How The GENIUS Act Strengthens the Fight Against Crypto Fraud
The GENIUS Act, signed into law on July 18, 2025, marks a turning point in combating cryptocurrency fraud, particularly “pig butchering” scams that exploit stablecoins to steal billions globally. Pig butchering scams are long-term fraud operations where scammers build trust with victims over extended periods—often through fake romantic relationships or casual online interactions—before convincing them to invest in phony cryptocurrency schemes or transfer funds, resulting in substantial financial losses. The term “pig butchering” metaphorically describes how fraudsters “fatten up” their targets with small, trust-building gestures before “slaughtering” them by stealing their money. These scams, often run from Southeast Asia, leverage stablecoins’ stability and cross-border transferability. The Act introduces tools to freeze and recover stolen funds, enhancing protections for consumers and businesses.
The Act designates stablecoin issuers as financial institutions under the Bank Secrecy Act, requiring compliance with anti-money laundering and customer identification rules. This makes stablecoins less appealing to fraudsters. Issuers must also develop technical capabilities to block or freeze illegal transactions, ensuring swift action. Additionally, the Act mandates compliance with U.S. court orders to seize or burn tokens, enabling recovery even from private wallets in civil cases.
Implementation challenges remain. The Act’s rollout extends over 18 months, with full restrictions on noncompliant stablecoins delayed until 2028. Regulators may tailor requirements to avoid stifling innovation, but this could weaken protections. Criminals may shift to noncompliant stablecoins on decentralized exchanges. Despite these hurdles, the GENIUS Act raises costs for scammers and empowers victims, making it a critical step toward a safer crypto ecosystem.
Sabal Law PLLC’s expertise in blockchain, AML / KYC, and securities law helps clients navigate the evolving regulatory landscape of stablecoins and digital assets. We guide businesses and investors through compliance with the GENIUS Act, ensuring robust AML measures and secure transactions. Schedule a Consultation to protect your digital asset ventures and stay compliant with new regulations!
Source: Law360