On July 18, 2025, President Trump signed into law the first major piece of cryptocurrency legislation, the Guiding and Establishing National Innovation for U.S. Stablecoins Act (“GENIUS Act”).1 The legislation, which creates a federal framework for the issuance, operation, and regulation of stablecoins in the United States, ultimately won strong bipartisan votes in both the House and Senate.2
While stablecoin legislation has been a vocal priority for the White House and Republican lawmakers throughout 2025, bipartisan support for the Act demonstrates consensus among lawmakers on the regulation of this important corner of digital assets markets in the United States.3
The GENIUS Act’s passage reflects a strong federal interest in establishing new regulatory frameworks for cryptocurrencies. It also represents the ongoing shift from an era of enforcement —which created barriers to digital asset adoption and use in the United States—to a rules- based approach under the current Congress and Trump administration that is supportive of growing the digital assets industry. And while this first landmark bill has now passed into law, at least two other high-profile crypto-related bills remain the subject of debate in Congress and progress is anticipated in the coming months.
This client alert provides a summary of how the GENIUS Act came together this year, before summarizing the law’s key provisions. Finally, we describe the latest prospects for other potential legislative changes in the digital asset space, including the House’s recent passage of a bill aiming to define a broader regulatory framework for digital assets.
Evolution of The Genius Act
The GENIUS Act was introduced in February by Senate Banking Committee member Bill Hagerty (R-TN), alongside Committee Chairman Tim Scott (R-SC), as well as Senators Cynthia Lummis (R-WY) and Kirsten Gillibrand (D-NY) who have worked together on other crypto- related bills in recent years.4 As we discussed in an earlier client alert, when the GENIUS Act was first introduced, it was one of three leading bills on the subject. While the Senate Banking Committee considered the GENIUS Act, the House Financial Services Committee, chaired by Representative French Hill (R-AR), advanced similar stablecoin legislation in the form of the Stablecoin Transparency and Accountability for a Better Ledger Economy Act (“STABLE” Act).5 The lead Democrat on the House Financial Services Committee, Representative Maxine Waters (D-CA), also circulated draft legislation on the topic.6 While the three bills differed on some points, they overlapped on many key aspects (e.g., definitions, consumer protections, a dual-banking system framework, and enforcement scope). This overlap led us to predict in February that stablecoin legislation could progress quickly. Ultimately, that is what happened. Both the House and Senate were determined to pass the GENIUS Act to avoid the risk of further delay in establishing a regulatory framework for stablecoins in the United States.
Key Provisions
While the GENIUS Act’s original core provisions survived debate in the Senate and successful votes in both chambers, several additions and amendments were made as the bill progressed. This section highlights both the core provisions and the changes made prior to the bill becoming law.
“Payment Stablecoins” Defined
The GENIUS Act defines a payment stablecoin as a digital asset designed to be used as a means of payment or settlement and whose issuer is required to convert, redeem, or repurchase the asset for a fixed monetary value or represent that the asset will maintain a stable value relative to a fixed monetary value.7 This definition specifically excludes digital assets that are national currencies, deposits, or securities,8 and balances concerns about the riskiness of digital assets by imposing fixed value requirements.
Federal and State Regulatory Authority
The GENIUS Act mimics the existing dual-banking system and requires the balancing of federal and state regulatory authority.9 Specifically, the GENIUS Act provides issuers with an “option” for state-level regulation, notwithstanding the federal regulatory framework, for issuers with total market capitalization of less than $10 billion, provided that the state-level regime is “substantially similar” to the federal regulatory framework.10
Applications to Become a Stablecoin Issuer
Under the GENIUS Act, federal regulators will consider the following factors when evaluating applications to issue payment stablecoins for both non-bank and insured depository institution entities:
- The applicant’s ability to comply with the Act, based on their financial condition and resources;
- Whether any officer or director of the applicant has been convicted of a felony involving financial crimes, including insider trading, embezzlement, cybercrime, money laundering, terrorism financing, or financial fraud;
- The competence, experience, and integrity of the officers, directors, and principal shareholders of the applicant;
- how the applicant’s redemption policy complies with other provisions under the Act; and
- “Any other factors” the primary federal payment stablecoin regulator considers “necessary to ensure the safety and soundness” of the issuer.11
The GENIUS Act also provides applicants who have had their applications denied an opportunity for a written or oral hearing before the primary federal payment stablecoin regulator to appeal the denial.12 Applicants wishing to appeal the denial must make a request for a hearing within 30 days of receiving notice that their application was denied.
