The proposed law in the United States of the Guiding and Establishing National Innovation for U.S. Stablecoins Act (GENIUS Act), would enable a greater use of stablecoins for payments.
Recently, the stablecoin market and its affect on the braoder financial system has come to the fore once again. The IPO of Circle Holdings was well received by the market. PayPal has notified that is intends on wading into the market.
Stablecoin issuers have become a more significant cornerstone of the TradFi system. This is evidenced by the fact that Tether is one of the largest holders of U.S. bonds. Last year it was the 22nd largest holder of the asset, in March of 2025 it became the 7th. Higher than the states of Taiwan, Norway and Canada.
Key Legal Changes in the GENIUS Act
The GENIUS Act would mandate strict reserve requirements of issuers of stablecoins. The bill has passed the senate and is awaiting its passing in the House. The bill will increase regulation and official over the space.
The GENIUS Act aims to regulate the issuance and trading of stablecoins in the United States by creating a category called “payment stablecoins.” It would establish rules for payment stablecoin issuers and intermediaries, also known as digital asset service providers.
Under the bill, it would be illegal for anyone other than an authorized payment stablecoin issuer to issue a payment stablecoin within the U.S. Additionally, digital asset service providers would be prohibited from offering or selling payment stablecoins unless they are issued by an approved issuer or a similarly regulated foreign issuer, as outlined in the legislation.
Furthermore, payment stablecoins that are not issued by authorized issuers would not be eligible to be treated as cash or cash equivalents for accounting purposes. They would also be ineligible for use as margin or collateral for broker-dealers, swap dealers, and other SEC- or CFTC-regulated entities. Additionally, such stablecoins could not be used as settlement assets for wholesale payments between banking organizations, either directly or through a payment infrastructure.
However, the bill does not apply to peer-to-peer (P2P) transfers or self-custody of payment stablecoins, meaning individuals transferring or holding payment stablecoins directly without intermediaries would not be affected by these restrictions.
Effect on the Liquidity Mining Industry
The GENIUS Act’s restrictions on the issuance and use of payment stablecoins could have significant implications for the liquidity mining industry. Liquidity mining platforms often rely on stablecoins as a key part of their operations, providing users with a means to stake assets and earn rewards.
If stablecoins not issued by authorized issuers are excluded from being treated as cash equivalents, they may lose utility within liquidity mining ecosystems. This could lead to reduced participation and the need for platforms to adapt, potentially shifting to other assets or compliant stablecoins. Additionally, the prohibition on using non-approved stablecoins as collateral or settlement assets could make it more difficult for liquidity miners to leverage stablecoins for funding and transaction execution.
While the bill does not regulate direct peer-to-peer transactions, it could disrupt liquidity mining platforms that rely on third-party intermediaries to facilitate stablecoin-based liquidity pools. This may force some platforms to restructure their operations or seek alternative solutions in order to comply with the new regulations.
Speculatour 