The Stablecoin Bill That Could Change Money Forever Is Stalling — and the Crypto World Is Furious

On a Tuesday last summer, President Donald Trump signed a piece of legislation that his supporters called historic and his detractors called a slow-motion disaster waiting to happen, all while the air conditioning was running too cold and the coffee was becoming stale in a function room somewhere near Capitol Hill. On July 18, 2025, the Guiding and Establishing National Innovation for U.S. Stablecoins Act, or GENIUS Act, was signed into law with much fanfare from the cryptocurrency industry and a noticeably more subdued reaction from bank regulators and economists who had spent months warning about what it actually contained. Critics pointed out that if something went wrong, the name would not age well. They questioned whether it made sense to let the cryptocurrency industry create its own regulations.

The goal of the bill was to establish a federal framework for stablecoins, which are digital currencies that guarantee a fixed value in relation to actual money, which is nearly always the US dollar. Stablecoins are made to feel safe, in contrast to Bitcoin and Ether, which fluctuate in value every day and are generally regarded as speculative.

One dollar in, one dollar out. The value remains constant and is accessible for transfers, payments, international remittances, and other purposes as required by the holder. The attraction is genuine. Bank transfers take a long time. The cost of international wire transfers is high. Theoretically, stablecoins make it as simple as sending a neighbor a Venmo payment to transfer $100,000 across international borders. That’s really helpful and explains why the market for stablecoins has expanded so quickly.

However, since these products were first introduced, the word “stable” has been doing a lot of heavy lifting. Once one of the biggest stablecoin issuers in the world, Terra completely failed in May 2022, destroying about $60 billion in investor assets in a matter of days. Jean Tirole, the economist who won the Nobel Prize, recently noted that while stablecoins, like money-market funds, appear secure, they can crumble under pressure. It’s instructive to compare this to money-market funds.

The Reserve Primary Fund “broke the buck” in 2008 when its value dropped below $1 per share. This led to a run that needed immediate government intervention to stop spreading throughout the financial system. Critics of the GENIUS Act claim that the 2025 version of that risk involves a market that has significantly expanded and now benefits from the implicit legitimacy of federal regulation without the substantive protections that federal regulation is meant to offer.

Before the bill passed, Senator Elizabeth Warren worked hard to change it. She repeatedly stated that her concerns were not about preventing cryptocurrency innovation, but rather about particular legal loopholes that she claimed posed predictable and avoidable risks. As written, the bill did not forbid stablecoin company ownership by those convicted of fraud and money laundering. Under the current wording of the law, regulators would have no legal means to prevent Sam Bankman-Fried, who is currently serving a 25-year sentence for fraud, from buying a stablecoin company while incarcerated.

Additionally, when Iran, North Korea, or Russia use dollar-backed stablecoins instead of traditional dollar transfers, the bill did not mandate that current U.S. sanctions be enforced. These weren’t minor issues. These were the kinds of gaps in compliance that would be unimaginable in any other financial regulatory legislation.

However, the Big Tech question has caused the most persistent anxiety. As long as they receive regulatory approval, non-financial companies are permitted to issue stablecoins through subsidiaries under both the GENIUS Act and its House companion, the STABLE Act. This was specifically forbidden by earlier stablecoin proposals. The new bills don’t. Practically speaking, this means that companies like Amazon, Meta, and Elon Musk’s X platform can all develop their own stablecoins. According to American University law professor Hilary Allen, this is being presented as a crypto bill, but big tech companies stand to gain the most from it. Payments data is some of the most commercially valuable information available because it shows what people actually buy, not just what they search for, which is why companies like Amazon and Meta have long desired access to it. They can collect that data at scale with a stablecoin that is integrated into regular transactions.

Although it goes in a different direction, the issue of financial stability is just as serious. Banks accept deposits and distribute them throughout the economy through mortgages, small business loans, and the standard credit machinery that keeps things going. Stablecoin reserves are merely held in authorized assets, such as government securities. The amount of capital available for lending decreases if a sizable percentage of household savings moves from bank accounts into stablecoins. On paper, the money is still there.

Simply put, it is no longer performing the tasks necessary for an economy to run. The most instructive parallel can be found in the subprime mortgage crisis of 2007–2008: instruments that were packaged and rated as safe concentrated risk in ways that weren’t apparent until they stopped being safe. Several economists have cautioned that stablecoins perform a structurally similar function, transforming high-risk assets into goods that appear to be dollar equivalents until they don’t.

Observing all of this gives me the impression that the legislation was passed more quickly than the reasoning behind it. When the political moment came—a pro-crypto administration and a divided Congress eager for something that appeared to be technology leadership—the bill that emerged reflected the industry’s preferences more than the concerns of the critics. The crypto industry had spent years and significant lobbying resources working toward a regulatory framework that would give its products legitimacy. It is genuinely unclear if regulators will have enough time to close the gaps before the January 2027 implementation date, or if the gaps are too structural to close without changing the underlying legislation. Financial innovation’s past is replete with products that appeared secure until they weren’t.