US takes major step towards crypto regulation with new stablecoin law

WASHINGTON: US President Donald Trump on Friday signed a new law to regulate stablecoins, digital currencies tied to the US dollar, in a move seen as a major step towards bringing cryptocurrency into everyday financial use.

The law, called the GENIUS Act, passed the House of Representatives with a 308-122 vote. It had already cleared the Senate. The bill gained support from most Republicans and nearly half of the Democrats.

The law is seen as a major win for the crypto industry, which has long pushed for a clear set of rules to give digital assets more legitimacy. Stablecoins are cryptocurrencies designed to maintain a fixed value, usually pegged 1:1 to the dollar. They are often used to quickly move funds between different crypto tokens, and industry leaders hope they will soon be used for everyday payments as well.

“This signing is a massive validation of your hard work and pioneering spirit,” Trump said at the signing ceremony, which included lawmakers, officials, and crypto executives. “It’s good for the dollar and it’s good for the country.”

Treasury Secretary Scott Bessent said the law would help strengthen the dollar’s role as the world’s top reserve currency, expand access to the US financial system, and increase demand for Treasury bills, which are used to back stablecoins.

Under the new law, companies issuing stablecoins must hold liquid reserves, such as cash or short-term Treasury bills, and report the makeup of these reserves every month.

Crypto companies believe the rules will boost trust in stablecoins, making it easier for banks, retailers, and consumers to use them. Standard Chartered has estimated the stablecoin market, now worth over $260 billion, could grow to $2 trillion by 2028 under the new rules.

The law follows years of lobbying by crypto firms, which donated more than $245 million during last year’s elections to support pro-crypto candidates, including Trump, according to Federal Election Commission records.

Trump, who has launched his own coin and partly owns crypto firm World Liberty Financial, thanked industry leaders for their support. “I promised to restore American liberty and leadership, and make the United States the crypto capital of the world. That’s what we’ve done,” he said.

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However, not everyone is pleased. Some Democrats and critics argue the law should have included stricter rules. They say it should have blocked big tech companies from issuing stablecoins, added tougher anti-money laundering safeguards, and barred foreign issuers from entering the market.

“By failing to close known loopholes and protect America’s digital dollar infrastructure, Congress has risked turning our financial system into a haven for criminals and hostile regimes,” said Scott Greytak of Transparency International US.

The law could also fuel new demand for Treasury bills, as stablecoin issuers will need more government debt to back their tokens.

Banks are watching the space closely. Some are exploring limited crypto services or pilot programmes, according to a May report by Reuters. Crypto firms like Circle and Ripple are also seeking banking licences to lower their operating costs by cutting out intermediaries.

In March, Trump signed an executive order to create a strategic bitcoin reserve. Earlier in January, he launched his own meme coin called $TRUMP.

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