GENIUS Act: A Revolution in Stablecoin Regulation or a Victory for Banks?
The GENIUS Act (Guiding and Establishing National Innovation for U.S. Stablecoins Act), signed by U.S. President Donald Trump on July 18, 2025, became the first federal law regulating stablecoins in the United States. Promising to be a breakthrough for the crypto industry, it has sparked fierce debates: some see it as a step towards the legitimization of digital assets, while others see it as protection of the interests of banks and traditional financial institutions. What are the implications for stablecoins and decentralized finance (DeFi)?
Key Provisions of the GENIUS Act
The GENIUS Act sets strict rules for stablecoin issuers pegged to the U.S. dollar. The main requirements include:
100% Reserves: Issuers are required to hold reserves in liquid assets, such as U.S. dollars or treasury bonds, to ensure stability.
Regular Audits: Monthly disclosure of reserve information and mandatory checks.
Ban on Yield: Issuers are prohibited from paying interest to stablecoin holders, severely limiting their competitiveness compared to traditional financial instruments like Money Market Funds (MMF).
Licensing: Issuers must obtain licenses from federal regulators, such as the Office of the Comptroller of the Currency (OCC), or at the state level if the capitalization of stablecoins does not exceed $10 billion.
These measures aim to increase trust in stablecoins and reduce risks similar to the TerraUSD collapse in 2022. However, the ban on yield has become the most controversial point, drawing criticism from experts and cryptocurrency market participants.
Ban on Yield: A Blow to Stablecoins?
The ban on paying interest to stablecoin holders puts them at a disadvantage compared to tokenized money market funds (MMF), which can offer yields of 4–5% annually by investing in solid assets like treasury bonds. Major banks, such as JPMorgan and BNY Mellon, are already actively developing tokenized MMFs that can be used as collateral or an alternative to stablecoins in DeFi.
Temujin Louie from Wanchain notes: "By banning yield, the GENIUS Act protects the MMF monopoly. It's not a victory for innovation, but a victory for Wall Street." Paul Brody from EY adds: "MMF can look like stablecoins but generate income. If they have no restrictions on use in DeFi, stablecoins will lose."
At the same time, the SEC has already approved the first income-generating stablecoin token YLDS from Figure Markets with a 3.85% yield, classifying it as a security. This opens a loophole for creating hybrid products that can bypass the ban on yield but under strict regulatory oversight.
Banks vs. Stablecoins: The Battle for the Market
The banking sector, which has offered depositors minimal interest rates for decades, fears competition from stablecoins. Austin Campbell from New York University warned back in May 2025: "Banks fear that yield-bearing stablecoins will lure away their customers." The GENIUS Act, according to critics, is the result of lobbying by banks seeking to maintain control over income-generating products.
Major players, such as JPMorgan, Goldman Sachs, and BNY Mellon, are actively integrating tokenization into their operations. For example, BNY Mellon has become the custodian of the stablecoin RLUSD reserves from Ripple, and JPMorgan is testing tokenized MMFs that can compete with USDT and USDC.
The Future of Stablecoins: Niche or Displacement?
The GENIUS Act creates ambiguous prospects for stablecoins:
Victory of MMFs: If tokenized money market funds are easily integrated into DeFi without strict restrictions, they may displace stablecoins due to the ability to offer yield.
Stablecoins' Niche Role: Stablecoins maintain an advantage due to high liquidity and compatibility with blockchain ecosystems, making them indispensable for DeFi and on-chain transactions.
New Opportunities: Companies can develop hybrid products, such as YLDS, to bypass restrictions, although this will require compliance with strict regulatory standards.
Conclusion: A Step Forward or a Brake on Innovation?
The GENIUS Act legitimizes stablecoins, paving the way for their mass adoption in traditional finance. However, the ban on yield and stringent licensing requirements may slow the decentralization of finance and strengthen the positions of banks. For the crypto industry, this is both a victory, providing legal clarity, and a missed opportunity for fair competition with traditional financial instruments. The future of stablecoins will depend on whether issuers can adapt to the new rules and find ways to remain competitive.