What the GENIUS Act Actually Does to Stablecoins

Let’s see where it goes. The Bretton Woods deal or agreement that happened in that period is quite similar with what is happening today with the Genius Act.

Today we are diving deep to discuss what it actually is, how it affects the United States market, and maybe what is the influence it brings to the market for the upcoming years.

Hello everyone. Welcome back to our new episode of Fintech Garden podcast. Today me, Dumitru Condrea, co-host for a Fintech Garden podcast and founder of Novafin. And we together with my co-host Igor, we will discuss a very interesting topic. Hello here.

Hello Dumitru, and thank you for joining us. Today we are bringing a special episode about the Genius Act because we reflected and understood that we discussed for a couple of years already stablecoins, but it was just barely the news about the Genius Act. And today we are diving deep to discuss what actually it is how it affects the United States market.

And maybe what influence it brings to the market for upcoming years.

So, the Genius Act itself. Well, at the beginning, everybody was making fun about this act specifically, maybe about the name of this act and the way how it was, how it was signed and so on. But in fact, a very critical and a very important document for the United States economy and the worldwide economy. The Genius Act is about stablecoins.

So at the moment we are recording this video, it seems like we will push it out somewhere in August. Already are 11 days after the deadline of implementation of of this genius act passed. So we have 11 days when everything has to work according to this genius act, whereby the way very good instrument when a country comes and says, hey guys, we are providing you with new regulations.

You have six months a year in this case to implement this and to make everything to work smoothly and to work good. Before starting to speak about the Genius Act, let’s talk about the stablecoins. I know that majority of you know what means the stablecoins, and I’m sure the majority of you even can, you know, by heart tell the names of stablecoins and which kind of chain they are using, and so on.

But let’s speak about the stablecoins, what they are in fact so eager to tell us what is stablecoin?

Before jumping into stablecoins, I would like to educate our listeners that genius can actually be split into the proper name, which is guiding and establishing national innovation for us. Stablecoins act and fairly its acronym, which everyone is using. But the idea is to guide and establish innovations that is connected to stablecoins.

Stablecoins is a fairly new trend and event that is built on top of the previously existing blockchain network. And I think the stablecoin finally married the two different worlds as a blockchain and fiat. And in a nutshell, it fixes issues of crypto-native currencies, but also gives the stability of fiat.

Because if you dive deep into the Adam Smith and Wealth of the Nations, you know that the difference of the government issue currencies is that they baked by the economy of those countries and the protective power, etc., etc. but what usually the blockchain native coins are missing is the proper governance from the government of those cryptocurrencies.

And when the stablecoin is backed by the real fiat currency, it means that you can move the funds across the blockchain using the technology. But under the hood, it’s backed 1 to 1, and it’s supposed to be backed 1 to 1 with the Fiat and partially genius act actually introduced those rules because before the Genius Act, they were stablecoins.

They were minted, they were redeemed, they were used across the globe. But it put the regulation. So what do you think about stablecoins? Is it the annotation for blockchain development. Or we will see more stuff like that and more genius acts for this stuff?

Well, blockchain is not about the crypto coins itself. It’s not only about this. Blockchain is a technology that is used today widely, not only in crypto, it’s used in, I don’t know, in regulations. It’s used in crypto. It’s using it’s been used in, I don’t know, KCB protocols and a lot of things like smart contracts as an example.

So everything what we see on blockchain like coins like, I don’t know, smart contracts. This is just on the surface of the iceberg behind the the sea level is much bigger. So be sure if it’s not the end of a developing of of blockchain is just one evolution branch of the stable of blockchain which arrived to possibly to last logic or last step, but only related to development of stablecoins by sure will appear different stablecoins in different countries.

We have several of US based stablecoins and soon we’ll have European one and other countries are also thinking the same. So be sure it’s not. Not the end of a blockchain. But yes, it can be. I have a feeling that it’s the end of evolution for stablecoins like we know them today. What means the end of evolution means like, we will not invent something new on this field.

What we will do instead of having vertical growth, we’ll have a horizontal growth means like we will populate this with policies, we’ll populate with procedures, we populate this with regulations and we’ll make the life of users life of economy, life of companies, businesses easier and all everything.

What we’ll do with horizontal growth will not be for investing, attracting money into this company. The genius act itself. Very simple by the concept. You want to mint a United States dollar stablecoin, you have to put something in Treasury before this act also applied. But we didn’t saw any kind of strict regulations like who will check the Treasury, who will do the audits, the checks and so on.

