Author: Fei Si

On July 18, 2025, the "Guidance and Establishment of the United States Stablecoin National Innovation Act" (the "GENIUS Act") was officially signed into law by President Trump at the White House after passing both houses of the U.S. Congress. The purpose of this act is to establish a comprehensive legal and regulatory framework for payment stablecoins in the United States. This article will provide a detailed introduction and interpretation of the GENIUS Act, aiming to help relevant market participants understand this important legislation that has a profound impact on the global digital asset market. The article will also compare the stablecoin regulatory legislation in the United States with that of Hong Kong, allowing readers to further understand global stablecoin regulatory trends.

01 Overview of Stablecoins

1. What is a stablecoin?

A stablecoin is a type of digital asset that is pegged to the value of fiat currencies (such as the U.S. dollar) or other assets, designed to maintain price stability through an anchoring mechanism. Unlike highly volatile cryptocurrencies like Bitcoin and Ethereum, the value of stablecoins is typically tied to a reference asset (such as the U.S. dollar or other fiat currencies) at a 1:1 ratio, ensuring their reliability as a payment and store of value tool.

2. What are the advantages of stablecoins?

In an era where electronic payments and mobile banking services are convenient and efficient, what are the advantages of stablecoin payments? Unlike traditional currencies and other forms of electronic payments, stablecoins exist solely within the Web3 ecosystem, meaning they are "on-chain" and can be conveniently used as a payment method for transactions within the Web3 ecosystem. For example, stablecoins can be used to (replace fiat currency) subscribe to or invest in tokenized financial products and real-world assets (RWA), and the issuers of these tokenized products and assets can use stablecoins (instead of fiat currency) for dividends or redemptions. In the context of decentralized finance (DeFi), stablecoins can also be used for lending and other financial activities. Therefore, stablecoins link the traditional financial system and the crypto market through their value anchoring mechanism with fiat currencies, becoming a store of value and medium of exchange in the Web3 ecosystem.

3. Why promote the regulation and compliance of stablecoins?

While major global regulatory agencies recognize the financial innovations brought by stablecoins and the digital asset industry, they are more concerned with how to ensure that financial innovations can develop sustainably in a safe and stable environment. Due to the high correlation between stablecoins and the traditional financial system (stablecoins are pegged to fiat currencies, and their reserve assets mainly consist of traditional financial products such as bank deposits and government bonds), how to mitigate the significant negative impacts that stablecoins may have on traditional financial markets and even the entire real economy has become one of the important regulatory considerations for governments worldwide. At the same time, governments are also concerned about whether the widespread use of stablecoins will lead to the marginalization of fiat currencies, which could bring risks related to monetary policy, monetary sovereignty, financial stability, consumer protection, cybersecurity, and anti-money laundering. The GENIUS Act, as a tool for the United States to promote stablecoin regulation, aims to mitigate these risks by establishing a comprehensive framework (such as licensing systems, reserve asset requirements, and other compliance standards) while promoting financial innovation, achieving policy goals of protecting consumers, strengthening monetary sovereignty, and maintaining financial stability.

02 How does the GENIUS Act define core concepts in stablecoin regulation?

1. Payment Stablecoin

The GENIUS Act defines a payment stablecoin as:

• A type of "digital asset," which is a digital representation of value recorded on a cryptographically secured distributed ledger;
• This digital asset is used or designed for payment or settlement;
• Its issuer is obligated to exchange, redeem, or repurchase the digital asset at a fixed amount of "monetary value" (referring to the value calculated in U.S. dollars and "national currencies" such as "foreign central bank-issued currencies"); and
• Its issuer commits to maintaining the stable value of this digital asset relative to a fixed amount of monetary value or creates a reasonable expectation for this.

Additionally, the GENIUS Act specifies that payment stablecoins do not include:

• Digital assets that are national currencies;
• Deposits, including deposits recorded using distributed ledger technology; and
• Securities.

