Financial Stability Board (FSB) in 2023 and includes a series of High Level Recommendations on Global Stablecoin Arrangements. The FSB’s recommendations include: cross-border collaboration and information sharing; transparent disclosures of reserve composition, redemption rights and associated risks; and, compliance with global AML/CFT measures. Any future regulation should continue to comply with global standards for interoperable regulations.

3. Public-private collaboration

Consistent communication between the public and private sectors is critical to ensure stablecoins are developed with a common goal.

Even beyond stablecoins, more comprehensive global regulation is needed in other areas of the digital assets ecosystem, including decentralized finance and broader crypto assets. Despite the recent passage of the GENIUS Act, the US continues to pursue regulations, including the proposed CLARITY Act, which is related to the market structure surrounding crypto assets. As digital asset adoption continues to surge around the world, it is imperative to have regulatory clarity.