The GENIUS Act and the Digital Dollar Dilemma

Hi there,

Today, I want to talk about a recent piece of legislation—the Guiding and Establishing National Innovation for US Stablecoins Act—or GENIUS, as it’s known (honestly, how long did they spend coming up with a title that spells genius?) But I digress. It’s an act that creates the first comprehensive federal framework for stablecoins, and effectively puts a new player on the board—one that will likely have a major impact on the traditional card and digital payments space.

For years, the payments arena has been dominated by a handful of giants: card networks like Visa and Mastercard, and digital payment platforms like PayPal and Stripe. Stablecoins, with their promise of a low-cost and borderless digital dollar, have existed for a while on the fringe, but have always been more of crypto curiosity than a genuine threat to the status quo. The GENIUS Act changes that. Providing regulatory clarity and powerful consumer protections, the Act is paving the way for stablecoins to move from the crypto wild west into the mainstream financial system.

Cutting banks out of the payment equation

The Act states that stablecoins must be 100% backed by highly liquid assets (like cash and U.S. Treasuries), addressing the trust issues that have plagued the crypto space for years. It also grants stablecoin holders priority in the event of an issuer's bankruptcy—a key consumer protection that makes these digital assets far more appealing for everyday use. In short, the GENIUS Act legitimizes a form of digital money that can be sent and received instantaneously and continuously, without the need for banks to be involved.

This, of course, is a direct challenge to card networks and digital payment processors. Today, a merchant pays a fee for every transaction to a card network and their acquiring bank. However, a stablecoin payment, especially a peer-to-peer or direct merchant payment, could bypass this infrastructure almost entirely, offering a cheaper and faster alternative.

For a card network, this means they can no longer sit idly at their desk, staring blankly out the window. They’re going to need to integrate stablecoin tech into their systems or face an eventual (but certain) erosion of their market share. We're already seeing this happen, with major card companies actively exploring how to use stablecoins for cross-border payments and other high-friction transactions.

For digital payment processors, the impact is potentially and equally profound. Stablecoins could offer a new payment route that's faster and potentially more cost-effective than ACH transfers. This will likely result in processors developing new products that provide merchants with real-time settlement and new levels of control over their cash flow.

The GENIUS Act is more than just a win for crypto—it’s a kick in the pants for the entire payments ecosystem. It’s going to force traditional players to innovate and adapt, or be left behind by the far more efficient and newly legitimized digital dollar. Whether you’re a fan of crypto or not, the blockchain tech at its heart has always had more advantages than disadvantages, and we’re going to see much more of it in the mainstream in the coming years.

Until next month,

Joe Zahaitis

Payment Processing Consultant