To avoid regulatory overlap, the GENIUS Act explicitly states that payment stablecoins issued by permitted payment stablecoin issuers do not constitute:

• "Securities" under U.S. federal securities law; and
• "Commodities" under the U.S. Commodity Exchange Act.

2. Permitted Payment Stablecoin Issuer

The GENIUS Act stipulates that, except for permitted payment stablecoin issuers, no one may issue payment stablecoins in the United States. In other words, only payment stablecoin issuers can legally issue payment stablecoins in the U.S.

A permitted payment stablecoin issuer (PPSI) refers to the following entities established in the United States:

• Subsidiaries of Depository Institutions: Subsidiaries of depository institutions (such as U.S. commercial banks) that have been authorized to issue payment stablecoins under the act;
• Federal Qualified Issuers: Federal-level qualified issuers, including non-bank entities, that must be approved through a federal approval process; and
• State Qualified Issuers: Qualified issuers approved by state stablecoin regulatory agencies.

It is important to note that the regulatory level of permitted payment stablecoin issuers (federal or state) primarily depends on their issuance scale. Federal regulation generally applies to large issuers whose total combined issuance exceeds $10 billion, while small and medium-sized issuers with total combined issuance not exceeding $10 billion can voluntarily choose state-level regulation (the state-level regulatory system must be substantially similar to the federal-level payment stablecoin regulatory framework in the U.S.). However, when the issuance exceeds $10 billion, they must gradually transition to the federal regulatory system according to the act's procedures (including notification, review, and transfer procedures).

The relevant U.S. federal regulatory agencies for permitted payment stablecoin issuers depend on the issuer's legal status and regulatory status, mainly including:

• Federal Reserve
• Office of the Comptroller of the Currency (OCC)
• Federal Deposit Insurance Corporation (FDIC)
• National Credit Union Administration (NCUA)

3. Sales Restrictions to Persons in the United States

Three years after the enactment of the GENIUS Act, no Digital Asset Service Provider may offer or sell payment stablecoins to persons in the United States unless the stablecoin is issued by (1) a permitted payment stablecoin issuer or (2) an exempt foreign payment stablecoin issuer.

An exempt foreign payment stablecoin issuer refers to a payment stablecoin issuer that is established or registered outside the United States and that:

• Is subject to a foreign stablecoin regulatory regime recognized by the U.S. Secretary of the Treasury as equivalent to the GENIUS Act;
• Is registered with the Office of the Comptroller of the Currency (OCC);
• Holds reserve assets in U.S. financial institutions sufficient to meet the liquidity needs of its U.S. customers, unless otherwise permitted under reciprocal arrangements (as discussed later); and
• Its place of registration and primary regulatory jurisdiction is not subject to comprehensive U.S. economic sanctions and has not been designated by the U.S. Secretary of the Treasury as a "jurisdiction of primary money laundering concern."

A digital asset service provider refers to a person engaged in the following business for profit in the United States:

• Exchanging digital assets for monetary value or other digital assets;
• Transferring digital assets to third parties;
• Acting as a custodian of digital assets; or
• Participating in financial services related to digital asset issuance,

but does not include:

• Distributed ledger protocols;
• Engaging in the development or operation of distributed ledger protocols or self-custodial software interfaces;
• Immutable self-custodial software interfaces;
• Validating transactions or operating a distributed ledger node; and
• Participating in liquidity pools or other mechanisms for the provisioning of liquidity for peer-to-peer transactions.

The above exceptions clarify that the regulatory targets of the GENIUS Act are centralized service providers (such as exchanges and custodians), rather than participants in the DeFi ecosystem (such as protocol developers, node operators, or liquidity providers). This provides legal clarity for the continued development of DeFi, to some extent avoiding the classification of DeFi participants as "digital asset service providers."

