GENIUS Act Brings Stablecoin Rules to the U.S., But Leaves Wider Crypto Market in Limbo

On July 18, President Trump signed the GENIUS Act, formally creating U.S. rules for dollar-backed stablecoins. In practical terms, banks, credit unions and other regulated financial firms are now allowed to issue their own stablecoins, as long as each coin is backed one-for-one by cash or government debt. The law has brought long-awaited clarity for dollar-backed stablecoins, and in doing so, it has also created a ripple effect across the broader blockchain ecosystem. Still, critics argue that it narrowly focuses on payments and avoids addressing the rest of the crypto economy.

For startups, the message is mixed. Stablecoins now have a legal pathway into the financial system, but most other tokens remain in uncertainty. Therefore, many young blockchain companies are responding by looking for flexible ways to raise capital and test products outside of traditional investment routes. Some are turning to token sales through established platforms, and resources such as this list of crypto launchpads have become a starting point for projects hoping to reach retail and institutional backers in a more structured way.

The Act also sets strict guardrails. Every stablecoin must be fully collateralized, issuers must undergo regular audits, and anti-money-laundering checks are mandatory. Only federally chartered firms can participate. In other words, it’s not the easiest route for startups. The law also bans yield-bearing stablecoins (coins that pay interest to holders). Some analysts say will push investors toward tokenized assets instead.

Globally, the U.S. approach stands in contrast to Europe’s. The EU’s Markets in Crypto-Assets (MiCA) framework, which came into force earlier this year, regulates a wide range of digital tokens and services. The GENIUS Act, by comparison, only addresses stablecoins tied to the dollar, leaving other cryptocurrencies in a legal gray area. This narrower focus creates both opportunity and frustration. On one hand, it gives U.S. stablecoin issuers certainty and a competitive edge. On the other hand, startups dealing with tokens outside the stablecoin category must continue to operate without clear federal guidelines.

The timing of the new law has coincided with a powerful rally in digital assets. Bitcoin touched record highs above $120,000 in August, while Ethereum and other major tokens also surged on expectations of lower interest rates and a friendlier regulatory environment. The White House recently also released a crypto policy roadmap that includes steps to integrate digital assets into retirement accounts and payment systems. Together with the GENIUS Act, these developments have given the impression that the U.S. is shifting to a more open stance toward crypto after years of mixed signals.

Still, challenges remain. Congress has yet to pass broader legislation on how digital tokens should be classified or how decentralized finance should be regulated. Without such measures, the GENIUS Act stands as an important but limited piece of the puzzle. For many startups, this means experimenting in areas like tokenization, early token offerings, or launchpads to keep moving forward while waiting for wider clarity.

For now, the law has given stablecoins a firm legal foundation, something the industry has sought for years. But it has also highlighted how much of the crypto market is still waiting for answers. Whether the GENIUS Act is seen in the future as the first step toward a comprehensive U.S. framework, or as a narrow fix that left too many gaps, may depend on how startups, investors, and regulators respond in the months ahead.

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