In 2025, the United States officially passed a groundbreaking federal law with far-reaching implications for the crypto market—the GENIUS Act (full name: "Guiding and Establishing the United States Stablecoin Innovation Act"). What exactly has this law changed? What does it mean for us traders?

**Why Do Stablecoins Need Regulation?**

Stablecoins are simply cryptocurrencies pegged to the US dollar. Compared to volatile assets like Bitcoin and Ethereum, stablecoins are widely used for transaction settlement and value transfer due to their price stability. But the problem is—until now, hardly anyone regulated them. This has hidden risks. In 2022, TerraUSD collapsed, $40 billion evaporated in an instant, and users lost everything. Similar risk events have repeatedly warned the industry: stablecoins cannot continue to grow recklessly.

**Breakdown of the Core Rules of the GENIUS Act**

The core logic of the law isn't complicated; it's one sentence: **must be backed by real assets**. Specifically:

*Reserve ratio enforced at 1:1* — Stablecoin issuers must hold US dollars or short-term US Treasuries as reserves at a 1:1 ratio. In other words, if you issue 1 million stablecoins, you must actually hold $1 million in assets. Users can redeem at any time, unlike some projects that falsely report assets.

*Monthly transparent disclosure + independent CPA audits* — Issuers must break down and publicly disclose their reserve composition every month. Plus, they need an independent Certified Public Accountant to sign off, not just self-report. This way, investors can at least see the real situation clearly.

**Market Impact?**

From a trading perspective, this law essentially puts a "safety latch" on the stablecoin system. Past reckless stablecoin projects, which relied on marketing and storytelling to attract users, can no longer continue unchecked. Compliant, truly reserve-backed stablecoins will instead gain a trust premium. And some projects that previously operated on a "partial reserve system"? Will be forced out.

For the entire crypto ecosystem, this means the infrastructure of stablecoins is finally maturing. Trading liquidity will become more stable, and market confidence will be stronger.