The GENIUS Act also stipulates that the aforementioned restrictions on issuance in the United States and sales to persons in the United States do not apply in the following situations:

Direct transfers of digital assets between two individuals for their own lawful purposes (acting on their own behalf and for their own lawful purposes) without the involvement of an intermediary;

Any digital asset transaction involving the same person between an account opened in the U.S. and an account outside the U.S.; or

Any transaction conducted through software or hardware wallets that facilitate individual custody of digital assets.

4. Special Treatment for Regulated Stablecoins

The GENIUS Act stipulates that payment stablecoins not issued by permitted payment stablecoin issuers shall not:

• Be regarded as cash or cash equivalents for accounting purposes;
• Serve as qualified cash or cash equivalent margin and collateral for futures companies, derivatives clearing organizations, broker-dealers, registered clearing agencies, and swap dealers; or
• Act as settlement assets for currency exchange and settlement between banks or payment infrastructure.

03 What are the requirements for permitted payment stablecoin issuers under the GENIUS Act?

1. Reserve Asset Requirements and Qualified Reserve Assets

Permitted payment stablecoin issuers must maintain identifiable reserve assets equal to the value of the stablecoins they issue (1:1) to support the circulating payment stablecoins. Qualified reserve assets include (but are not limited to):

• U.S. dollar cash or funds deposited in any Federal Reserve Bank account;
• Demand deposits (or other deposits that can be withdrawn at any time) at depository institutions, subject to specific risk standards set by the FDIC;
• Short-term, medium-term, and long-term U.S. Treasury securities maturing within 93 days;
• Funds obtained under overnight repurchase agreements collateralized by U.S. Treasury securities with maturities not exceeding 93 days;
• Overnight reverse repurchase agreements where the payment stablecoin issuer acts as the reverse repurchase party, using short-term, medium-term, and long-term U.S. Treasury securities as collateral (must enter into market-standard tri-party clearing or central clearing agreements, or bilateral agreements with reputable counterparties);
• Money market funds that invest solely in the aforementioned underlying assets;
• Any other similarly liquid assets issued by the U.S. federal government approved by the primary federal payment stablecoin regulatory agency; or
• Any of the above assets existing in tokenized form, provided that the asset complies with all applicable laws and regulations.

2. Prohibition on Repledging Reserve Assets

Reserve assets may not be pledged, rehypothecated, or reused, except for the following purposes:

• To meet margin requirements for repurchase/reverse repurchase transactions involving reserve assets;
• To meet specific obligations under standard custodial service agreements; or
• To provide liquidity to meet reasonable expectations for the redemption of circulating stablecoins. For this purpose, U.S. Treasury securities as reserve assets may be sold through repurchase transactions with maturities not exceeding 93 days, provided that:

- The repurchase transaction is cleared by an approved central counterparty; or

- The repurchase arrangement is approved by the relevant regulatory agency.

3. Timely Redemption and Disclosure Requirements

Permitted payment stablecoin issuers must:

• Establish procedures for the timely redemption of circulating payment stablecoins and publicly disclose redemption policies, which must clearly disclose all fees associated with the purchase or redemption of payment stablecoins in plain language (any changes to fees must be communicated to customers at least 7 days in advance);
• Publish information on the composition of their monthly reserve assets on their website, including the total number of circulating payment stablecoins and the amount and composition of reserve assets (including the average maturity of relevant assets and the geographical locations of custodians for various asset types);
• Arrange for a registered public accounting firm to audit the information disclosed in their report at the end of the previous month on a regular basis; and
• Submit certifications regarding the accuracy of monthly reports to the relevant federal or state regulatory agencies from the Chief Executive Officer and Chief Financial Officer.

4. Annual Financial Statement Requirements

Permitted payment stablecoin issuers with a total combined issuance of payment stablecoins exceeding $50 billion, and not subject to reporting requirements under the Securities Exchange Act of 1934, must prepare annual financial statements in accordance with U.S. Generally Accepted Accounting Principles (GAAP) to disclose any related party transactions.