So everything was like under the trust me regulation. Now you have to put the dollar on the table. If you want to mint a coin. You have strict rules regarding how the Federal Reserve, how okay, how other institutions in the United States will control you. You cannot just take a mint. US dollar if you are not a company who is registered in the system.

So because looking quite strange when, for example, a company who has no American roots can mint a United States dollar. So under the logic of sovereignty, under the logic of Make America Great Again or America First and so on. They just implemented very strict rules. And by the way, a very good one. Of course, for majority of population it was like, hey, we we want to control this.

We want to bring more money in the country. We want to make our country richer. But in fact, it was a horizontal growth for for this topic. So I’m to be honest, I’m very happy that this disappeared. And we here in the European Union, we have to take an example about this.

I think it can be wrapped up into the really simple explanation what act effectively says. So it says a company may issue a US payment stablecoin only when it’s licensed, supervised, fully backed by safe assets, redeemable, transparent and compliant with AML and sanctions rules. So it’s a pretty simple explanation, but it gives a power for the company to know in advance what rules are going to be used, and coming back to the baked at least 1-to-1.

It’s not just to US dollars. So the rules are effectively saying that it should be baked to US dollars and Federal Reserve balances demand deposits at insured bank US Treasury securities with the remaining maturity of no more than 93 days certain overnight structure baked wrapper transactions, qualifying government money market funds and approved similarly liquid government assets

So it kind of gives really diverse ability to bake those stablecoins. It means that the process of minting, redeeming and actually moving is under the control of the U.S. government by imposing the amount centralized transaction checks and everything. So I think that’s a huge improvement, which in one way improved a lot of things, but made a little bit harder to get the license and operational activities.

But we see that in 2025, the market self of the stablecoin grew 50%, and in 2026, it’s no longer dark web activities. As a blockchain, it’s really mainstream because the acquisition of bank, all the acquisitions that stripe is doing, even the discussion for IDM and Stripe to acquire PayPal, because those two companies are streamlining the stablecoins might be the impact of this genius act.

So itself. The act doesn’t mean that starting from July 18th, 2026, all the companies have to be who are minting. The United States dollar has to be to respect all the rules. What it says specifically is there is a period of time of one year where all the federal agencies involved in this, they have to provide instructions, regulations, clean and clear rules for the market itself.

That one year deadline was not a deadline for the companies itself. It was a deadline for them, for agencies, federal agencies, to prepare themselves and to provide strict regulations and to provide instructions how the things has to be done. For public institutions from federal public institutions say, hey, we are proving this law.

So if someone wants to meet the US dollar, they have to come to put the dollar on the table to, to to issue this. But you guys go, I mean, you have federal agencies. You have to to prepare the documentation. Still today the problem persists is with control, anti-money laundering, treasury management and so on as crypto assets.

By the way, treasury management for crypto assets is not the same as treasury management for fiat assets. It’s a little bit different by logic itself. Even for finance teams, sometimes it can be the same because I mean you still see the numbers. It’s $1000 or 1000 USD or USDC. You think it’s the same, but technically and practically it’s not for federal agencies.

We will see that they will come with legislation. They will come with regulations; they will come with instructions, and everybody will understand how they have to work. So the hardest thing is, is still ahead in front of us with the implementation of the law itself, because the law cannot be implemented only just by the law, if it has it need the background.

So the implementation from the business side, it will be quite a hard one. I think we will still see some shakes on the market on stablecoins market. But at the end, I think in one year from today, we even can make an experiment and record the podcast next year on the same day and to analyze this. But I think the market itself will pass through a very interesting process and let’s see where it goes.

Another question that you might ask, like what is happening with the foreign-issued stablecoins? Because USDt, one of the example and basically the act creates a route for foreign stablecoin issuers, but generally they need regulation in the jurisdiction that Treasury determines incomparable to US framework, registration and oversight arrangements in the United States, sufficient US accessible liquidity and compliance with lawful US sanctions and enforcement orders.

So it kind of pushes and that’s potentially the issue that is happening on the market with USD, because recently it has been withdrawn from Revolut for use. So that shows that this act combines the forces over the globe to regulate stablecoins if they were a really popular one. So I think once again, that’s an advantage, because if you know the rules in advance and you know how those rules are applied from the legal perspective, it’s really good.

