For decades, cross border payments have lagged behind domestic ones in almost every dimension that matters: speed, cost, transparency, and predictability. While domestic payments in most developed economies settle in seconds or hours, international transactions can take days, pass through multiple intermediaries, and accumulate fees at every step. Stablecoins emerged as a credible alternative, but until recently they operated in a regulatory grey zone in the United States. That changed with the GENIUS Act.
Signed into law in July 2025 — the House passed the bill on July 17 and the President signed it the following day — the Guiding and Establishing National Innovation for U.S. Stablecoins Act is the first comprehensive regulatory framework for payment stablecoins in the US. For anyone whose business depends on moving money across borders, the implications are significant.
Key Point Summary
Why the traditional system and financial institutions struggle with cross-border payments
To understand what the GENIUS Act changes, it helps to understand how cross border payments work today. The current system is built on correspondent banking. When a business in one country pays a supplier in another, its bank rarely has a direct relationship with the recipient's bank. Instead, Bank A sends a payment message through a chain of intermediaries — often a correspondent bank in each of the countries involved — and, as funds move through the chain, those intermediary and correspondent banks credit and debit an account until the funds eventually reach Bank B.
Each link in that chain adds cost and delay. Every intermediary applies its own compliance checks, charges its own fees, and operates in its own time zones. When the transaction involves different currencies, FX conversion adds another layer of cost and uncertainty. Data standards are inconsistent across jurisdictions, which means payment information is frequently truncated or reformatted along the way, complicating reconciliation and fraud detection.
The result is a system in which retail cross border payments routinely cost 5–6% of the transferred amount, while cross-border payments can cost up to 10 times more than domestic payments, and wire transfers are commonly used for large transactions even though large transactions between sophisticated financial institutions can still take two or more business days to settle. As of March 2025, average remittance fees were around 6.5%. For businesses managing global supply chains, this creates real cash flow problems: capital sits in transit instead of working, and settlement timing is hard to predict. These frictions add an estimated $120 billion annually to the global financial system. Central banks and the Financial Stability Board have flagged these frictions for years, and global initiatives like the G20 cross-border payments roadmap have made progress — but the structural reliance on intermediaries remains, even as the value of cross-border payments is expected to exceed $250 trillion by 2027 and remittances accounted for 3% or more of GDP in over 60 countries in 2024.
What stablecoins changed — and what was missing
Payment stablecoins offered a technical answer to a structural problem. A dollar-pegged stablecoin moves on a blockchain in minutes, around the clock, without regard for banking hours or time zones. It collapses the correspondent chain into a single transfer: sender and recipient interact with the same asset, regardless of how many borders sit between them. Faster settlement, lower costs, and 24/7 availability made stablecoins increasingly attractive for international transactions, particularly in corridors where correspondent banking has retreated, especially remittance routes where average fees were around 6.5% as of March 2025.
But technical capability alone was never enough for mainstream adoption. Financial institutions, treasurers, and regulated payment service providers could not build core financial transactions or cross-border payment services on assets whose legal status was unclear. Who guarantees the reserves? What happens in an issuer insolvency? Which regulations apply to anti money laundering and sanctions screening? Without answers, stablecoins remained a tool for crypto-native firms rather than the broader financial system.
What the GENIUS Act actually does
The GENIUS Act answers those questions. Its core provisions establish who may issue payment stablecoins in the US, how they must be backed, and which regulatory requirements apply.
Licensed issuance. Only permitted payment stablecoin issuers — federally regulated entities, qualifying subsidiaries of insured depository institutions, or state-regulated issuers meeting equivalent standards — may issue payment stablecoins to US persons. Oversight sits with federal banking regulators, including the Federal Reserve and the OCC, depending on the issuer's structure.
Full reserve backing. Issuers must back outstanding stablecoins one-to-one with high-quality liquid assets: cash, bank deposits, short-dated US Treasuries, and similar instruments. Reserves must be segregated, regularly attested, and publicly disclosed. This directly addresses the financial stability concerns that regulators around the world have raised about under-collateralized digital assets.
Bank Secrecy Act obligations. The law explicitly treats stablecoin issuers as financial institutions under the Bank Secrecy Act. That means full AML programs, sanctions compliance, suspicious activity reporting, and the technical capability to freeze or burn tokens when required by lawful order. The aim is to close the illicit finance gap without banning the technology — a notable contrast with approaches in some other countries.
