The Genius Act: How Banks Just Got a License to Print Crypto

What Is the Genius Act?

The Genius Act of 2025 is the first federal law to regulate stablecoins in the United States — and it changes everything. Signed into law by President Trump, it allows banks and licensed entities to issue U.S. dollar-pegged digital tokens, effectively baking crypto into the traditional financial system.

“Permitted payment stablecoin issuers shall maintain reserves backing the issuer’s payment stablecoins outstanding on an at least 1 to 1 basis.”
— GENIUS Act, Sec. 4(a)(1)(A)

Trump didn’t just sign the bill — he demanded it. Once a crypto skeptic, he now boasts that the U.S. under his leadership has become the “crypto capital of the world.” With this law, that boast isn’t so far-fetched.

“We’re making the U.S. the crypto capital of the world,” he said at the bill’s signing.

Why Stablecoins? Why Now?

The Act defines stablecoins as:

“A digital asset... used as a means of payment... and backed by a fixed amount of monetary value.”
— GENIUS Act, Sec. 2(14)

Under the law, only licensed issuers — such as banks or approved nonbank entities — can legally issue U.S. stablecoins:

“It shall be unlawful for any person other than a permitted payment stablecoin issuer to issue a payment stablecoin in the United States.”
— GENIUS Act, Sec. 3

This gives traditional financial institutions a massive opportunity: use customer deposits to buy Treasuries, then mint stablecoins backed by those Treasuries. They earn yield from the Treasuries and gain a new financial instrument to deploy across crypto markets, payment rails, or internal operations.

Are They Printing Money from Thin Air?

That’s the big question. Some believe this gives banks a license to mint digital money out of nowhere. Others argue it's just structured financial engineering — no different than what stablecoin issuers like Tether already do.

The law explicitly requires:

“Reserves must consist of U.S. currency, short-term Treasuries, reverse repos, and central bank deposits.”
— GENIUS Act, Sec. 4(a)(1)(A)

But what happens when those reserves were already on the bank’s balance sheet? Now the same assets support both the bank’s existing obligations and new stablecoins. That’s where the concern about “synthetic money” arises.

Bitcoin’s New Tailwind

For all its regulatory complexity, the Genius Act is wildly bullish for crypto. Smart money sees what’s coming: a wave of new stablecoins, issued by regulated entities, flooding the blockchain.

“The Act is expected to increase public trust in the assets and grow the industry overall.”
— White House statement

This isn’t theoretical. It’s the same dynamic that has supported Tether for years — only now, it's legal for U.S. banks. Many expect this to drive disproportionate inflows into Bitcoin, at least in the early phases.

The Trade-Off: Who Gets Cut Out?

While crypto gets pumped, someone else gets cut. As banks shift their attention to easy stablecoin yield, it’s entirely plausible they’ll reduce lending to homeowners and small businesses.

That means higher mortgage rates and fewer real-economy loans. It also means the U.S. debt market stays healthy — because banks have every reason to keep buying government debt, knowing they can squeeze out more value through stablecoin issuance.

Whether that’s sustainable is anyone’s guess.

Personally? I think this is exactly what’s going to happen. I’m buying Bitcoin.