The recently passed GENIUS Act of 2025 creates a new legal framework for licensing and regulating payment stablecoin issuers. The Act is explicit in stating that an insolvent payment stablecoin issuer that is not a subsidiary of a depository institution will be resolved using US bankruptcy law and thus excluded from federal deposit insurance. The Act also sidesteps the issue of a payment stablecoin lender of last resort. But do not be fooled by the laissez faire tone of the legislative language. Payment stablecoins have already been bailed out by the FDIC insurance fund using costly lender of last resort assistance provided by the Federal Reserve.
Read Full Article »