And it gives companies the ability to build longer term strategy and approaches, which are showing stripe on the market stripe continuously for almost a year and a half, starting maybe from bridge acquisition last year in May. They systematically bind the stablecoins infrastructure because stripe is sitting in payments.

And that’s one of the markets that has been impacted by the stablecoins ingenious act. A lot is actually the payment market because we tend to think that payments usually are local. But with stablecoins, the payments are global. You don’t need to do a lot of things which should be necessary in local fiat payments, because you need to collect the local currency, do the FX and then cross-border settle, which is a no longer question, because if you were collecting the payments in USDC or any other stablecoin, you can pay directly to the merchant in those currencies, which is facilitated.

And that’s the reason why companies like stripe, they strategically acquire in the businesses, and they think in two steps ahead when majority of the transactions might not see it in the existing payment rails as a card networks or even banking transfers, they will be executed on the blockchain networks, and that gives them the door opener and potential growth in future years.

Because they think and about this strategically.

The companies are not staying and waiting when the regulation will appear and so on. They just move. They create the infrastructure, they purchase other companies, other products, they do different activities. That basically what I meant will reshape the market. Coming back to my lovely topic of compliance and regulations just checked.

Still today there is no published document from all the federal agencies. I think that 5 or 6 federal agencies who they have to provide all those rules, everything, nothing is published. They came together with common statements saying, hey, we still need time till August 21st. So one year passed. Yeah, by for sure.

We had the last weeks of writing those rules and everything will be implemented, and after that we’ll have 120 days. I mean, we, the United States companies will have 120 days to adopt those rules and to implement them. But again, as you said, companies like stripe, companies, like any other companies, they’ve made a lot of interesting moves on the market because nobody is waiting when the rules will appear.

They just act because business has no time to to wait. The business has to make money. And by the way, if you know what will happen in a year where year and 2 or 3 months, you can build a strategy, you know where to look at. And stripe made the correct move. By the way, stripe looked also for PayPal. We mentioned that in one of our previous weekly harvest review.

Stripe also looked at PayPal to make an offer together with other companies to make a. They made a purchase offer for PayPal. Let’s see where it goes. But so I’m sure that on market appear new players because they’ll have liquidity, they’ll have a sense. Again, we still not know till today how to manage that liquidity and what the liquidity in cryptoassets means from regulation point of view or like peer company with a lot of liquidity and this will generate huge impact.

Just remember my words. We will start in one moment when everything will be regulated or those assets will be regulated. You have to understand that it will appear a new markets, new niches on the markets, like offering loans in crypto assets which today exist already. But it will be much more a very dynamic market.

It appears a lot of insurance instruments for with crypto assets. The popularization of crypto assets will go deeper and deeper. I even heard some opinions of very interesting, smart guys. They said, it seems like we are in the 1950s again, where Bretton Woods deal or agreement that happened in that period is quite similar with what is happening today with Genius Act.

Who knows, maybe the United States just opened not only a new stage in crypto assets development. Maybe they just open a new period, a new era in the worldwide financial and economic world. Who knows?

It’s worth mentioning that I would say it’s not here primarily a retail checkout revolution because so far what we have, it’s payment infrastructure, but it doesn’t reach yet the final customers during the online checkouts and stuff like that. So it’s worth to mention that the near term opportunity is stronger for remittances.

Pay out platforms, global payroll providers, marketplaces, merchant settlement platforms, treasury management system and stablecoin on ramp and off ramps. And I would like to focus a little bit on that, because before that, it was really hard to understand and be clear what is needed to build on ramp ramp solution.

And actually, the Genius Act answered how actually it goes. So usually for a stablecoin on ramp used through ACH wire or card converted into the stablecoin, the act provides the clear answers around what qualifies as a payment stablecoin, who may issue it, who reserves and redemption should work, which issues and stablecoins on ramp may support, and how stablecoins are treated relative to securities and commodities.

Because the act clearly answered that stablecoins are not securities and commodities, which before might be even prosecuted after the specific cases. And we heard about the FTZ and cases like that which is overlapping there. And what I would like to say is that what act doesn’t make easier. It’s basically FinCEN registration.

So the Genius act regulates payment stablecoin issuance, but it doesn’t create a single nationwide license for independent fiat-to-crypto or in ROMs. It means that you still need to go to the FinCEN registration. You need to still go state by state licensing, because that’s how in the United States works.

