USDWStablecoin Launches under Developing U.S. Regulations, courtesy of WisdomTree
In a landmark move, the GENIUS Act, enacted in July 2025, has established the first comprehensive federal regulatory framework for payment stablecoins in the U.S., reshaping the adoption and regulation of stablecoins by asset management firms and major Wall Street banks.
The GENIUS Act sets forth a series of key impacts on adoption and regulation:
- Eligibility and Issuance Restrictions: Only federally regulated banks, qualified nonbank entities, and state-regulated issuers under approved regimes can issue payment stablecoins, limiting participation to well-regulated entities.
- Strict Reserve and Disclosure Requirements: Stablecoins must be backed 1:1 by U.S. dollars or U.S. Treasuries, with issuers required to publish detailed monthly disclosures about their reserve holdings.
- Operational and Compliance Mandates: Issuers must maintain robust redemption policies, operational soundness, comply with anti-money laundering (AML) rules, and under Bank Secrecy Act (BSA) supervision.
- Consumer Protection and Marketing Restrictions: The Act prohibits issuers from marketing stablecoins as legal tender, federally insured, or U.S. government-backed and restricts use of transaction data for advertising or sharing without consent.
- Limits on Non-Financial Firms: Non-financial public companies can only issue stablecoins with unanimous approval from a Treasury-chaired Stablecoin Certification Review Committee.
Implications for Asset Management Firms and Wall Street Giants
The clear federal framework provided by the GENIUS Act may encourage asset management firms like WisdomTree to integrate stablecoins into their investment products or payment infrastructures under the new compliance regime, provided they or their partners qualify as permitted issuers. Firms must align with the operational, disclosure, and consumer protection mandates, which could increase compliance costs but also reduce risks associated with stablecoin holdings or issuances.
Major banks, already regulated at the federal level, are well-positioned to become authorized stablecoin issuers or partners in issuance, allowing them to leverage the GENIUS Act framework to expand services involving stablecoins. The Act’s clarity gives them a defined path to develop stablecoin-based products, settlements, or custody services while ensuring compliance with federal oversight and AML standards. They will need to ensure robust reserve management, redemption capability, and consumer data protections as per the legislation.
Notable Developments in the Stablecoin Landscape
- WisdomTree has launched a stablecoin named WUSD, soon to be rebranded as USDW, and operates exclusively within WisdomTree Prime, a regulated digital asset platform overseen by the New York Department of Financial Services (NYDFS).
- Fidelity, managing around $6 trillion in assets, is in the testing phase for its own stablecoin and has applied to launch a tokenized money market fund.
- A collaboration between Goldman Sachs and Bank of New York Mellon has resulted in a platform that allows institutional investors to purchase tokenized money market funds, with ownership securely recorded on Goldman’s blockchain infrastructure.
- Merchants could benefit from stablecoins as a more competitive and cost-effective alternative to high interchange fees, potentially integrating with popular payment platforms like Apple Pay and Google Pay.
The Future of Stablecoins and Retail Payments
The GENIUS Act could promote stablecoin adoption, potentially disrupting the retail payment landscape. The DOJ's antitrust case against Visa is gaining traction, potentially disrupting the retail payment monopoly held by Visa and Mastercard.
Binance's unrealized profits hit a record 60,000 Bitcoin despite falling reserves, indicating the growing importance of digital assets in the financial sector. WisdomTree is developing a suite of infrastructure services to support the use of USDW, including establishing on- and off-ramps for existing stablecoins like USDC and PYUSD.
In summary, the GENIUS Act is expected to stimulate stablecoin adoption by providing regulatory clarity and consumer protections, facilitating integration of stablecoins into mainstream financial services by asset managers and large financial institutions alike. However, it also raises regulatory and operational compliance requirements that could increase costs and limit participation to well-regulated entities.
- Asset management firms like WisdomTree may choose to integrate stablecoins into their investment products or payment infrastructures, leveraging the regulatory framework established by the GENIUS Act and aligning with its operational, disclosure, and consumer protection mandates.
- The GENIUS Act's clarity and consumer protection measures could attract major Wall Street banks to expand their services involving stablecoins, positioning themselves as authorized issuers or partners, while ensuring compliance with federal oversight, AML standards, and managing reserves, redemption, and consumer data protections.