Annual financial statements must:

• Be audited by a registered public accounting firm in accordance with applicable auditing standards;
• Be publicly available on the permitted payment stablecoin issuer's website; and
• Be submitted annually to the relevant primary federal payment stablecoin regulatory agency.

5. Capital, Liquidity, and Risk-Related Requirements

The regulatory agency for permitted payment stablecoin issuers should:

• Establish capital requirements (including capital buffers, if applicable), liquidity standards, reserve asset diversification (including concentration of deposit-type reserve assets), and interest rate risk management standards based on the issuer's business model and risk profile, but these regulatory requirements must not exceed the level necessary to ensure their continued operation;
• Set appropriate operational, compliance, and IT risk management standards suitable for the issuer's business model and risk profile, including compliance with the Bank Secrecy Act and sanctions compliance standards.

The above regulatory measures follow a tailoring principle, meaning that regulatory agencies may consider the specific capital structure, risk profile, complexity, financial activities, scale, and other risk factors of a particular issuer or class of issuers to formulate applicable capital, liquidity, and risk-related requirements.

6. Anti-Money Laundering/Counter-Terrorism Financing Obligations

As permitted payment stablecoin issuers are considered financial institutions under the Bank Secrecy Act, they must comply with all U.S. federal laws applicable to financial institutions located in the United States, including laws related to economic sanctions, anti-money laundering, customer identification, and due diligence, including:

• Establishing effective anti-money laundering programs;
• Maintaining appropriate records of payment stablecoin transactions;
• Monitoring and reporting suspicious transactions;
• Ensuring adequate technical capabilities and developing corresponding policies and procedures to block, freeze, and reject illegal transactions;
• Developing effective customer identification programs, including identifying and verifying account holders, high-value transactions, and appropriate enhanced due diligence; and
• Establishing effective economic sanctions compliance programs capable of verifying sanctions lists and identifying sanctioned entities.

7. Technical Capacity Requirements for Executing "Legal Orders" from the U.S. Federal Government or Courts

The act requires that permitted payment stablecoin issuers possess the "technological capacity" to execute any definitive and valid "legal orders" issued by the U.S. federal government or courts and must genuinely execute such orders; otherwise, they may not issue payment stablecoins.

In addition to the above requirements, foreign payment stablecoin issuers must also have the technical capacity to comply with the reciprocal arrangements specified in Section 18 of the act; otherwise, they may not offer or sell their overseas-issued stablecoins within the United States.

If a foreign payment stablecoin issuer is determined by the U.S. Secretary of the Treasury to be non-compliant with legal orders, the Treasury will notify the issuer within 30 days of such determination. If the issuer fails to make compliance corrections within 30 days of notification, the Secretary will publish the issuer's non-compliance determination in the Federal Register and prohibit all digital asset service providers from offering secondary trading services for the stablecoins issued by that issuer within the United States.

A "legal order" refers to any definitive and valid warrant, process, order, rule, decree, directive, or other requirement issued by the federal government or courts under U.S. federal law, including:

Requiring someone to seize, freeze, burn payment stablecoins, or prevent their transfer;

Specifically designating payment stablecoins or accounts subject to blocking; and

Being subject to judicial or administrative review under the law, with the parties having the right to appeal.

8. Prohibition on Paying Interest

No permitted payment stablecoin issuer or foreign payment stablecoin issuer may pay any form of interest or return (whether in cash, tokens, or other forms of consideration) to holders of payment stablecoins solely for holding, using, or retaining payment stablecoins.

9. Business Limitations and Prohibition on Tying

Unless permitted by the relevant regulatory agency, the business scope of permitted payment stablecoin issuers is limited to:

• Issuing and redeeming payment stablecoins;
• Managing related reserve assets (including buying, selling, holding reserve assets, or providing custodial services in accordance with relevant federal laws);
• Providing custodial or safekeeping services for payment stablecoins, reserve assets, or the private keys of payment stablecoins; and
• Other activities directly supporting any of the above functions.

