Blogs from July, 2025

Stablecoin concept illustrated on a glowing digital microchip, symbolizing blockchain technology and digital payments
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Stablecoins vs. Visa and Mastercard: The Payment Revolution Under the GENIUS Act of 2025

By R Tamara de Silva

On July 18, 2025, President Donald J. Trump signed the Guiding and Establishing National Innovation for U.S. Stablecoins Act (GENIUS Act) into law. As I discussed in my earlier article "Understanding the GENIUS Act: A New Regulatory Framework for Stablecoins", this landmark legislation establishes the first comprehensive federal framework for payment stablecoins, covering issuance, reserves, regulatory oversight, and consumer protections. While institutional investors are expected to drive initial adoption, the GENIUS Act’s broader implications could significantly reshape retail payment systems, positioning stablecoins as a viable alternative to entrenched networks like Visa and Mastercard.

Traditional Payment Networks and the Dominance of Visa and Mastercard

Visa and Mastercard process billions of transactions each day. They act as intermediaries connecting consumers, merchants, banks, and card issuers. This system imposes several layers of fees, including interchange fees (usually 1-3%), network assessments, and charges from acquiring banks. Altogether, these costs can total 2-4% per transaction, burdening small businesses and driving up consumer prices. Cross-border payments are especially costly and slow, often taking days to complete and incurring additional currency exchange fees.

While Visa and Mastercard thrive due to their reliability and widespread acceptance, their centralized model creates bottlenecks, raises transaction costs, and excludes many unbanked individuals..

How Stablecoins Offer a Disruptive Alternative

Stablecoins are blockchain-based digital tokens that maintain a stable value, typically by pegging to a fiat currency like the U.S. dollar (e.g., USDC or USDT).

Stablecoins are cryptocurrencies designed to maintain a steady value. They often peg to fiat currencies like the U.S. dollar, which helps them avoid the volatility of assets like Bitcoin. This makes them useful for trading, payments, and hedging. Key examples include fiat-collateralized types, such as Tether (USDT), the market leader backed by dollar reserves; USD Coin (USDC), issued by Circle with transparent holdings in U.S. Treasuries; and TrueUSD (TUSD), which focuses on real-time audits. Crypto-collateralized options like Dai (DAI) from MakerDAO use over-collateralized digital assets for a decentralized approach. Emerging variants add diversity, including Ethena's USDe (synthetic and yield-oriented) or the Euro-pegged Stasis Euro (EURS). With a market cap over $260 billion as of July 2025, these stablecoins play a key role under frameworks like the GENIUS Act.

Unlike traditional payment systems, stablecoin transactions allow users to transact directly, peer-to-peer, on decentralized ledgers.

Unlike traditional payment systems, stablecoins allow users to transact directly, peer-to-peer, on decentralized ledgers. This structure eliminates the need for intermediaries and results in fast, inexpensive transactions, often costing less than a cent each.

The GENIUS Act imposes strict standards on "payment stablecoins," requiring them to maintain reserves fully backed by high-quality liquid assets. These reserves can include cash, short-term U.S. Treasury bills, or money market funds. Issuers must publicly disclose reserve compositions each month, certified by their CEOs and CFOs. Additionally, larger issuers with over $50 billion in stablecoins outstanding must submit annual audited financial statements. These measures enhance transparency, ensure redeemability, and address historical issues like insufficient reserves among unregulated stablecoin providers.

Regulatory Clarity as a Catalyst for Adoption

Before the GENIUS Act, stablecoin issuers navigated a patchwork of state-level regulations and faced significant uncertainty at the federal level. This complexity discouraged broader acceptance and mainstream use. The GENIUS Act now provides clarity by overriding conflicting state rules for federally regulated issuers. Smaller issuers with less than $10 billion in outstanding stablecoins can still be supervised by states, as long as state regulations align with federal standards. Importantly, the Act explicitly classifies compliant payment stablecoins as non-securities under federal law, greatly reducing litigation risks.

Established regulatory bodies oversee different categories of issuers under the GENIUS Act. The Office of the Comptroller of the Currency (OCC) supervises federal nonbank issuers, while primary banking agencies oversee subsidiaries of banks. States manage regulation for qualified smaller entities. Issuers must adhere strictly to the Bank Secrecy Act (BSA), including requirements related to anti-money laundering (AML), counter-financing of terrorism (CFT), and compliance with sanctions. Authorities may also require issuers to freeze or destroy ("burn") tokens when necessary.

