US President Donald Trump has signed the GENIUS Act into law, setting guidelines for crypto tokens pegged to the US dollar.
Financial companies from the US now plan to launch their own stablecoins. However, experts warn about possible complications down the line. This law is designed to facilitate crypto usage and could pave the way for stablecoins to become an everyday way to make payments and allow for money movement. To capitalise on the opportunity, companies design their crypto strategies for instant payments and settlements.
Although the GENIUS Act has been signed into law, its effective date is potentially several years off, with federal banking regulators expected to issue rules in the meantime to fill in certain gaps.
How the GENIUS Act affects different institutions
Amongst the companies interested in creating their own stablecoin are Walmart and Amazon, according to the Wall Street Journal. However, the brands did not comment on these speculations.
Experts mention that the new bill did not immediately open the way for opportunity, as it can lead to several challenges for firms when it comes to strategy and technicality. Companies can either choose to deploy their own US-pegged tokens or integrate existing stablecoins, such as Circle’s USDC, into their business. Experts mention that a retail platform could make stablecoins available for shoppers to buy products, which could be preferable for crypto-savvy customers, while other companies could utilise them for cross-border payments, as stablecoins enable instant transfers with lower fees.
For neobanks, stablecoins bring new compliance costs and oversight requirements, given that the GENIUS Act enforces issuers to comply with AML and KYC laws. This means that businesses that already have these requirements in place have a competitive advantage in this context. Banks are likely to enjoy the advantages brought by stablecoins, as they are accustomed to screening and client identity verifications. Bank of America and Citigroup are already issuing their own USD-pegged assets, while banks like Morgan Stanley are monitoring developments.
Additionally, they may need to weigh factors such as how holding the tokens might affect liquidity requirements, and the fact that their balance sheets might be required to hold more capital under current bank rules. Stablecoins are issued on blockchains like Ethereum or Solana, which are public and transparent. Banks may prefer private blockchains for stricter governance, while others favour public ones for proven scalability.
