The U.S. has just passed what could become one of the most consequential financial laws of the decade: the GENIUS Act. While its headline purpose is to regulate fiat-backed stablecoins, its implications run deeper – with ripple effects that could reshape not only crypto markets, but how value moves globally.

For decades, foreign exchange (FX) and cross-border payments have been hampered by legacy infrastructure: opaque banking rails, multi-day settlement cycles and high intermediary fees. The GENIUS Act doesn’t just introduce guardrails for digital dollars – it offers the legal foundation for programmable, instantaneous and transparent money movement.

But does this mean FX is finished? Not quite. Instead, what’s emerging is a dual-track financial system – where traditional currency trading coexists with new tokenized rails that could complement or compete depending on use case. Let’s take a closer look at what it all means.

How the GENIUS Act Changes the Game

At its core, the GENIUS Act delivers regulatory clarity – the first of its kind in a major financial jurisdiction. It doesn’t regulate “crypto” broadly, but rather fiat-backed stablecoins: digital tokens pegged to the U.S. dollar and backed 1:1 by reserves.

Here’s what the Act mandates for any entity issuing a stablecoin in the U.S.:

• 100% reserve backing in cash, insured bank deposits or short-term U.S. Treasurys.
• Daily public disclosure of reserves and third-party attestations.
• Par redemption rights for consumers.
• Eligibility for issuance by both FDIC-insured banks and licensed nonbanks.
• Exemption from securities classification, easing integration into financial workflows.
• Robust AML/KYC and consumer protection requirements.
  
  

The key innovation? Treating qualifying stablecoins as digital cash, not securities or derivatives (a position recently echoed by the SEC’s interim accounting guidance for fully reserved stablecoins). This unlocks a pathway for regulated entities – from Wall Street banks to asset managers to crypto-native firms – to use, issue and settle in stablecoins without regulatory whiplash. Taken together, this isn’t just regulation – it’s infrastructure policy. It enables stablecoins to become the connective tissue between traditional finance and crypto-native platforms, and the base layer for programmable money in both private and institutional settings. That has far-reaching implications.

Impact #1: Cross-Border Payments May Never Look the Same

The clearest use case for regulated stablecoins is cross-border money movement. Unlike traditional FX rails, which rely on a patchwork of correspondent banks, stablecoins can move value instantly, 24/7, across jurisdictions, often at a fraction of the cost.

This won’t eliminate FX markets – but it could disrupt how trades settle, how value is transferred and how capital flows between countries:

• Personal remittances, which often cost 5–7% in fees, could move near-instantly for pennies.
• Treasury and trade settlement could benefit from stablecoin-based clearing mechanisms.
• Emerging market users, often locked out of dollar banking, could gain new access to U.S. dollar equivalents.

At scale, this introduces new liquidity channels outside traditional banking – and creates demand for U.S. Treasurys as stablecoin issuers seek risk-free collateral.

But not everyone will adopt U.S.-issued stablecoins. Capital control regimes, monetary sovereignty concerns and geopolitical frictions (think EU, China, India) will ensure that legacy FX systems don’t vanish, but evolve. Furthermore, other countries could enable their own currency-backed stablecoins to compete with the dominance of the U.S. dollar.

Impact #2: Banks Finally Have the Green Light – Will They Use It?

With the GENIUS Act in place, regulated banks can enter the stablecoin market at scale – no longer limited to internal pilots like JPM Coin. That clarity knocks down the biggest barrier to entry: regulatory risk. For compliance teams, the lack of a federal framework has long been a dealbreaker. Now, with the rules established, banks can issue stablecoins with confidence. While crypto-native firms like Circle and Tether have dominated the market to date, banks have major advantages:

• Brand trust with corporates and institutions.
• Distribution power across treasury, payments and capital markets.
• Regulatory goodwill from long-standing oversight relationships.

A stablecoin issued by JPMorgan or BNY Mellon won’t just compete with crypto-native options – it could become the default in institutional workflows, from collateral management to liquidity provisioning.

Impact #3: Institutions Are Running Out of Excuses

The GENIUS Act won’t solve every problem – but it displaces legal uncertainty as the biggest blocker. For institutions that have been “waiting for clarity,” the message is clear: it’s time to build.

With compliant, redeemable stablecoins now federally recognized:

• Collateral desks can explore tokenized margin.
• Lenders can offer weekend liquidity without waiting for wire transfers.
• Exchanges and OTC desks can settle faster, without sacrificing compliance.

The barriers that remain – custody complexity, interoperability, counterparty risk – are technical and operational, not legal. For a market long starved of clarity, that’s a leap forward.

From Vision to Infrastructure

For over a decade, crypto has promised a faster, fairer, programmable financial system. The GENIUS Act doesn’t deliver that system overnight – but it lays the rails.

This isn’t about replacing FX. It’s about offering a credible alternative to parts of the system that no longer serve today’s needs. Just as e-commerce didn’t eliminate retail, but transformed it, regulated stablecoins may not kill FX – but they will redefine how global money moves.

The road to adoption still has friction – but the direction is set. FX, Treasury and collateral markets may never look the same. The FX market isn’t dead. But it is, finally, getting real competition.