While the passage of the United States’ first federal stablecoin law has opened a new chapter for digital assets, it has also highlighted disagreements on Wall Street.
Major institutions are now debating whether the GENIUS Act will strengthen demand for the U.S. dollar and draw new buyers into the short-term Treasury market, or leave broader financial dynamics largely unchanged.
Wall Street Banks Question Whether Stablecoins Will Move Markets
The GENIUS Act, signed on July 18, 2025, introduces a unified federal framework for stablecoin issuers. Its arrival has prompted Wall Street banks to reassess how the market may evolve over the next several years.
Strategists at JPMorgan, Deutsche Bank, and Goldman Sachs remain cautious. Specifically, they argue that stablecoins remain too small to drive meaningful changes in global dollar flows or in Treasury purchases. Therefore, in their view, expectations of a structural shift are premature at this stage.
However, their caution contrasts with the outlook from U.S. Treasury Secretary Scott Bessent, who predicts sharp expansion. He expects the stablecoin market to grow from $300 billion today to $3 trillion by 2030. Indeed, such growth, he argues, could lift demand for Treasury bills as issuers build larger reserve portfolios.
Nevertheless, not everyone is convinced. Critics note that stablecoin backing largely comes from existing pools like money market funds, bank deposits, cash, and offshore dollars. They warn that this pattern suggests a reshuffling of current Treasury holders rather than an influx of new investors.
Interest Ban Weakens Investor Incentives
Notably, a central provision of the law highlights these concerns. The GENIUS Act bans issuers from paying interest on their tokens, thereby limiting the appeal for yield-seeking investors.
With traditional savings products offering higher returns, Wall Street analysts say stablecoins lack the incentive to attract new capital. This dynamic strengthens the argument that any increase in Treasury purchases will likely come from repositioning, rather than from genuine new demand.
Regulators Face Tight Rulemaking Deadlines
While market analysts debate the long-term impact, federal agencies are focused on execution. Currently, implementation sits under a strict timeline, and lawmakers want to ensure momentum does not stall.
During a House Financial Services Committee hearing on Tuesday, Rep. Bryan Steil pressed regulators for updates. He warned that the one-year deadline for final rules is approaching and cited past examples where regulatory delays slowed major legislation.
Under the GENIUS Act, agencies must complete all implementing rules by July 18, 2026. The framework becomes effective on January 18, 2027, or 120 days after the final rule is issued, whichever comes first. This timeline is now shaping the pace of internal work across multiple agencies.
🚨Breaking Crypto Update🚨
⁰NCUA Chair @kylehauptman confirms we are on track to implement the GENIUS Act by July 18. pic.twitter.com/Elvgme0f75— Bryan Steil (@RepBryanSteil) December 2, 2025
Agencies Outline Early Steps
Regulators say they are working to stay on schedule. NCUA Chairman Kyle Hauptman emphasized that the agency’s first proposal will focus on the issuer application process. He noted that all participating agencies understand the seriousness of the deadline.
FDIC Acting Chair Travis Hill offered a parallel timeline. He said the FDIC’s first proposal will be released later this month and will address application requirements for FDIC-supervised issuers.
Subsequently, a second proposal, planned for early next year, will cover capital, liquidity, and reserve standards for bank-issued stablecoins.
Leaders from the Federal Reserve, the Office of the Comptroller of the Currency, and the National Credit Union Administration also joined the hearing, signaling the broad regulatory effort now underway.
Law Creates First Nationwide Standards for Issuers
Beyond timing, the Act introduces the first uniform federal requirements for stablecoin issuers. Tokens must maintain one-to-one backing with U.S. dollars or high-quality liquid assets. Issuers with a market capitalization above $50 billion are required to undergo annual audits.
In addition, the law extends federal oversight to stablecoins issued by foreign entities, providing a clearer supervisory structure for offshore projects at a time when global stablecoin activity is growing.
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