Greg Ip’s warning that stablecoins could spark a crisis rests on the assumption they operate without oversight. Congress already curbed that risk with the Genius Act, which sets statutory guardrails for digital payment tokens used by Americans. The law forces issuers to hold a one‑for‑one backing of cash or short‑dated Treasuries, or equivalent liquid securities, separating those reserves from any other corporate assets.

Under the act, stablecoins must be low‑risk reserve assets and kept in segregated accounts audited by strictly independent firms. Federal supervisors can inspect those holdings, ensuring transparency and preventing the kind of balance‑sheet leverage that plagued earlier crypto ventures. By prohibiting any yield‑generating mechanisms, the rule also bans interest‑bearing stablecoins, removing a source of hidden risk.

The regulatory framework leaves little room for the speculative products that some analysts fear could destabilize markets. Crypto firms must redesign token economics to comply, likely shifting capital toward traditional finance partners who can supply the required Treasury backing. Compliance with the Genius Act now defines the operational baseline for U.S. stablecoins, and set compliance costs that investors will monitor closely.