Permitted payment stablecoin issuers may not impose the following conditions on their services:

• Customers must obtain additional paid products or services from the permitted payment stablecoin issuer or any of its subsidiaries; or
• Customers must agree not to obtain additional products or services from competitors.

10. False Statements and Use of Deceptive Names

Permitted payment stablecoin issuers may not:

• Use any combination of terms related to the U.S. government in the name of the payment stablecoin; or
• Market payment stablecoins in any way that may reasonably lead one to believe that the payment stablecoin is a legal currency or is issued, guaranteed, or approved by the U.S. government.

However, using abbreviations related to the anchor currency, such as USD, is not subject to the above restrictions.

Any statement that payment stablecoins have the full faith and credit of the U.S. government, are guaranteed by the U.S. government, or are insured by the Federal Deposit Insurance Corporation is illegal.

No product may be marketed as a "payment stablecoin" unless it is legally issued under the GENIUS Act.

11. Prohibition on Employment of "Bad Actors"

Individuals convicted of the following crimes may not serve as executives or directors of permitted payment stablecoin issuers:

• Insider trading;
• Embezzlement;
• Cybercrime;
• Money laundering;
• Financing terrorism; or
• Financial fraud.

12. Special Provisions for Non-Financial Public Companies

Non-financial services public companies and their wholly-owned or controlled subsidiaries/affiliates may not issue payment stablecoins unless they meet the following conditions and receive unanimous approval from the Stablecoin Certification Review Committee:

• No Significant Risk: The issuance of stablecoins must not pose a significant risk to the safety and soundness of the U.S. banking system, U.S. financial stability, or the Deposit Insurance Fund;

• Data Usage Restrictions: The public company must comply with data usage restrictions and may not use non-public personal information from stablecoin transaction data for the following purposes without explicit consumer consent:

- Targeted advertising and other content personalization or recommendation sorting;

- Selling to third parties; or

- Sharing with non-affiliated parties.

• Prohibition on Tying: The public company and its affiliates must comply with the tying prohibition in the GENIUS Act.

The Stablecoin Certification Review Committee consists of the U.S. Secretary of the Treasury, the Chair of the Federal Reserve, or the Vice Chair responsible for regulation, and the Chair of the Federal Deposit Insurance Corporation.

The above prohibitions also apply to non-U.S. companies primarily engaged in non-financial activities.

13. Bankruptcy Proceedings

In the bankruptcy proceedings of a permitted payment stablecoin issuer, the claims (redemption rights) of holders of payment stablecoins issued by that issuer take precedence over the issuer's and any other creditors' claims against its reserve assets.

If the issuer's reserve assets are insufficient to redeem the circulating payment stablecoins, any remaining claim amounts of the holders shall generally take precedence over any other claims against the issuer.

04 Other Key Provisions in the GENIUS Act

1. Reciprocal Arrangements

The U.S. Secretary of the Treasury may create and implement reciprocal arrangements or other bilateral agreements with other jurisdictions, provided that the payment stablecoin regulatory framework in that jurisdiction is comparable to the regulatory framework established by the GENIUS Act. The act requires the U.S. Secretary of the Treasury to implement reciprocal arrangements within two years of the enactment of the GENIUS Act.

2. Custody of Stablecoins

Only specific regulated financial institutions may provide custody or safekeeping services for payment stablecoin reserve assets, payment stablecoins used as collateral, or private keys related to the issuance of payment stablecoins. Custodial services must adhere to the following three principles:

• Customer Asset Principle: For payment stablecoins used as collateral or private keys related to the issuance of payment stablecoins, custodians must treat them as belonging to the relevant customers or beneficiaries and take reasonable measures to protect such assets from claims by the issuer or the custodian's creditors.
• Prohibition on Commingling Principle: Payment stablecoin reserve assets, payment stablecoins, cash, and other related properties held by the custodian must be segregated from the custodian's own assets, but:

- For management convenience, it is allowed to classify and concentrate the issuer's or customers' payment stablecoin reserve assets, payment stablecoins, cash, or other related properties into a single omnibus customer account;

- Any payment stablecoin reserve assets held in cash form as liabilities of a depository institution shall not be subject to any requirements to separate such cash from the property of the depository institution.

