Donald Trump signed the GENIUS Act into law on July 18, 2025, at 2:30 PM in the White House. The law introduces nationwide stablecoin regulations targeting yield-bearing stablecoins used by both individual and institutional holders.
The GENIUS Act bans stablecoins that allow users to earn passive income through staking or lending. This includes platforms offering returns through centralized or decentralized methods. The law applies to all users in the U.S., regardless of the amount held.
The signing followed months of congressional debate. Lawmakers approved the act with bipartisan support, marking it as the first major law to directly regulate digital assets in the country.
Law Sets Reserve Requirements and Licensing Rules for Issuers
The GENIUS Act requires stablecoin issuers to hold 100% reserve backing. These reserves must match the value of all stablecoins in circulation. Firms must also undergo regular audits and submit detailed reports to regulators.
Only licensed institutions such as banks, credit unions, or regulated fintech firms can issue stablecoins under the new law. Issuers must register and follow new federal and state procedures.
The act gives enforcement powers to the Federal Reserve, SEC, and CFTC. These agencies are expected to work together to oversee compliance and enforce penalties for violations.
Ethereum DeFi Gains Attention After Stablecoin Yield Ban
After the GENIUS Act blocked stablecoin-based yields, many users turned to Ethereum DeFi platforms. These protocols allow yield generation through on-chain mechanisms like liquidity provision or token staking.
DeFiLlama data shows that Ethereum DeFi currently holds the largest Total Value Locked (TVL) across decentralized finance. This makes it a top option for users looking to earn yield without violating U.S. rules.
Analyst Nic Puckrin noted the change, stating the law would “increase Ethereum DeFi usage” as it remains outside the new ban on yield-bearing stablecoins.
Congress Also Moves Forward With CLARITY Act and Anti-CBDC Act
Alongside the GENIUS Act, Congress is advancing two other major crypto bills: the CLARITY Act and the Anti-CBDC Act. Both were developed to create a full regulatory framework for U.S. crypto regulation.
The CLARITY Act defines the legal roles of the SEC and CFTC. It assigns regulatory authority and aims to reduce overlapping responsibilities between the two agencies.
The Anti-CBDC Act blocks the creation of a Federal Reserve digital currency. It also prevents the use of government-backed tokens for financial surveillance or monitoring of user activity.
Together, these three bills represent a coordinated federal effort to build a legal structure for the digital asset sector.
