forbes.com
Regulatory Clash: GENIUS Act vs. Fed Policy on Public Blockchains for Stablecoins
Congress passed the GENIUS Act in July 2025 to allow stablecoin use on public blockchains like Ethereum, despite the Federal Reserve's Policy Statement 9(13) advising against it due to safety and soundness concerns; this creates uncertainty for financial institutions developing new blockchain infrastructure, such as Circle's Arc and Stripe's Tempo.
- How does the current stablecoin market landscape, particularly Ethereum's dominance, influence the regulatory debate?
- The conflict arises from the GENIUS Act's support for open blockchains and the Federal Reserve's concerns regarding safety and soundness on such networks. Ethereum currently dominates the stablecoin market (49-54%), highlighting the stakes. This tension is further exemplified by institutions like Circle and Stripe creating permissioned blockchains for stablecoin use, rather than using Ethereum directly.
- What are the potential long-term impacts of this regulatory uncertainty on the future development and adoption of public blockchains in institutional finance?
- The future of stablecoins on public blockchains like Ethereum hinges on the reconciliation of the GENIUS Act and Policy Statement 9(13). The emergence of permissioned blockchains like Circle's Arc suggests a possible path toward compliance while still leveraging Ethereum's capabilities. Advancements in RegTech may also play a key role.
- What is the core conflict between the GENIUS Act and the Federal Reserve's Policy Statement 9(13), and what are the immediate implications for stablecoin issuers?
- In July 2025, Congress passed the GENIUS Act, aiming to prevent stablecoin issuers from being denied licenses simply for using public blockchains like Ethereum. However, the Federal Reserve's Policy Statement 9(13) advises against such activities, creating regulatory tension. This tension is heightened by major financial institutions announcing new blockchain projects.
Cognitive Concepts
Framing Bias
The article frames the narrative around the conflict between the GENIUS Act and Federal Reserve Policy 9(13). This framing emphasizes the regulatory uncertainty and the potential consequences for the US's competitiveness in the blockchain space. While this is a valid and important point, the framing could be improved by providing more balanced coverage of both sides of the debate, potentially including voices that support the Federal Reserve's cautious approach. The repeated emphasis on the potential damage to US competitiveness may subtly influence readers to favor the GENIUS Act's position.
Language Bias
The article maintains a largely neutral tone, using objective language and presenting facts from various sources. However, phrases like "regulatory prejudice" (in a quote from President Trump) and descriptions of Policy 9(13) as an obstruction to progress lean towards a particular viewpoint. While the article presents these phrases within context, they could be replaced with more neutral wording, such as "regulatory differences of opinion" or "differing regulatory approaches".
Bias by Omission
The article focuses heavily on the tension between the GENIUS Act and Federal Reserve Policy 9(13), and the resulting actions of major financial institutions. However, it omits discussion of smaller players and their approaches to stablecoin issuance and the use of public blockchains. This omission could lead to an incomplete picture of the overall stablecoin market landscape and the impact of the regulatory uncertainty. Further, alternative perspectives from consumer advocacy groups or smaller blockchain projects are absent, limiting the analysis of potential societal impacts beyond institutional finance.
False Dichotomy
The article presents a somewhat false dichotomy between permissioned and permissionless blockchains, suggesting that institutions must choose one or the other. While the regulatory tension highlights this apparent choice, it overlooks the potential for hybrid models or innovative solutions that combine aspects of both approaches. This simplification might lead readers to believe that there are only two starkly different options, neglecting the spectrum of possibilities.
Sustainable Development Goals
The GENIUS Act fosters innovation in financial technology by promoting the use of open, public blockchains like Ethereum for stablecoin issuance. This encourages the development of new blockchain infrastructure and applications, contributing to advancements in financial technology and potentially boosting the U.S.'s competitiveness in the global digital asset market. The article highlights the development of new blockchain infrastructure projects like Circle's Arc and Stripe's Tempo, demonstrating a response to the regulatory landscape and continued innovation.