• Customer Priority Principle: Regardless of whether the relevant assets are segregated, customers' claims on custodial assets take precedence over claims by the issuer or custodian.

3. Retention of Roles for Traditional Financial Institutions

The GENIUS Act does not restrict regulated banks, trust companies, or other similar entities from engaging in permitted activities under applicable law, including:

• Receiving deposits and issuing digital assets representing deposits;
• Using distributed ledgers as their bookkeeping tool and conducting intrabank transfers; and
• Providing custodial services for payment stablecoins, related private keys, or reserve assets.

For regulated financial institutions engaged in custodial activities, the GENIUS Act also stipulates that U.S. federal financial regulatory agencies may not require regulated banks, trust companies, or other similar entities to list custodial assets as liabilities on any financial statements or balance sheets, nor may they require such regulated entities to maintain additional regulatory capital for the assets they hold in custody, unless the regulatory agency deems that additional regulatory capital is necessary to mitigate the operational risks of the regulated financial institution.

4. Effective Date of the Act and Coordinated Legislation at the State Level

The GENIUS Act will take effect on the earlier of the following dates:

• 18 months after the enactment of the GENIUS Act; or

• 120 days after the primary federal payment stablecoin regulatory agency issues any final regulations implementing the GENIUS Act.

Within one year of the enactment of the GENIUS Act, each primary federal payment stablecoin regulatory agency, the U.S. Secretary of the Treasury, and state payment stablecoin regulatory agencies shall develop appropriate and coordinated rules to implement the GENIUS Act.

05 Overview: Hong Kong's Stablecoin Regulation

As an international financial center and global digital asset hub, Hong Kong upholds strict regulatory standards while embracing Web3 innovation. The recently introduced Stablecoin Ordinance in Hong Kong, spanning 269 pages, is one of the most comprehensive pieces of legislation globally specifically targeting the issuance and distribution of stablecoins.

The ordinance underwent extensive public consultation and aligns with international standards, with its core features generally consistent with global standards set by international organizations such as the Financial Stability Board (FSB) and the Basel Committee on Banking Supervision (BCBS), as well as relevant systems in major jurisdictions, including the United States.

The core contents of the Stablecoin Ordinance are as follows:

• Licensing Requirements: Any person issuing fiat-pegged stablecoins (such as the Hong Kong dollar or U.S. dollar) in Hong Kong or actively promoting the issuance of related stablecoins to the public in Hong Kong must obtain a stablecoin issuer license issued by the Hong Kong Monetary Authority (HKMA).
• Qualified Reserve Assets: Licensed issuers must fully back circulating stablecoins with high-quality liquid assets at a 100% ratio. Reserve assets will be subject to strict regulation aimed at minimizing credit, market, and liquidity risks. Reserve assets must be segregated from the issuer's other assets and held by qualified custodians.
• Prudential and Conduct Requirements: Issuers must meet stringent prudential standards, including capital and liquidity requirements, governance and risk management standards, and operational resilience, and implement measures such as business activity restrictions, comprehensive transparency in information disclosure, and audits to ensure market integrity and investor confidence.
• Consumer and Investor Protection: The Stablecoin Ordinance emphasizes investor protection, allowing only stablecoins issued by licensed issuers approved by the HKMA to be sold to retail investors in Hong Kong. Additionally, only specific licensed entities may offer or distribute stablecoins in Hong Kong.
• Anti-Money Laundering/Counter-Terrorism Financing Compliance: Issuers must comply with AML/CFT regulations and establish effective internal systems to prevent potential illegal activities.
• Regulation and Enforcement: The HKMA is granted extensive regulatory and enforcement powers, including on-site inspections, issuing directives, and taking disciplinary actions against violators.