And you need to find the partners in bank payments and compliance, because still, that’s the part of the work. But it’s unified the understanding how it should be done. And then as an outcome, I see that a lot of new on ramps, off ramps with ability to open use the accounts and receive the ACH payments is basically appearing as mushrooms after the rate.

So do you think that we will see more companies which is operating on this thin border between fiat and stablecoins because having an ability to open an account in ACH right now, it’s easier than it used before. Yes, potentially it requires more documents from the end customer even as the source of wealth.

But is it getting more accessible for foreigners to open accounts in the United States? According to this act.

I think will appear a new type of onramp or firm solutions. Type means the procedures will be much cleaner. Of course, the technical solution will be the same as it is today. Maybe with some small enhancement it will change the focus of those on ramp off from solutions. Currently, a lot of off-ramp-on-ramp solutions are developed to sustain some existing, already existing businesses that are working under current logic.

What will happen in the future? Those off ramp solutions. They will try to migrate an adaptive. A new reality possibly will appear new solutions because on mass market to a simple person who is living in a village somewhere in the United States, will be entrepreneurs who like to deliver such kind of assets to those people, to those niches.

so be sure to appear those old one who will not be able and ready to rethink about their logic and how the business has to work. Of course, we’ll disappear, so we will see a reshape, but it will. Basically, it will be like a shuffle. So. So you’ll just take something from one side and put in another side. And this is how the market will look.

Plus the big players, the big sharks like stripe and other companies, they will start to make offers to smaller companies to embed those solutions into their existing infrastructure and ecosystems, to provide new value streams of of income and profit for the bigger companies. So by sure, it will be a reshaping of the market.

Not sure it will look like we will lose a lot of players. Yes. Will be will disappear some of the companies but another one new one. Solutions for off ramp on ramp will appear by sure. Mostly because some United States states itself they under federal law, they’ll develop some local state regulations, but someone will be more open to some, I don’t know, stablecoin companies of ramp on ramp solution.

some of them will be more strict. So yeah, we will save this kind of a migration on this side.

And let’s take an example of a on ramp in 1,000 USD into the wallet, because it’s kind of a practical task. Like you can go to different applications right now as MetaMask wallet and other systems. And I think it’s really good to expose how actually it works. So basically, you always start with a customer on board and a verification.

And usually during this step the customer should be KYC like the various documents are collected depending where the regions where you’re onboarding. But let’s say in the United States you will be asked to provide the identification documents. And after the verification, you will have an ability to initiate the ACH or wire or even card initiation.

In this case, the Fiat receipts and the Fiat is getting safeguard on their platform, which is an on ramp. And that’s the moment when there are frauds and sanction checks happening, because in this case, you are not getting the fiat in exchange or you’re not getting the crypto digital assets in exchange of yet your transaction under the fraud checks and AML checklists sanction checks.

After that, the internal ledger is basically building the entry because you’ve received some fiat. The stablecoin process of purchase on minting is happening and fairly in 90% of your operations, you will see that it’s basically the exchange or purchase, because through the liquidity providers and those platforms, they require the amount of the digital assets.

And then your wallet is initiated with the delivery. The blockchain is also monitored. And after the compliance checks or know-your-transaction process, your transaction will be finished. It will land on them. Wallet and reconciliation and regulatory reporting from the platform will happen. So all those steps will be received into the specific payment rails and then get in the money, unaccountable land.

And I think the advantage is that a genius act ironed out all the processes which are happening there. And you can take a look. There are a lot of competitors and a lot of products over there for on ramp off ramp, which is making it easier to operate with the stablecoins.

Nowadays, what we have to do now is to wait until the 21st of August to see the final rules and the final sketches of the rules and regulations, and waiting till 18 of January 2027, when the act itself will start to govern with all the rules behind. So we will see what happens in winter and spring. But yeah, it seems like the market will start to move already somewhere in autumn, after right after the August holidays.

Let’s see where it all goes. But again, it’s a very good instrument that the United States government introduced. It’s very well thought and provide quite interesting possibilities for new companies and existing companies. Let’s see where it goes. Thank you very much for all of you for watching this podcast episode.

Me with my co-host Igor. We are waiting for your comments. Don’t forget to subscribe, and let’s stay in touch. Thank you very much.