On July 18, 2025, the US got its first crypto regulation when President Trump signed the GENIUS Act. The timing of the bill is quite significant, as Trump has been pushing pro-crypto regulations, and it only took two months from introduction to the House to being signed as law. The government also wanted to stay ahead of China, which is currently pushing for yuan-backed stablecoins in a significant shift from its anti-crypto policies.
Three days after the signing of the GENIUS Act, the Senate Banking Committee released its discussion draft of the RFIA bill. This one isn’t new, as it has been in the senate since June 2022, with a July 2023 revision, and now the July 2025 update.
Unlike the GENIUS Act, it’s a more comprehensive framework that addresses the larger crypto assets industry, not just stablecoins.
However, while the GENIUS Act received bipartisan support and was signed just two months after introduction, the RFIA bill is a bit more contentious. Its position on stablecoins also differs from the GENIUS Act, which raises some concerns.
First, what are stablecoins, and why is regulation necessary?
To get a better idea of how these two regulations take different approaches to stablecoins, let’s first look at what stablecoins are and why the regulations are necessary.
Basically, stablecoins are cryptocurrencies – stablecoins maintain a consistent value. In other words, they avoid the volatility that the crypto industry is known for.
To do this, they base their price on another asset, mostly fiat currency or gold. They then have a protocol that allows them to maintain a 1:1 ratio to the backing asset, with the issuer increasing or decreasing the available supply based on market demand. When the value deviates from the underlying asset, it’s quickly corrected.
There are also algorithmic stablecoins. These attempt to maintain their value through software rules instead of reserves, but they haven’t been fully embraced yet.
When it comes to actual use, the stability allows stablecoins to operate more like digital cash. They are the main means of payment in distributed finance (DeFi) and are also used for trading, regular payments, and as a store of value.
However, the fact that stablecoins can be created by many entities means that they aren’t created equal. And sometimes, they can collapse, something that happened to TerraUSD in May 2022 and wiped close to $500 billion from the broader cryptocurrency market.
Regulatory measures are being introduced in the US and other regions to protect consumers from such and provide some legal clarity.
What’s the GENIUS Act all about?
As earlier mentioned, this is the first U.S. law purely about crypto assets, and in this case, stablecoins. It’s not a surprise that this has been the focus of the first legislation, as the stablecoin market has wide appeal, and regulation is expected to integrate it with the traditional financial system.
In a statement released by Paul Atkins, chair of the U.S. Securities and Exchange Commission, “Payment stablecoins will play a significant role in the securities industry moving forward.” The legislation is in line with “achieving President Trump’s goal of making America the ‘crypto capital of the world.’
The legislation has several provisions that aim to provide clear regulatory guardrails for the industry:
- Regulating issuers – Stablecoin issuers need to be licensed, but they can be banks or fintechs that receive approval from the Federal Reserve. They just need to show that they can comply with the relevant laws.
- Full reserve backing and transparency – Stablecoin issuers must hold 1:1 reserves for any stablecoins issued. These reserves must be low-risk assets with relative liquidity, such as cash and short-term Treasury securities. The issuer then needs to allow regular third-party audits and publish a monthly report on reserve composition.
- Anti-money laundering (AML) and KYC – All issuers need to comply with the Bank Secrecy Act, which outlines AML, sanctions, and KYC (know your customer) rules that regular financial institutions adhere to.
- Consumer protection – The Act prohibits issuers from paying interest on stablecoin holdings and prioritises holders (ahead of creditors) in the event of the issuer’s bankruptcy.
- Categorisation – According to the Act, stablecoins aren’t a “security” under the US federal securities laws or a “commodity” under the Categorisation – Change Act, which means they aren’t under the oversight of the SEC or CFTC.
The law will take some time to be fully implemented, allowing the industry to adjust and for the final regulations to be issued. The full implementation will be on January 18, 2027 (18 months after enactment) or 120 days after the primary federal stablecoin regulators issue their final regulations implementing the act, whichever is earlier.
Concerns Raised by the RFIA around Stablecoins
Unlike the GENIUS, this one takes a more comprehensive approach to digital assets. This means that it doesn’t go into detail, as it groups stablecoins as part of digital assets, and as you would expect, it deviates from the more specific GENIUS Act.
Let’s look at some of the areas where industry experts are raising some concerns.
Regulatory overlap and uncertainty
While the GENIUS Act states that stablecoins aren’t under the SEC and CFTC, the RFIA clarifies some of them as “commodities” and others as “securities”. This splits oversight and causes some confusion, and it could also lose “securities”, as it puts some under banking oversight and securities rules.
Less Specific Stablecoin Framework
Since the RFIA is broad, it doesn’t have a strong framework that regulates stablecoins in particular. This is a concern to many, as the regulators have a big room for interpretation, which leads to uncertainty.
Potential regulatory loopholes
Since assets can be regulated as commodities or as securities, some can choose to be regulated under the CFTC’s framework (as a commodity) to avoid more strict oversight, which creates a loophole.
While the RFIA is still pending, it will be interesting to see whether it’s draughted to naturally accommodate the GENIUS Act, which is already law, especially considering it also differs in some areas from yet another act that has already passed the House, the CLARITY Act.
