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U.S. Government’s First Comprehensive Crypto Policy Signals Major Shift

Illustration of the U.S. Capitol under rising sun, symbolizing a major regulatory shift in U.S. crypto policy

The Guiding and Establishing National Innovation for U.S. Stablecoins (GENIUS) Act, signed into law by President Donald Trump on July 18, 2025, marks the U.S.’s first major cryptocurrency legislation, per npr.org. The White House is set to release a comprehensive crypto policy report on July 22, 2025, outlining a regulatory framework that prioritizes stablecoins and aims to position the U.S. as the “crypto capital of the world,” per whitehouse.gov. The GENIUS Act shifts oversight from the SEC and CFTC to bank-centric regulators like the Federal Reserve, FDIC, and OCC, mandating 1:1 reserve backing with low-risk assets (e.g., cash, Treasuries) for payment stablecoins, per investopedia.com. This overhaul, backed by bipartisan votes (Senate: 68-30, House: 308-122), enhances consumer protections, enforces AML rules, and boosts stablecoin credibility, per thehill.com. X posts from @coinbureau and @NatCryptoAssoc highlight the act’s role in fostering regulatory clarity, with BTC ($123,091, -0.54%) and ETH ($3,820, +1.74%) showing mixed responses, per reuters.com.

Key Provisions and Market Implications

  • Regulatory Framework: The GENIUS Act establishes a dual federal-state licensing regime, requiring stablecoin issuers to maintain 1:1 reserves, conduct monthly audits, and comply with AML and anti-terrorism rules, per lw.com. Small issuers (≤$10B circulation) can opt for state oversight, while larger ones fall under OCC, Federal Reserve, or FDIC, per investopedia.com.

  • Market Impact: The $250B stablecoin market, with 90%+ pegged to the USD (e.g., USDC’s 78% circulation growth), gains legitimacy, potentially driving mainstream adoption for payments and remittances, per trmlabs.com. USDT dominance dropped to 3.71%, signaling capital rotation to altcoins like SOL ($197.50, +22%) and AVAX ($37.45, +18%), per coinomedia.com. DeFi protocols tied to compliant stablecoins, like Ethena’s USDe ($6.09B supply), face liquidity shifts due to BaFin’s 42-day redemption rules, per coingecko.com.

  • Institutional Adoption: Major banks and retailers (e.g., Walmart, Amazon) are exploring stablecoin issuance, with Circle’s NYSE listing on June 5, 2025, boosting confidence, per investopedia.com. BlackRock’s USDtb and StablecoinX’s $360M ENA buyback align with the act’s framework, per crypto.news.

  • Criticisms: Critics like Mark Hays and Amanda Fischer argue the act’s weak safeguards and industry lobbying ($100M+ in 2024 Congressional races) risk financial instability, per npr.org. A potential bond sell-off could spike U.S. interest rates, per theconversation.com. X posts from @DigitalWarfare1 warn of a “regulated backdoor CBDC,” per.

Broader Crypto Policy and Future Legislation

The July 22 policy report is expected to address the GENIUS Act’s implementation and preview the CLARITY Act, which passed the House (294-134) and seeks to define securities vs. commodities, shifting oversight to the CFTC, per nytimes.com. The Anti-CBDC Surveillance State Act (219-210) bans Federal Reserve retail CBDCs, aligning with Trump’s anti-CBDC stance, per lw.com. According to coinomedia.com, Patrick McHenry, the chairman of the House Financial Services Committee, highlighted the act’s ability to spur innovation and set a goal for its enactment by September 2025. SEC Chairman Paul S. Atkins praised the shift to “regulation-by-design,” per lexology.com. However, according to ABCNews.go.com, Elizabeth Warren and Maxine Waters expressed disapproval of Trump’s affiliations with World Liberty Financial, citing conflicts of interest.

Investor Guidance and Risks

 

  • Action: Capitalize on altcoin momentum (ETH, SOL, XLM) on dips, but prioritize BTC ($123,091) or USDC for stability, per CoinMarketCap.

  • Track the USDT.D (3.71%) on TradingView and the Dune Analytics stablecoin flows. ETH ($3,820) targets $4,000–$4,200 if it clears $3,920, per CryptosNewss.com.

  • Risks:

    • Regulatory Uncertainty: GENIUS Act’s fiat-backing rules threaten non-compliant stablecoins like USDe, per bitcoinethereumnews.com.

    • SEC vs. CFTC jurisdiction battles may delay CLARITY Act, per nytimes.com.

    • Market Volatility: Whale sell-offs or macro shocks (e.g., Fed tightening) could trigger corrections, with ETH at risk below $3,675, per coinotag.com.

    • Systemic Risks: Weak reserve oversight could destabilize markets, as seen with Silicon Valley Bank’s 2023 collapse, per theconversation.com.


  • Outlook: Analysts like Nate Geraci forecast increased institutional adoption, with BTC targeting $150,000 and ETH $10,000 by 2026, per onesafe.io. Stablecoin adoption in DeFi and remittances could drive TOTAL2 to $1.65T, per ccn.com.

Verify policy details via whitehouse.gov and market trends on CoinGlass before trading. The GENIUS Act and upcoming report signal a pro-crypto U.S., but caution is warranted amid regulatory and market risks.

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