The recent approval in the United States of America of the GENIUS Act or GENIUS Law — short for its full name (Guiding and Establishing National Innovation for U.S. Stablecoins Act) — represents one of the most significant milestones in the regulation of the Fintech ecosystem — and in this case, cryptocurrencies or digital assets — at the global level. It is a pioneering federal regulation whose effects will undoubtedly be very significant not only in the United States, where it seeks to establish clear rules for this type of digital asset for the first time, but its impact will likely be global.
In Latin America, where stablecoins have proliferated as savings, payment, and remittance mechanisms, especially in economies with inflation or exchange restrictions, the approval of the GENIUS Act could have strategic, operational, and regulatory implications for the region’s financial system.
I- What are stablecoins?
In recent years, there has been rapid growth in a new type of digital asset: stablecoins or stable cryptocurrencies. These instruments can be seen as an alternative to “traditional” cryptocurrencies (Bitcoin or Ethereum) with one key difference: they are designed to maintain a constant or stable value, generally linked to a strong reference currency, particularly the US dollar (USD). Unlike other cryptocurrencies, which can experience sharp fluctuations in price, stablecoins are designed to offer stability, liquidity, and trust to encourage their use as a means of payment, savings, or transfer of value.
Depending on the mechanisms designed to achieve this stability, it is possible to distinguish three types of stablecoins:
- Stablecoins backed by legal tender or valuable metals: these are backed 1:1 by strong currencies such as the USD, the euro, or other liquid assets deposited by the stablecoin issuer, or valuable metals such as gold.
- Stablecoins backed by crypto assets: these are backed by other cryptocurrencies.
- Algorithmic stablecoins: these use automatic and predetermined supplies and demand mechanisms to maintain their value. They have lost popularity following major collapses of some schemes that followed this model.
Currently, USD-backed stablecoins are the most widely used, to the point that specialized media estimate that more than 99% of the total value of these assets is linked to that currency.
II- What are stablecoins used for?
Although they were created as tools to facilitate trade within cryptocurrency platforms, their use has evolved rapidly in recent years. Among their most notable applications are:
- International transfers (remittances): they allow money to be sent quickly, directly, and with lower fees.
- Protection against inflation: in economies with unstable currencies, stablecoins act as a form of accessible digital dollarization.
- Payments and e-commerce: there are already platforms that allow you to pay with stablecoins in physical and online stores.
- Digital savings: unbanked individuals can access more stable assets through digital wallets.
- Decentralized financial services (DeFi): they function as a unit of accounting on blockchain lending, savings, or investment platforms.
According to specialized media publications, by early 2025, the global supply of stablecoins already exceeded US$220 billion, with sustained growth of an average of 25% per year since 2021, after having multiplied almost eightfold since 2020[1], and their use is growing especially in emerging economies such as those in Latin America.
III- Why are they relevant for Latin America?
In Latin America, particularly in countries such as Argentina, Venezuela, and even Mexico and Brazil, millions of people have found stablecoins to be a useful tool for protecting their income and facilitating international transactions in the face of weakened local currencies or restricted banking systems.
The combination of inflation, limited access to the traditional financial system, and a young, digital population has made the region one of the world’s fastest-growing markets for stablecoins. According to a report by the company Bitso[2], 39% of cryptocurrency purchases in Latin America in 2024 (mainly in the four largest economies: Brazil, Mexico, Colombia, and Argentina) were stablecoins (USDC + USDT), representing growth from the 30% recorded in 2023.
IV- What are the risks of using stablecoins?
Despite the advantages that make them attractive, stablecoins are not without risks. Among the main ones are:
- Lack of transparency: some issuers do not clearly report on their reserves or financial structure.
- Solvency risks: if an issuer does not maintain sufficient liquid assets, it may be unable to meet withdrawal requests from holders of that cryptocurrency.
- Capital flight: in some countries, the widespread use of stablecoins could affect local monetary policy.
- Money laundering or illicit use: As with other cryptocurrencies, there are regulatory concerns about their misuse.
Cases such as the collapse of TerraUSD in 2022 or the temporary loss of parity of USDC in 2023 (following the bankruptcy of a custodian bank) have led to frequent calls to regulate this market and provide greater security for users.
