The GENIUS Act was signed by President Donald Trump on Jul. 18, 2025. The bill was aimed at setting a legal framework for stablecoin issuers. One month after signing it into law, we can see the real impact as stablecoin-focused blockchains and corporate-issued stablecoins become a hot topic. How did the GENIUS Act help launch these trends, and why do the Free Banking era comparisons emerge in the discussions about the GENIUS Act?
- The GENIUS Act sparked new trends in the stablecoin space even before it was signed into law.
- Big tech companies, including Amazon, Meta, Airbnb, and Uber, are looking to integrate stablecoins into their infrastructure.
- Some corporations issue stablecoins, while others are developing dedicated stablecoin layer-1 blockchains.
- Alarmists were comparing stablecoins to wildcat banknotes of the free banking era. Now, the GENIUS Act makes these claims obsolete.
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The stablecoin space and the GENIUS Act
The GENIUS Act, or Guiding and Establishing National Innovation for U.S. Stablecoins Act, sets the rules for issuers of stablecoins, which are cryptocurrencies with fixed value usually pegged to a certain fiat currency or other type of asset. The stablecoin space is largely dominated by tokens pegged to the U.S. dollar.
For many people, stablecoins became a handy remittance tool as they, unlike other types of cryptocurrencies, preserve their value while being transferred swiftly across the globe, requiring nothing except a crypto wallet. While many see Bitcoin as a store of value (or “digital gold”), stablecoins are a practical means of payment. Additionally, in countries with high inflation rates, where local currencies quickly lose their value against the U.S. dollar, stablecoins serve as a savings account.
According to the White House ‘Crypto Czar’ David Sacks:
“Stablecoins really have the potential to ensure American dollar dominance internationally, to increase the usage of the U.S. dollar digitally as the world’s reserve currency, and in the process create potentially trillions of dollars of demand for U.S. treasuries.”
The growing popularity of USD-pegged stablecoins across the world facilitates an indirect demand for the U.S. dollar and the U.S. Treasury bills. Especially given that the GENIUS Act requires stablecoin issuers to back their supply and make each token redeemable. Thus, stablecoin issuers stimulate the buy pressure on USD and keep these dollars to back their supply instead of selling them, while people will keep on using stablecoins not only to dodge sanctions or buy illicit goods, but simply because individuals and institutions find paying in stablecoins is easy. Soon, integration with Mastercard and other traditional payment systems will likely make stablecoins more popular.
What is the impact of the GENIUS Act?
The GENIUS Act was influential even before becoming the law. As the bill was a bipartisan effort under the crypto-friendly administration, big corporations began to share plans for various projects that involve stablecoins. For instance, Apple, X, Uber, and Airbnb started working on possible stablecoin integration before the passage of the GENIUS Act.
Another new trend, hardly possible during the gray area stablecoins era, is the emergence of stablecoin-focused layer-1 blockchains. USDC issuer Circle is working on the Arc blockchain, designed to work with stablecoins. Payment processor Stripe is working on its own stablecoin-focused Tempo layer-1 blockchain. Stable and Plasma are startups developing their respective stablecoin blockchains. Competition grows as companies strive to gain more control over the flow of stablecoins and decrease transaction costs.
On top of that, by July, several corporations outside the crypto industry introduced plans to launch their corporate stablecoins. The names include Walmart, Meta, and Amazon. In May, four major banks, Wells Fargo, Citigroup, JPMorgan, and Bank of America, started exploring the possibility of collaborating on a joint stablecoin.
As the bill was signed into law, the number of companies planning to issue their USD-pegged stablecoin surged while already existing stablecoin issuers continued to work on scaling their products for institutional use. Currently, corporations working on their USD-pegged stablecoins include Société Générale, Revolut, and Fiserv.
It is hardly a coincidence that the emergence of such a massive and diverse surge in stablecoin-focused projects by big tech corporations and startups takes place when the GENIUS Act streamlines the stablecoin business.
The GENIUS Act and free banking
For years, USD-pegged stablecoin critics have been drawing parallels between stablecoins and the Free Banking era in the U.S. The latter was a period in the 19th century, when banks were issuing dollar-denominated private currencies against their gold reserves with little to no government oversight.
In the wake of the stablecoin’s popularity spike and especially after the GENIUS Act bill’s emergence, this comparison began to gain traction. Some see this parallel as inspiring, while others are less optimistic, citing the worst examples of “wildcat” bank-issued banknotes that caused chaos in several regions of the U.S.
Crypto investor and writer Nic Carter took a bold stance, making a solid effort in dotting the i’s in this debate. In an essay titled “The Last Word on Stablecoins and Free Banking,” Carter suggests that stablecoins indeed were similar to questionable and unreliable wildcat currencies before the GENIUS Act passage, and it was the new law that eliminated the risks, thanks to requirements of 100% backing of supply and other holder protection measures.
“…when you consider today’s stablecoins against the failures of the banks in antebellum America, the specific reasons that free banks failed in the US are today addressed with stablecoins, especially in the post-GENIUS regime. In my view, the lessons of this particular historical episode actually vindicate the contemporary stablecoin project, rather than diminishing it.”
Carter outlines that the free banking experience in Canada and Scotland was more positive than in the U.S., and it was the U.S. government’s restrictions that were to blame for the failure of free banking in the U.S.
Carter claims that many stablecoin critics use comparison with the Free Banking era to advocate for the adoption of central bank digital currencies, a form of central-bank stablecoins rejected by the Trump Administration.
Matt Hougan, the CIO at Bitwise, is another notable opposer of comparisons between wildcat banks and stablecoins. The day the GENIUS Act was signed into law, he took to X to dismiss the “careless comparison.” Hoguan explained that one of the problems with free banking was that redemption of banknotes required a physical visit to the bank, and depending on the distance from the issuer, its notes could trade at a discount to other dollars.
Defending stablecoins, Hougan wrote:
“In the Genius Act, there are strict limits on the assets [issuers] hold, redemptions can be made daily from anywhere, and stablecoin prices will trade on exchanges, allowing instant convertibility and price discovery. State-regulated stablecoins are size-limited ($10b cap), which means they’ll be a vanishing fraction of the market, and are generally subject to the same asset holding and redemption provisions as the federally regulated stablecoins that will make up 95%+ of the market.”
Lately, it is easier to find favorable comparisons between the free banking era and stablecoins than alarmist ones, so it seems that the narrative shifts and a more positive stance is taking over. Nevertheless, one month is a very short period for a high-scale business, and a lot of things may unfold in the time to come.
