Traditional finance's rulebook undergoing discreet change: Stablecoins subtly altering conventional financial systems (Editorial)
In a significant move towards regulating the burgeoning world of stablecoins, the United States Senate passed the Guiding and Establishing National Innovation for U.S. Stablecoins Act (GENIUS Act) on June 17, 2025. This legislation, designed to create a federal regulatory framework for stablecoins, is a step towards addressing the growing need for these digital assets, particularly in cross-border transactions and remittance.
The GENIUS Act aims to provide a clear, uniform legal structure, reducing regulatory uncertainty and promoting broader adoption of stablecoins within the financial system. The Act restricts stablecoin issuance to permitted payment stablecoin issuers (PPSIs), which can be federally or state-approved banks, qualified nonbank entities, or state-regulated issuers under specified conditions.
Stablecoins, a part of the crypto world that was once shadowy, are now mainstream and integrated with traditional financial systems. In fact, a significant portion of global Fiat capital flow is expected to be represented by stablecoins in the near future. This shift is evident in the European Union, where the Markets in Crypto-Assets Regulation (MiCA) was implemented in 2024, prioritising consumer protection and anti-money laundering. The stability created by MiCA led to an increase in EURC stablecoin transactions, from $7m to $21m between December and January 2025.
The impact of stablecoin adoption on traditional finance will be significant over the coming years. Global stablecoin transactions passed $27.6tn in 2024, and this number is set to rise further. For instance, $1.2tn in U.S. debt is set to be bought by stablecoin issuers like Tether and Circle by 2030.
In the US, the Commodity Futures Trading Commission (CFTC) is the primary regulator of digital commodities and payment stablecoins. However, the path to stablecoin integration in everyday use cases is more nuanced. JP Morgan, for example, developed the JPM Coin in 2019 for cross-institutional transactions.
The GENIUS Act is currently moving to the U.S. House of Representatives, where a companion bill, the Stablecoin Transparency and Accountability for a Better Ledger Economy Act of 2025 (STABLE Act), is under consideration. Both bills must be reconciled before final enactment, and it remains uncertain whether the House will pass stablecoin rules standalone or tie them to broader digital asset market structure legislation.
There is ongoing debate about the sufficiency of the GENIUS Act’s regulatory approach. New York Attorney General Letitia James has urged Congress to strengthen the legislation by regulating stablecoin issuers similarly to banks, including applying FDIC insurance to stablecoin deposits to better protect investors and the financial system.
As most people will not know they are using stablecoins, the digital infrastructure for crypto adoption is already in place. With the GENIUS Act, the US is taking a significant step towards a future where stablecoins are a fundamental part of the financial system, offering safety, transparency, and innovation.
- The GENIUS Act, predicting a broader adoption of stablecoins within the financial system, aims to provide a clear legal structure for these digital assets, such as Tether and Circle.
- Stablecoins, a once shadowy part of the crypto world, are now integrated with traditional financial systems, and a significant portion of global Fiat capital flow is expected to be represented by them in the near future.
- In the European Union, the implementation of the Markets in Crypto-Assets Regulation (MiCA) in 2024 prioritized consumer protection and anti-money laundering, leading to an increase in EURC stablecoin transactions.
- The CFTC is the primary regulator of digital commodities and payment stablecoins in the US, but the path to stablecoin integration in everyday use cases is more nuanced, as shown by JP Morgan's development of the JPM Coin in 2019 for cross-institutional transactions.
- As most people may not know they are using stablecoins, the digital infrastructure for crypto adoption is already in place. However, ongoing debate exists about the sufficiency of the GENIUS Act’s regulatory approach, with calls for stronger legislation to protect investors and the financial system, like regulating stablecoin issuers similarly to banks and applying FDIC insurance to stablecoin deposits.
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