In-depth Interpretation: Did Trump Sign the “Genius Act,” Bringing a “Professional Army” Era to the U.S. Crypto Market?

After years of running wild in the Wild West of crypto, the United States has finally reached its “constitutional moment.”

On July 18, 2025, with President Trump officially signing and bringing it into effect at the White House, the “Guiding and Establishing National Innovation for U.S. Stablecoins Act” (GENIUS Act for short, a.k.a. the “Genius Act”), officially became law. This is the first federal-level piece of dedicated crypto legislation in the United States, marking that U.S. dollar stablecoins have officially moved from the “gray zone” to the “sunny road.”

This is not just a regulatory bill—it is a grand strategic plan concerning U.S. dollar hegemony, sovereign debt absorption, and technological competition. Let’s pull it apart thread by thread and see exactly where this “Genius Act” is really “genius.”

I. Draw the Line: Who Gets Accepted, Who Gets Cold-Shouldered?

The GENIUS Act’s core positioning is very clear: it regulates “money-like” things, not “stock-like” things.

Regulated objects: Only dollar payment-type stablecoins. That is, tokens that claim to be pegged to the U.S. dollar at 1:1, such as USDT, USDC, PYUSD, and others.

Non-regulated objects: Volatile cryptocurrencies like Bitcoin (BTC) and Ethereum (ETH) are not within the direct regulatory scope of this act.

Why do it this way?
The bill explicitly defines payment-type stablecoins legally: they are not legal tender, not bank deposits, and not securities or commodities. They are an independent digital payment settlement tool. This definition is crucial—it directly sidesteps the long-running jurisdictional wrangling between the SEC (U.S. Securities and Exchange Commission) and the CFTC (U.S. Commodity Futures Trading Commission), and sets up a dedicated regulatory rulebook for stablecoins.

II. Core Provisions: Put a “Tight Ring” on Stablecoins

To make stablecoins truly safe, the act sets very high thresholds, mainly reflected in the following four aspects:

1. Issuance Qualifications: A Two-Track System and a “Banned Entry” Rule

You can’t just issue coins if you want to. The act implements tiered regulation:

Big tier (circulating market cap > $10 billion): Must be subject to direct federal oversight by the Federal Reserve and the Office of the Comptroller of the Currency (OCC). This means that players at the level of Circle (USDC) and Tether (USDT) will be brought into a national-level financial monitoring system.

Small and mid tier (market cap < $10 billion): They can apply for state-level financial licenses, but the regulatory standards must align with the federal level.

Tech giants barred entry: This is a major restriction—pure tech companies such as Meta (Facebook) and Tesla cannot directly issue coins. They must cooperate with licensed banks or financial institutions. This eliminates the risk that tech giants could issue currency arbitrarily using user data.

2. Reserve Assets: 100% Fully Backed, Strictly Prohibiting “Passing the Buck with Empty Hands”

This is the most core risk-control provision. For every $1 stablecoin issued, there must be a hard-asset backing of $1.

Accepted assets: Only U.S. dollar cash, bank-held deposits, U.S. short-term Treasury bills, and government money market funds.

Completely banned: The “partial reserves” model (i.e., misusing users’ funds to invest) is defined as illegal; so-called “algorithmic stablecoins” (without real collateral) that once caused the LUNA crash are also directly banned.

3. Transparency and Auditing: Not Just Trust—Proof

To prevent black-box operations like FTX, the act requires:

Monthly disclosure: Issuers must publish a complete monthly breakdown of reserve assets (how much is cash, how much is Treasuries).

Quarterly audits: For giants with an outstanding circulation size exceeding $50 billion, third-party independent audits are required each quarter.

Anti-money laundering (AML): Full implementation of KYC identity verification to crack down on illegal flows of funds.

4. Bankruptcy Protection and Anti-CBDC

User priority: If the issuing company goes bankrupt, ordinary users holding stablecoins enjoy first-priority settlement rights, ahead of corporate creditors and shareholders. In addition, the issuer must strictly isolate users’ reserve funds from the company’s operating funds.

No interest: Stablecoin holders are prohibited from receiving interest payments, preventing stablecoins from turning into a disguised deposit-taking bank.

Banning CBDC (central bank digital currency): This is the personal flavor of Trump. The act clearly prohibits the Federal Reserve from issuing digital dollars to ordinary citizens. Trump believes that private stablecoins are sufficient to perform payment functions, while an official CBDC would infringe on privacy and lead to excessive government surveillance.

III. Deep Strategy: The Drunkard’s Intent Is Not in the Wine

Why is the U.S. government suddenly so focused on stablecoins? On the surface, it’s about standardizing the industry; in reality, it’s about consolidating national destiny.

1. Consolidate the Global Hegemony of the U.S. Dollar

In the digital era, if the U.S. dollar lacks a corresponding digital carrier, its hegemonic position could weaken. By forcing major global stablecoins to hold U.S. Treasuries and the U.S. dollar as reserves, the U.S. effectively ties global crypto transaction volumes to the dollar war machine. This not only squeezes cross-border space for digital currencies like the euro and the renminbi, but also ensures the U.S. dollar continues to act as the “anchor” in the Web3 world.

As Trump said: “Losing the U.S. dollar reserve currency status is equivalent to losing a world war.”

2. Absorb U.S. Treasuries to Ease Debt Pressure

This is a sophisticated financial closed loop. At present, the size of U.S. national debt is as high as $36 trillion. The act requires stablecoin issuers to purchase large amounts of short-term U.S. Treasuries as reserve assets.
This means that as global demand for dollar stablecoins increases, issuers must keep buying U.S. Treasuries. This creates a continuous and stable super-buyer for the U.S. government, helping lower financing costs and ease fiscal pressure.

3. Establish Competitive Advantages in the Industry

By setting a unified federal regulatory framework, it eliminates long-standing legal uncertainty, which will attract global crypto capital to flow back into the United States. At the same time, by setting high entry barriers (such as the federal regulatory line at a $10 billion market cap), it effectively protects existing U.S.-based compliant giants (such as Coinbase and Circle), building a moat against foreign competitors.