The following image outlines the core contents of Hong Kong's Stablecoin Ordinance:

06 Comparison of Stablecoin Legislation in Hong Kong and the United States

The general framework of Hong Kong's Stablecoin Ordinance and the U.S. GENIUS Act is similar: both implement comprehensive regulation of stablecoin issuers and related activities. Both refer to international standards set by the FSB and BCBS, establishing strict standards for the scale and composition of reserve assets held by licensed issuers, and setting diversified compliance and risk control measures to effectively protect investor interests.

However, the stablecoin legislation in the two regions exists within entirely different legal systems. For example, the United States is a federal system, and the GENIUS Act includes specifically designed provisions for tiered regulation between federal and state levels. Additionally, the U.S. has three major federal banking regulatory agencies (the Federal Reserve, OCC, and FDIC), while Hong Kong has only the HKMA as its banking and prudential regulatory authority. This difference also makes the U.S. stablecoin regulatory system more complex.

Furthermore, one of the main goals of the GENIUS Act is to solidify the dollar's dominance in the digital age and create sustained demand for U.S. Treasury securities. Therefore, the reserve asset requirements are fundamentally limited to U.S. dollar deposits at U.S. banking institutions or U.S. Treasury securities. Compared to the macroeconomic policy objectives of the GENIUS Act, Hong Kong's Stablecoin Ordinance places greater emphasis on investor and consumer protection, such as allowing only stablecoins issued by licensed issuers approved by the HKMA to be sold to retail investors in Hong Kong.

Conclusion

The formal enactment of the U.S. GENIUS Act marks a new phase in stablecoin regulation in major global financial markets. As the first federal-level legislation specifically addressing stablecoins in the United States, the act provides legal certainty for stablecoin market participants by establishing a clear regulatory framework that defines the essence and scope of payment stablecoins, establishes an issuer licensing system, sets strict reserve asset requirements, and creates transparent information disclosure mechanisms. Its core designs—such as a tiered regulatory system, 100% reserve asset requirements, and a prohibition on algorithmic stablecoins—balance innovation and risk while paving the way for the integration of traditional finance and the crypto ecosystem.

The macroeconomic strategic intent of the GENIUS Act is also significant: by incorporating stablecoins into the "dollar-Treasury" cycle, the U.S. aims to expand the use cases of the dollar in global payments and create long-term demand for the Treasury market. In the long run, the GENIUS Act may become a key pillar of the digital dollar strategy, with impacts that extend far beyond the crypto industry itself, potentially redefining the power structure of the international monetary system.

Moreover, the influence of the act extends beyond the U.S. itself. Its unique reciprocal arrangement mechanism effectively sets a benchmark for global stablecoin regulation, which will have a profound impact on compliance standards in international markets. At the same time, Hong Kong's Stablecoin Ordinance will also officially take effect in August, reflecting that major global financial centers are actively building robust regulatory frameworks for digital assets. Although there are differences in specific paths and policy focuses between the U.S. and Hong Kong (such as the U.S.'s dollar strategy considerations versus Hong Kong's emphasis on prudential compliance and investor protection), this trend of global regulatory convergence is already clear.

For the industry, the implementation of the GENIUS Act signifies that stablecoins are officially moving from the gray area to mainstream acceptance, with compliance becoming a prerequisite for the survival of related businesses. For participants in the global digital asset market, their attitude towards the regulatory changes in stablecoins needs to shift from "close monitoring" to "active response," thoroughly assessing the direct impacts of new regulations like the GENIUS Act on their business models and timely adjusting their compliance strategies to adapt to this increasingly clear and stringent global regulatory environment.

King & Wood Mallesons will continue to monitor the legislative processes related to stablecoins in various jurisdictions and provide clients with the latest updates and professional analysis in a timely manner.

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