Permitted stablecoin issuers under the Act include subsidiaries of insured banks and credit unions, federally qualified issuers approved by the OCC (such as nonbank entities or federal branches of foreign banks), and state-approved smaller issuers. Public companies not primarily engaged in finance generally cannot issue stablecoins unless approved by a special review committee. Foreign issuers from similar regulatory jurisdictions may register, provided they maintain reserves within U.S. institutions.

The Act's provisions come into effect either 18 months after enactment or 120 days following the release of final regulations, which must be completed within one year.

Institutional Adoption Leading the Charge

Banks, fintech companies, and hedge funds are ideally positioned to lead stablecoin adoption under the GENIUS Act. They possess the resources and infrastructure necessary to meet stringent prudential requirements, including specialized capital and liquidity rules designed for stablecoin operations. Their early involvement will boost market liquidity and foster the development of crucial infrastructure such as custody services and settlement systems. Additionally, institutional adoption will establish best practices, paving the way for later retail integration.

Banks, for instance, could issue their own stablecoins to streamline and expedite trade settlement. These institutions can utilize the Act's specific bankruptcy protections, which prioritize stablecoin holders' claims against issuer reserves. Over time, institutional participation should increase digital asset activity in the U.S., strengthening the dollar's role as the primary global reserve currency.

Liquidity and Existing Stablecoin Uses Drive Growth

Much of the discussion surrounding the GENIUS Act highlights dramatic scenarios, such as buying daily coffee with stablecoins or drastically cutting global remittance costs. Yet these transformative retail changes may take longer to realize and initially remain secondary. In the short term, the Act's primary impact will be greater liquidity and the expansion of existing stablecoin use cases, such as trading, arbitrage, and cross-border capital flows.

As of July 2025, the stablecoin market exceeds $260 billion. Previously, regulatory uncertainty created friction, dampened growth, and raised ongoing fears of sudden enforcement actions. The GENIUS Act's clear regulatory framework now removes many of these barriers. This clarity will attract more capital, increase trading volumes, and boost overall market activity. Enhanced liquidity, for example, will allow more efficient arbitrage trading between exchanges. Streamlined international capital transfers can accelerate institutional investments and transactions without lingering regulatory concerns.

While retail use cases frequently dominate public imagination, stablecoins already drive trillions in annual trading volume, far exceeding possible new consumer applications.

Market analysts project substantial growth ahead, estimating the stablecoin market could expand to $1.4 trillion by 2030, with even conservative forecasts predicting $500 billion. Institutional investment, coupled with reduced regulatory risk, will primarily fuel this growth.

The Retail Payments Revolution: Stablecoins vs. Traditional Networks

From Institutional Foundations to Retail Transformation

While initial adoption under the GENIUS Act will primarily involve institutional investors, stablecoins have significant potential to reshape retail payments in the long term. By allowing users to bypass traditional payment processing networks like Visa and Mastercard, stablecoins could dramatically reduce transaction fees, streamline payments, and improve financial inclusion. Traditional networks impose multiple intermediary fees, adding considerable costs to each transaction. In contrast, stablecoin-based payments offer consumers and businesses more affordable, efficient, and accessible alternatives.

Stablecoin transactions conducted on blockchain networks eliminate intermediary fees, potentially cutting transaction costs by 90% or more compared to traditional credit card systems. For example, a small business processing $100,000 monthly in sales could save thousands of dollars each year by adopting stablecoin payments. Additionally, blockchain transactions settle nearly instantly, significantly improving cash flow management for merchants and reducing operational friction compared to traditional payment systems, which often take days to clear.

Stablecoins also promote greater financial inclusion by allowing access via smartphones without needing a traditional bank account. This advantage can significantly benefit the estimated 1.7 billion unbanked people globally, especially in remittance and e-commerce contexts. Already, stablecoins are outperforming traditional methods for cross-border payments by offering lower fees, and the GENIUS Act's clear regulatory guidelines may accelerate their adoption further. However, stablecoins will not offer yields or FDIC insurance protections, and marketing materials must clearly avoid suggesting any form of government endorsement or backing.