V- GENIUS Act: The United States takes the first major regulatory step
In response to these challenges, the United States recently completed the approval process for the GENIUS Act, already considered by many to be the most important legislation on stablecoins globally to date.
VI- What does the GENIUS Act establish?
In general terms, this law establishes the following:
- Licensing requirement: Only entities authorized by the federal government or by state regulators with equivalent standards may issue stablecoins in the US. In other words, national or state banks, as well as credit unions, may choose to issue stablecoins, as may non-bank entities, for which they will have to apply for a license.
- 100% backing: All stablecoins must be fully backed by cash, bank deposits, or short-term U.S. Treasury securities.
- Transparency and audits: Issuers will have to publish regular reports on their reserves and undergo independent audits.
- Prohibition on interest: Non-bank issuers will not be allowed to pay interest to stablecoin holders, to avoid unfair competition with banks.
- Regulatory compliance: Strict anti-money laundering and terrorist financing policies will be required, as well as compliance with existing banking rules and regulations in this regard.
- Foreign issuers: There will be strict requirements for foreign issuers to operate in the US, including the possibility of only allowing issuers from jurisdictions with standards equivalent to those of the US or those with which US regulators have entered into a cooperation agreement.
- Rules for custodians of stablecoin assets and reserves, which may or may not be issuers of these cryptocurrencies.
The objective is to provide legal certainty, protect users, and encourage financial innovation without compromising the stability of the system.
VII- What are the implications for Latin America?
Although this is a law that will govern in the US, its impact will be global, especially in regions such as Latin America where the use of stablecoins is increasingly common.
Some likely effects on the region’s financial systems and economies could include:
- Greater confidence: Being regulated, stablecoins such as USDC or USDT could be perceived as safer, driving their adoption in the region. They could eventually even evolve into digital substitutes for the USD, affecting traditional banking products such as USD accounts and international transfers. Faced with this scenario, Latin American financial institutions would be encouraged to incorporate stablecoin issuance and/or custody solutions into their offerings and seek partnerships with relevant international players.
- Pressure for local regulation: If the GENIUS Act is confirmed as what it appears to be, a global regulatory standard, Latin American countries could be encouraged to establish similar legal frameworks, or at least require issuers in these jurisdictions to comply with these international standards. This will certainly include KYC/AML and traceability elements for these transactions.
- Debate on monetary sovereignty: There are questions about whether greater digital dollarization could weaken the ability of some countries’ central banks to control their monetary policy. This is because there could be a significant increase in the use of the USD “outside” the national financial system. In certain countries, moreover, in economic contexts of loss of user confidence, it could become more difficult to attract deposits in local currency. In response, financial institutions in the region will be called upon more than ever to innovate in order to offer their customers products that compete in terms of efficiency and value protection.
- Boosting financial inclusion: if managed well, stablecoins could become a powerful tool for providing financial services to unbanked populations.
- Internationalization: Banks that adapt to this new financial infrastructure could benefit from a more efficient global network for payments, remittances, and digital products. A radical change in international payment systems is anticipated, with near-instant settlement and lower costs, as well as new business opportunities in open banking, multi-currency digital wallets, tokenized products, regulated blockchain financial networks, etc.
Overall, the passage of the GENIUS Act could mark a turning point in the global development of digital finance, with significant implications for users, businesses, and regulators in Latin America.
VIII- Final comments
Stablecoins are here to stay. They represent a new generation of digital money that combines the stability of the dollar with the efficiency and openness of blockchain technologies. In this sense, the passage of the GENIUS Act in the US will mark the beginning of a new era: stablecoins will cease to be an informal phenomenon and become a regulated and legitimate part of the global financial system.
For Latin America, this reality presents both opportunities and challenges. They could facilitate international payments, lower the cost of remittances, encourage savings in hard currency, and offer financial alternatives to traditionally excluded segments. But they also require greater oversight, technological modernization, transparency, and an informed debate about their role in national economies.
From a legal, economic, and technological perspective, it is time for the region to analyze, regulate, and intelligently leverage this innovation, adapting strategically and proactively to build a more secure, competitive, and inclusive financial ecosystem that responds to the needs of its citizens in a global context.
[1] Visa publication in cooperation with Allium.
[2] Crypto Landscape in Latin America, Bitso.