Consumer protection. Holders of payment stablecoins get priority claims on reserves in insolvency, issuers are barred from misrepresenting government backing, and yield-bearing payment stablecoins are restricted. These provisions exist to protect consumers and prevent stablecoins from masquerading as insured bank deposits.
In short: the law takes an instrument that was already useful and makes it legible to the regulated financial system.
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What changes for retail cross border payments
The practical impact on cross border transactions comes in several forms.
Institutional participation. Banks and regulated payment companies can now hold, issue, and settle in payment stablecoins under a clear framework. That unlocks integration with existing processes — treasury management, payment rails, custody — rather than forcing stablecoins to live in a parallel universe. When a regulated issuer's token is backed by attested reserves and supervised by the Federal Reserve or state regulators, a CFO can defend using it for settlement.
Compression of the settlement chain. A stablecoin transfer does not need a correspondent in every country involved. A payment from one country to another becomes a single on-chain transaction followed by local conversion into the national currency at each end. For corridors involving multiple currencies, this drastically simplifies routing: rather than chaining three or four banks, a payment moves through one digital asset and two local liquidity points.
Predictable compliance. Counterintuitively, regulation is what makes stablecoins more usable, not less. Yes, applying full AML and sanctions screening increases costs for issuers relative to the unregulated era. But for the businesses using them, standardized compliance reduces uncertainty. Screening can be embedded at the token level, fraudulent transactions can be traced on transparent ledgers, and audit trails are native rather than reconstructed. For firms that previously avoided digital assets because of compliance risk, the calculus has flipped.
Working capital efficiency. Faster settlement is not just a convenience; it is a balance-sheet improvement. Funds that settle in minutes instead of days reduce prefunding requirements, free trapped capital, and smooth cash flow for importers, exporters, and payment service providers. In emerging-market corridors — where correspondent relationships are thinnest and fees are highest — the difference is most dramatic.
What the law does not solve in a comprehensive regulatory framework
It is worth being precise about limits. The GENIUS Act is a US law; it does not harmonize regulations across different countries, and cross-border usage still depends on how other jurisdictions treat US-issued stablecoins. The Financial Stability Board and national central banks continue to study whether widespread stablecoin adoption could affect monetary sovereignty in economies where the local currency is weak — a real concern when a dollar token becomes more attractive than the national currency.
Liquidity at the edges also remains a private sector problem. A stablecoin moves value instantly, but converting it into Nigerian naira, Kenyan shillings, or UAE dirhams at a cost effective rate requires local market makers, banking partners, and FX expertise. The blockchain solves the middle of the journey; the first and last mile still depend on infrastructure that someone has to build and operate. Data standards, interoperability between chains, and alignment with global initiatives like ISO 20022 are works in progress.
In other words: the GENIUS Act removed the legal ambiguity, not the operational complexity. The firms that win in this new environment are those that combine regulated stablecoin rails with deep local liquidity and institutional-grade compliance.
The bigger picture
Stablecoins are no longer a speculative corner of financial markets — they are becoming settlement infrastructure for the global economy. With a comprehensive regulatory framework in place, the question for financial institutions and businesses is no longer whether to use payment stablecoins for international transactions, but how the system works in practice: which issuers, which corridors, which partners.
The direction of travel is clear. Money that once crawled through correspondent chains can now move at the speed of a payment message, with compliance built in rather than bolted on.
Conclusion
Moving money across borders shouldn't feel like a workaround. The GENIUS Act has settled the regulatory question — payment stablecoins are now part of the financial mainstream. What remains is execution: finding partners with the liquidity, local settlement capabilities, and compliance infrastructure to turn regulatory clarity into operational advantage.
That's where FinchTrade comes in. As a Swiss VQF-regulated OTC desk, we provide PSPs, fintechs, and corporates with deep stablecoin liquidity and seamless fiat on/off-ramps across Europe–Africa, LatAm, and UAE corridors. Whether you're settling supplier payments in emerging markets or optimizing treasury flows across time zones, our infrastructure delivers institutional pricing, same-day settlement, and compliance built into every transaction.
For requesting more information about how we can help reach out to us. We're here to help and answer any questions you may have.
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