Real-World Examples of Stablecoin Adoption and Innovation

Recent developments vividly illustrate stablecoins' growing impact on financial services. PayPal’s launch of PYUSD, its proprietary stablecoin, signals mainstream acceptance of blockchain payments. By adopting stablecoins, PayPal directly challenges traditional payment giants like Visa and Mastercard.

Interestingly, traditional networks themselves are exploring stablecoin solutions. Visa has partnered with Circle, the issuer of the widely used USDC stablecoin, to settle transactions on blockchain networks. Mastercard is similarly developing blockchain-based settlement capabilities. These moves underscore a broad industry recognition of stablecoins' efficiency and cost-saving advantages.

Institutional adoption also continues to accelerate. JPMorgan uses its own stablecoin, JPM Coin, for internal payment settlements, illustrating practical use cases within traditional banking structures. Meanwhile, Ethena and Anchorage Digital have launched USDtb, a stablecoin explicitly compliant with GENIUS Act requirements. Anchorage Digital, as a federally chartered crypto bank, demonstrates how clear regulations are fostering new partnerships and innovations in the sector.

Stablecoins also make cross-border payments significantly cheaper and faster. For example, Stellar’s blockchain collaboration with MoneyGram helps consumers transfer money internationally at lower costs and greater speed compared to conventional methods. This advancement highlights stablecoins' real-world benefits, particularly for underserved and unbanked populations globally.

Circle's USDC stablecoin provides another compelling instance of regulatory-driven innovation. Circle’s stringent transparency measures and reserve disclosures align closely with the GENIUS Act standards. By proactively adhering to clear regulatory frameworks, Circle enhances consumer trust and encourages market growth.

These examples showcase stablecoins' increasing adoption across multiple markets—from retail and institutional finance to global remittances. Together, they underscore stablecoins' transformative potential within the GENIUS Act’s regulatory framework.

Practical Implications for Consumers and Businesses

Consumers can benefit from stablecoins through cheaper remittances. For instance, they send money abroad without facing the typical 7% fees. Stablecoins also enable seamless peer-to-peer payments.

Businesses cut processing costs. They then share these savings with customers via lower prices or loyalty programs.

Unbanked individuals access financial services easily. They achieve this without relying on traditional bank accounts.

Consider these examples. Developers integrate stablecoins into apps like PayPal or merchant POS systems. This approach echoes Visa's growth, yet it leverages blockchain for greater efficiency.

Conclusion

The GENIUS Act positions stablecoins to disrupt traditional payment networks dominated by Visa and Mastercard, potentially transforming everyday retail transactions. By significantly cutting transaction fees, accelerating payment speed, and broadening financial inclusion, stablecoins offer substantial benefits for both consumers and businesses. Initially, adoption will be driven primarily by financial institutions, banks, and hedge funds, given their established infrastructure and regulatory preparedness.

At De Silva Law Offices, we guide clients through GENIUS Act compliance, develop robust stablecoin strategies, and navigate related legal and regulatory challenges. Contact De Silva Law Offices today to schedule a consultation, and ensure your business stays ahead in the emerging digital payments landscape.

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Sources:

1. Guiding and Establishing National Innovation for U.S. Stablecoins Act, Pub. L. No. 119-XXX, 139 Stat. XXX (2025) (enacted as S. 1582).

2. Press Release, White House, Fact Sheet: President Donald J. Trump Signs GENIUS Act into Law (July 18, 2025), https://www.whitehouse.gov/fact-sheets/2025/07/fact-sheet-president-donald-j-trump-signs-genius-act-into-law/.

3. The GENIUS Act of 2025 Stablecoin Legislation Adopted in the US, LATHAM & WATKINS (July 24, 2025), https://www.lw.com/en/insights/the-genius-act-of-2025-stablecoin-legislation-adopted-in-the-us.

4. The GENIUS Act: A Framework for U.S. Stablecoin Issuance, SIDLEY AUSTIN LLP (July 21, 2025), https://www.sidley.com/en/insights/newsupdates/2025/07/the-genius-act-a-framework-for-us-stablecoin-issuance.

5. Press Release, White House, The President Signed into Law S. 1582 (July 18, 2025), https://www.whitehouse.gov/briefings-statements/2025/07/the-president-signed-into-law-s-1582/.

