GENIUS Act: First Regulatory Deadline Missed — What Happens Now?

The GENIUS Act, the flagship US Congress bill on stablecoin regulation, has just missed its first major implementation deadline. It’s a warning sign for an industry that has been waiting on clear rules.

Behind this delay lie deep tensions between traditional banks, federal regulators, and the crypto industry. The road ahead looks far more complicated than anyone anticipated.

Here’s a breakdown of what’s blocking progress, what each stakeholder is demanding, and what this concretely means for the future of stablecoins in the United States.

A Missed Deadline That Exposes the Fractures in the Legislative Process

The GENIUS Act (Guiding and Establishing National Innovation for US Stablecoins) was presented as the foundational piece of stablecoin regulation in the United States. Passed out of the Senate Banking Committee with bipartisan support, it set regulators a precise timetable to produce the first implementing rules. That timetable has not been met.

This failure is far from trivial. It illustrates the structural difficulty of translating legislation into operational regulation when multiple federal agencies — including the Fed, the OCC, and the FDIC — must coordinate. Each agency is defending its own jurisdictional turf, and reaching consensus takes time. The result is a persistent regulatory grey area that leaves stablecoin issuers scrambling to achieve compliance without any clear framework to comply with.

For market participants, this delay carries real consequences. Stablecoin issuers such as Circle and Paxos cannot finalize their compliance structures without precise rules governing reserves, audits, and capital requirements. Legal uncertainty remains total, and with it comes the risk of regulatory arbitrage in favor of other jurisdictions — with Europe leading the way, its MiCA framework already fully operational.

Banks Push Back and Demand a Revision of the Proposed Rules

Among the most active players in this regulatory standoff, major US banks have taken a firm stance. They are explicitly calling for a revision of the rules proposed under the GENIUS Act, arguing that certain provisions create an uneven playing field between bank and non-bank stablecoin issuers.

The core of the dispute centers on access to dollar reserves and the conditions under which non-bank entities — fintechs and crypto firms — could issue stablecoins backed by safe assets. Banks argue that these entities would benefit from a lighter regulatory regime without bearing the same prudential constraints that banks are subject to. It’s an argument that carries significant weight in the corridors of Congress.

This banking pressure is mechanically slowing down the rulemaking process. Regulators must now incorporate these objections into their public consultations, pushing the prospect of a final regulatory framework even further out. According to several analysts closely tracking the issue in Washington, a final rule adoption before the end of 2025 now looks increasingly unlikely.

What Does This Mean for the Stablecoin Market?

The stablecoin market currently represents more than $230 billion in total market capitalization, with over 60% dominated by Tether’s USDT. Paradoxically, this US regulatory vacuum benefits offshore issuers, who face far fewer transparency requirements. Tether, registered in the British Virgin Islands, continues to operate without any binding US federal framework.

For players banking on clear regulation — Circle with USDC chief among them — every month of delay is a month of competitiveness lost to less scrupulous rivals. Europe, meanwhile, is pressing ahead: the MiCA regulation has, since June 2024, imposed strict requirements on stablecoin issuers operating across the continent, setting a precedent that Washington is watching closely.

The central question remains unanswered: will the GENIUS Act manage to deliver a coherent regulatory framework before the market definitively organizes itself around other standards? The accumulated delays are deepening doubts about the ability of the US legislative system to effectively regulate an industry that moves at a pace entirely incompatible with traditional institutional timelines.