Investing.com -- Bernstein analysts said in a note Monday that the Stablecoin GENIUS Act, set for a Senate vote this week, could reshape the role of stablecoins in the U.S. financial system.

If passed, the legislation would pave the way for stablecoins to evolve “from the money rail of crypto to the money rail of the internet,” according to Bernstein.

The GENIUS Act, short for Guiding and Establishing the National Innovation for U.S. Stablecoins Act of 2025, is expected to become law by the end of summer.

Bernstein believes it will serve as a foundation for the next decade of innovation in financial services, stating, “Stablecoins have brought mainstream attention back to the underlying global rail—the blockchain—and its transformative potential.”

They explain that the legislation establishes a framework for three types of U.S. stablecoin issuers: bank subsidiaries, non-bank issuers approved by the Office of the Comptroller of the Currency (OCC), and state-qualified issuers.

It also bars foreign issuers from operating in the U.S. unless they meet local compliance standards.

Crucially, stablecoins are officially defined as “payment stablecoins,” with strict reserve backing requirements. Issuers must maintain 100% reserves in the form of U.S. Treasury bills under 93 days, repos, or demand deposits.

The assets are said to be treated as digital cash for accounting and settlement purposes, but are not considered deposits or securities.

Bernstein also notes the law imposes “bank-level compliance,” including anti-money laundering and know-your-customer rules, and sets high bars for non-financial public companies wishing to issue stablecoins.

Ultimately, Bernstein sees the GENIUS Act as a step toward legitimizing stablecoins as a digital cash infrastructure that integrates directly with capital markets and payment systems.