6. The GENIUS Act Becomes Law: Key Provisions from the Federal Stablecoin Regulatory Framework, COVINGTON & BURLING LLP (July 25, 2025), https://www.cov.com/en/news-and-insights/insights/2025/07/the-genius-act-becomes-law-key-provisions-from-the-federal-stablecoin-regulatory-framework.

7. Trump Signs Landmark GENIUS Act, Hailing "Exciting New Frontier" for Crypto, CBS NEWS (July 18, 2025), https://www.cbsnews.com/news/trump-signs-genius-act-crypto-bill/.

8. World - Stablecoin Market Capitalization, MACROMICRO, https://en.macromicro.me/charts/134292/world-stablecoin-market-cap (last visited July 25, 2025).

9. Stablecoin Market Capitalization Exceeded $250B in H1 2025, COINSPAIDMEDIA (July 23, 2025), https://coinspaidmedia.com/news/stablecoin-market-capitalization-exceeded-250b-h1-2025/.

10. Which Stablecoins Are the Largest and Most Popular in 2025?, THE MOTLEY FOOL (July 15, 2025), https://www.fool.com/research/largest-stablecoins/.

11. Stablecoin $2 Trillion Forecast Is 'Optimistic,' JPMorgan Says, BLOOMBERG (July 23, 2025), https://www.bloomberg.com/news/articles/2025-07-23/stablecoin-2-trillion-forecast-is-optimistic-jpmorgan-says.

12. Digital Dollar Report: Stablecoin Market Set to Soar, to Reach Up to $3.7 Trillion by 2030, FINTECH NEWS (May 26, 2025), https://fintechnews.am/blockchain_bitcoin/53909/digital-dollar-report-stablecoin-market-set-to-soar-to-reach-up-to-us3-7-trillion-by-2030/.

13. Stablecoins Could Become One Of The US Government's Most Valuable Financial Allies, ARK INVEST (June 5, 2025), https://www.ark-invest.com/articles/analyst-research/stablecoins-as-a-us-financial-ally.

14. Mastercard 2024–2025 U.S. Region Interchange Programs and Rates, MASTERCARD (effective April 12, 2024), https://www.mastercard.us/content/dam/public/mastercardcom/na/us/en/documents/merchant-rates-2024-2025.pdf.

15. Visa USA Interchange Reimbursement Fees, VISA (Oct. 19, 2024), https://usa.visa.com/dam/VCOM/download/merchants/visa-usa-interchange-reimbursement-fees.pdf.

16. Current US Interchange Rates for 2025, HOST MERCHANT SERVICES (2025), https://www.hostmerchantservices.com/current-us-interchange-rates/.

17. Top 10 Stablecoins To Watch In 2025, SHAMLA TECH (2025), https://shamlatech.com/top-10-stablecoins-to-watch-in-2025/.

18. World's 6 Largest Stablecoins: Top Cryptocurrencies That Maintain a Steady Value, YAHOO! FINANCE (July 11, 2025), https://finance.yahoo.com/news/world-6-largest-stablecoins-top-151000657.html.

19. Ethena Taps Anchorage to Issue $1.5 Billion USDtb Stablecoin in U.S. Under GENIUS Act, UNCHAINED (July 25, 2025), https://unchainedcrypto.com/ethena-taps-anchorage-to-issue-1-5-billion-usdtb-stablecoin-in-u-s-under-genius-act/.

20. Anchorage Digital Partners with Ethena Labs to Launch the First GENIUS-Compliant Federally Regulated Stablecoin, BUSINESSWIRE (July 23, 2025), https://www.businesswire.com/news/home/20250723391461/en/Anchorage-Digital-Partners-with-Ethena-Labs-to-Launch-the-First-GENIUS-Compliant-Federally-Regulated-Stablecoin.

21. PYUSD Stablecoin | US Dollar Crypto Rewards, PAYPAL (2025), https://www.paypal.com/us/digital-wallet/manage-money/crypto/pyusd.

22. Kinexys Digital Payments, J.P. MORGAN (2025), https://developer.payments.jpmorgan.com/docs/treasury/global-payments/capabilities/global-payments-2/jpm-coin-system.

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