Stablecoins and the Role for ACH

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There's a lot of talk lately about stablecoins, especially after the GENIUS Act was signed into law in July. But just what is stablecoin? And where does ACH fit in?

The GENIUS (Guiding and Establishing National Innovation for U.S. Stablecoins) Act defines a stablecoin as a digital asset designed for payment or settlement. It must be fully backed by fiat currency or other secure reserves, maintaining a fixed value relative to the U.S. dollar. Stablecoin issuers must hold reserves on a 1-to-1 basis and must comply with federal standards, including capital and liquidity requirements, and provide public disclosure of their reserves. According to The Associated Press, stablecoins are "designed to provide an alternative to the volatility of some of the popular cryptocurrencies."

And while stablecoin might be a relatively new word to many Americans, the idea itself isn't.

"Stablecoins have been around for years, so they're not new. What is new is that now there's a law on the federal government's books," said Brad Smith, Nacha Senior Director, Industry Engagement and Advocacy. "The GENIUS Act regulates how stablecoins will be backed, among other things, and that's what's put stablecoins in the spotlight recently. With a legal framework now in existence, it paves the way for much wider acceptance and use of stablecoins."

Clearly, a lot is at stake. So what role does ACH have to play in all of this?

"To buy stablecoin you need an on-ramp to move your dollars over. Conversely, when you sell stablecoin you need an off-ramp to return your dollars to a bank account. ACH is built perfectly for this," said Smith.

"Every single financial institution in the U.S. is capable of handling ACH payments. Fintechs and digital wallets also support ACH," said Smith. "But those are not the only good reasons. Same Day ACH is a logical choice for moving funds in and out of digital wallets because not only is it quick and secure, it's also a very low-cost rail."

While it's still early days for stablecoin as a mainstream fixture in the payments world, that's unlikely to be the case for long. In a July 18 statement following the signing of the GENIUS Act, Treasury Secretary Scott Bessent called stablecoins "a revolution in digital finance" and "a groundbreaking technology" which "will buttress the dollar's status as the global reserve currency." And in a June 17 post on the social platform X, Bessent wrote, "Recent reporting projects that stablecoins could grow into a $3.7 trillion market by the end of the decade. That scenario becomes more likely with passage of the GENIUS Act."

Mark Dixon, Senior Consultant at Nacha Consulting, said enactment of the GENIUS Act is an important milestone for financial institutions.

"With compliance expectations now clear for banks and credit unions, this helps to pave the way for them to explore stablecoin services," said Dixon, who leads the Navigating Through Digital Currencies project team of Nacha's Payment Innovation Alliance. "FIs that get involved in stablecoin sooner, rather than later, may well find themselves at a competitive advantage."

The Navigating Through Digital Payments Project Team has several resources available on its page.

Mark Dixon has a new blog on stablecoins which you can read here.