Genius Act gives legitimacy boost to stablecoins, says Cornell’s Eswar Prasad

The Genius Act, recently signed into law by US President Donald Trump, has given a significant legitimacy boost to stablecoins, says Eswar Prasad, Professor of Economics at Cornell University.

In an interview with CNBC-TV18, Prasad said the new law reflects the US administration’s pro-crypto stance and could be the first in a wave of crypto-friendly regulations.

The Genius Act provides a clear regulatory framework for stablecoin issuers. Those issuing less than 10 billion stablecoins will be overseen by state regulators, while larger issuers will fall under the purview of federal agencies like the FDIC or OCC. “The actual act will take effect either in January 2027 or four months after all the rules are written by the relevant agencies,” Prasad said.

Stablecoins have already gained massive market traction. The combined market capitalisation of leading issuers Tether and USD Coin has crossed $200 billion. This growth, Prasad said, will accelerate now that legal clarity has arrived. “This legitimisation of stablecoins is certainly going to give a huge boost not only to these two stablecoin issuers but also to other private stablecoin issuers,” he noted.

He added that stablecoins act as a vital bridge between traditional finance and decentralised finance, enabling users to move money between commercial banks and crypto platforms seamlessly. This on-ramp and off-ramp functionality is key to the growth of decentralised finance.

On the technology front, he pointed out that stablecoins are more centralised than traditional cryptocurrencies. Unlike Bitcoin or Ethereum, whose value is volatile and driven by market forces, stablecoins are pegged to fiat currencies like the US dollar and backed by reserves. “That stable value allows them to be used in payments,” he said, even though it departs from the decentralised philosophy of early cryptos.

Prasad concluded by highlighting that while Bitcoin remains highly volatile and not practical for everyday payments, stablecoins seem to be delivering on the original promise of cryptocurrencies—efficient, alternative digital payments backed by trust and value.

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