By GENIUS Act 2025: US Stablecoin Regulation and Its Global Impact
In June 2025, the United States passed a landmark bill known as the GENIUS Act (Guidelines for Ensuring National and International Use of Stablecoins). This act marks the first comprehensive legal framework for stablecoins—a class of digital assets pegged to traditional currencies like the US Dollar. The move has significant domestic, international, and economic implications.
For aspirants preparing for UPSC, RBI Grade B, SEBI, SSC, and other government exams, this development is highly relevant, touching topics like digital economy, fintech regulation, global financial architecture, and India’s crypto policy.
💡 What Are Stablecoins?
Stablecoins are a form of cryptocurrency whose value is tied to a stable asset, typically fiat currencies like USD or INR. Examples include:
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USDT (Tether)
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USDC (USD Coin)
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DAI
They are widely used in cross-border transactions, decentralized finance (DeFi), and crypto exchanges due to their low volatility.
📜 What Is the GENIUS Act 2025?
Passed by the US Congress in June 2025, the GENIUS Act is the first federal legislation focused solely on regulating the issuance, circulation, and backing of stablecoins.
Key Provisions:
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Stablecoins must be fully backed 1:1 by fiat reserves
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Only licensed entities under the US Treasury and Federal Reserve can issue stablecoins
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Mandatory audits, disclosures, and cybersecurity standards
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Bans algorithmic stablecoins that lack transparent collateral systems
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Introduces international guidelines for stablecoin governance
🌍 Global Implications
✅ 1. US Dollar’s Digital Supremacy
The Act reinforces the US Dollar’s dominance by legitimizing USD-backed stablecoins as trusted digital payment mechanisms globally.
Impact: May limit monetary sovereignty of developing nations dependent on USDC/USDT-based remittances and trade.
✅ 2. Pressure on Other Economies to Regulate
Countries like the UK, Singapore, UAE, and even India are now under pressure to draft clear regulations to prevent capital flight and regulatory arbitrage.
Impact for India: Pushes for a stablecoin framework aligned with RBI and SEBI oversight.
✅ 3. Redrawing Crypto Trade Dynamics
The act’s transparency and compliance requirements could shift crypto exchange volumes to US-compliant coins, leading to a more centralized but safer crypto environment.
India’s Position and Strategic Response
India has so far taken a cautious approach to cryptocurrency regulation, including:
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30% tax on crypto profits
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No clear legal status for stablecoins
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RBI’s launch of the Digital Rupee (CBDC)
What India Needs to Do:
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Draft comprehensive fintech legislation covering stablecoins, CBDCs, and DeFi
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Clarify regulatory roles between RBI, SEBI, and MeitY
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Promote India-based stablecoin alternatives backed by INR for global use
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Leverage platforms like IMF, G20, and BRICS to shape international norms
Relevance for GS II (IR): India’s role in global digital finance diplomacy
Relevance for GS III: Cybersecurity, financial stability, innovation policy
📘 Relevance for UPSC & Competitive Exams
📍 For GS II – International Relations
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India–US digital cooperation and financial diplomacy
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Role of international institutions in digital currency regulation
📍 For GS III – Economy, Tech & Security
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Impact on financial innovation, privacy, and systemic risk
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India’s digital payment architecture and challenges
🖋️ For Essay/Interview
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Topics like:
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“Digital Currencies and Global Financial Sovereignty”
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“Balancing Regulation and Innovation in the Digital Economy”
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“Is Crypto the Future of Money or a Threat to Stability?”
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🔚 Conclusion
The GENIUS Act 2025 sets a benchmark for global stablecoin regulation. While it brings legitimacy and oversight to the crypto space, it also amplifies the geopolitical power of the US Dollar in digital form. For India, the Act serves as both a warning and a guide—highlighting the need for timely and structured regulation that protects national interests while fostering innovation.
JiGuruG advises all aspirants to closely follow this space, as digital finance will increasingly become a core topic in exams, policy debates, and governance.