The "Guiding and Establishing National Innovation for U.S. Stablecoins Act," otherwise known as GENIUS, will become law later this Friday when U.S. President Donald Trump signs the first major piece of legislation addressing digital assets.

This is a historic law for the digital assets industry, which has been craving for regulatory clarity for years. But what is it?

The GENIUS bill, which started in the Senate, sets up a regulatory framework to address stablecoins, cryptocurrencies whose values are pegged to the value of another asset — usually the U.S. dollar.

The U.S. dollar stablecoin industry, with a $267 billion market capitalization , is largely dominated by Tether and Circle (CRCL) and primarily used as an intermediate asset for trading or a tool for accessing the U.S. dollar in countries with hyperinflation or other monetary issues.

The GENIUS Act creates a definition for payment through stablecoins . The law assigns the Federal Reserve and the Office of the Comptroller of the Currency — two of the major U.S. bank regulators — tasks overseeing their issuance. The Fed will be tasked with the big bank issuers, while the OCC will oversee nonbank issuers with more than $10 billion in stablecoins. State regulators can still oversee certain issuers above the $10 billion threshold if they meet certain criteria and can secure a waiver.

The bill also defines reserve requirements and creates requirements for issuers to regularly share information about their reserves. The reserves themselves must be in U.S. currency, demand deposits, Treasurys and other "approved assets."

Why does it matter?

Essentially, this law will translate into potentially clear regulatory frameworks for using stablecoins for everyday financial transactions, which is good news for crypto companies and consumers, according to some observers.

"This bill will empower American businesses and consumers and enable them to take advantage of the next iteration of financial innovation," said Kirsten Gillibrand, a longtime Democrat sponsor of stablecoin legislation.

This could also help crypto become more mainstream for the masses, help accelerate further innovation in the financial system, leveraging the blockchain technology.

"This new stablecoin law will help unlock technologies that will transform how value moves around the world, expand access to the financial system, and unlock new economic opportunities for millions. We’re just scratching the surface of what’s possible," said Avery Ching, CEO and co-founder of Aptos Labs.