New US Stablecoin Reserve Rules Could Upend Crypto’s Biggest Players

For years, the only thing that was more volatile than the crypto markets themselves was the oversight of U.S. regulators and agencies the industry was subject to.

But with the American regulatory bodies being given a reset under the Trump administration, that could be about to change. Fittingly, the potential for regulatory stability across digital assets is in large part due to the rise of the stablecoin.

Stablecoins have caught the attention of Washington, and with the August recess looming, U.S. lawmakers are racing to push forward the Guiding and Establishing National Innovation for U.S. Stablecoins of 2025 Act (GENIUS Act), which has already cleared the Senate. President Donald Trump has weighed in on his own social media platform that the House should move “LIGHTNING FAST” on the Senate’s stablecoin bill.

Seeing an opportunity, pro-crypto lawmakers are reportedly hoping to seize it by adding the CLARITY Act, a piece of legislation establishing a framework for crypto markets, to the GENIUS Act’s momentum via a combined procedural vote that could unify federal oversight.

Together, the two bills aim to do what the U.S. has failed to accomplish for a decade: draw clear lines between securities and commodities, regulate digital tokens at the federal level, and bring transparency to stablecoin issuance.

But as with anything in Washington, the path is neither simple nor certain. And the end result could have a lasting impact across the crypto marketplace, with incumbents of the Wild West sector potentially ill-suited to American regulators’ scrutiny.

Read more: Are Closed-Loop Financial Instruments the Future of Institutional Stablecoins?

Winners, Losers, and Battle Over Reserves

The GENIUS Act introduces stringent yet precise guidelines for the issuance of “payment stablecoins” — digital tokens pegged to the U.S. dollar and designed for real-time value transfer.

To qualify under the act, stablecoins must be backed 1:1 by cash or cash-equivalent reserves such as short-term U.S. Treasurys. These reserves must be held in segregated accounts and audited monthly by independent firms. Issuers are also prohibited from paying interest on balances, a move designed to avoid conflict with banking regulations.

At its core, GENIUS seeks to define and protect the utility of stablecoins as near-cash instruments, not speculative assets. By enforcing strict proof-of-reserves and transparency requirements, the act aims to guard against systemic risk while inviting responsible innovation.

But as lawmakers push to combine the stablecoin and crypto market bills, frictions are arising. The GENIUS Act, for example, includes a three-year compliance window for stablecoin issuers. The parallel House bill proposes a shorter 18-month transition period, which will need to be reconciled before the legislation lands on the president’s desk.

Chief among the likely casualties of any potential stablecoin reserve requirements is Tether, the dominant stablecoin issuer by volume and market cap, whose operational history is notorious for its opaque reserve practices and limited regulatory engagement.

Tether holds a mix of cash, precious metals, commercial paper, and even crypto assets as backing. These reserve practices fall short of the GENIUS Act’s rigorous standards, setting up a scenario where Tether may either exit the U.S. market, reconstitute itself offshore, or attempt to launch a parallel U.S.-compliant version of its token.

Read more: Keeping Stablecoins Stable Is Complicated: Why CFOs Need to Pay Attention

A Monetary Operating System

By clarifying reserve requirements, audit standards, and issuer eligibility, lawmakers hope to legitimize dollar-backed digital tokens without stifling innovation. And on the flip side, reserve requirements could create fertile ground for banks, FinTechs and even non-financial corporates to enter the stablecoin arena.

“I think the largest banks will succeed as stablecoin issuers,” Amias Gerety, former assistant secretary of the Treasury, told PYMNTS in March.

With compliance pathways clearly spelled out, traditional players like JPMorgan, Visa, and Stripe now have legal cover to experiment with tokenized dollars, and many have already begun piloting and launching blockchain initiatives.

“Everybody’s jumping into stablecoins right now,” Brett McLain, head of payments and blockchain at Kraken, told PYMNTS. “All the big banks, they’re talking about creating their own; others want to leverage existing ones.”

Still, regulatory implementation will be no less complex than passage. The Treasury Department, in coordination with the Federal Reserve and the Financial Crimes Enforcement Network (FinCEN), will be tasked with defining compliance standards, audit protocols and licensing regimes.

After all, most illicit activity on the blockchain now includes stablecoin use.