Reserve Requirements
Stablecoin issuers will be required to establish one-to-one reserves13 and will be prohibited from rehypothecating reserves, meaning that they cannot use a client’s reserves as collateral for their own borrowing or trading.14
The GENIUS Act stipulates that stablecoin issuers are considered financial institutions under the Bank Secrecy Act.15 The Act also contains segregation requirements preventing commingling of payment stablecoins, private keys, cash, and other customer property with the issuer’s funds.16 The new law also explicitly prioritizes recovery for customers holding an issuer’s payment stablecoins in any insolvency proceeding against the issuer.17
Redemption Policies
The GENIUS Act further requires issuers to publicly disclose their redemption policies, which must establish “clear and conspicuous” procedures for “timely” redemption of outstanding payment stablecoins. The Act does not, however, define what constitutes a “timely” redemption.18
Limits on Issuer Activities
The Act also limits issuer activities to those that directly support the issuance and redemption of payment stablecoins and prevent issuers from performing other depository functions, such as lending.19
Officer and Director Backgrounds
The GENIUS Act prohibits an individual who has been convicted of a felony involving financials crimes, including insider trading, embezzlement, cybercrime, money laundering, terrorism financing, or financial fraud, from serving as an officer or director of a payment stablecoin issuer.20
Enforcement
The GENIUS Act permits the primary federal regulator, as defined in in Sec. 2(25), to revoke or suspend an issuer’s registration based on a determination that the issuer “willfully or recklessly” violated the Act or violated a condition of a written agreement with the regulator.21 The Act also permits the federal regulator to issue a cease-and-desist order or to take affirmative action to correct violations through both criminal and civil monetary penalties.22 Indeed, the Act authorizes the regulator to remove a party from their position at the issuer or prohibit participation for both direct and indirect violations of the Act.23
Endogenously Collateralized Stablecoins
The GENIUS Act requires the U.S. Department of the Treasury (“Treasury”), in consultation with the Federal Reserve Board, the Office of the Comptroller of the Currency, the Federal Deposit Insurance Corporation, the Securities and Exchange Commission (“SEC”), and the Commodity Futures Trading Commission (“CFTC”), to conduct a study and issue a report on endogenously collateralized stablecoins within one year of enactment.24 An endogenously collateralized stablecoin is a digital asset that the originator will convert, redeem, or repurchase for a fixed monetary value and that relies solely on the value of another digital asset created or maintained by the same originator to maintain the fixed price.25
Extraterritoriality
The GENIUS Act makes it unlawful for a digital asset service provider to offer or sell a payment stablecoin to a person in the U.S., unless it is issued by an issuer.26 This is one of several provisions added in recent months that borrows from draft legislation originally published by House Democrats. Similarly, digital asset providers are prohibited from offering, selling, or making available in the U.S. a payment stablecoin issued by a foreign payment stablecoin issuer, unless the foreign issuer “has the technological capability to comply, and will comply, with the terms of any lawful order and any reciprocal arrangement” provided for by Section 18 of the Act.27
The Act allows for up to $1,000,000, and imprisonment of up to five years for knowingly participating in a violation of this section.28
This section of the Act also allows Treasury to issue regulations providing limited safe harbors that are consistent with the Act’s purposes and apply to a “de minimis volume” of transactions.29 Additionally, the Act outlines a process for Treasury to provide limited safe harbors upon a determination that “unusual and exigent circumstances exist.”30 To provide limited safe harbors in unusual and exigent circumstances, Treasury must submit a justification for the determination of such circumstances to the Senate Banking Committee and the House Committee on Financial Services.31
Additional Legislation
As part of the what Republican lawmakers dubbed “Crypto Week,” the House of Representatives passed two additional crypto-related bills this month.
The Digital Asset Market Clarity Act of 2025 (“CLARITY Act”) passed the house by a vote of 294-134 and outlines a broader regulatory framework for digital assets.32 The CLARITY Act delineates the roles of the CFTC and SEC in regulating these assets and it introduces registration and compliance rules for digital commodity exchanges, brokers, and dealers.33
A third bill, the CBDC Anti-Surveillance State Act (“Anti-CBDC Act”), seeks to prohibit the Federal Reserve from issuing its own central bank digital currency, either directly or indirectly.34 It passed the House by a narrower margin of 219-210, with just two Democrats voting in support.
The CLARITY Act and the Anti-CBDC Act now await Senate action, although it remains to be seen whether either will move as quickly as the stablecoin legislation. A Senate Banking Committee hearing held on July 9, 2025 highlighted the lingering Senate disagreements over crypto market structure legislation.35 Yet on July 22, 2025, Senate Committee on Banking, Housing, and Urban Affairs Chairman Tim Scott (R-S.C.), Subcommittee on Digital Assets Chair Cynthia Lummis (R-Wyo.), Senator Bill Hagerty (R-Tenn.), and Senator Bernie Moreno (R-Ohio) released a discussion draft building on the CLARITY Act.36 Chairman Scott and his colleagues also issued a Request for Information for stakeholders to submit feedback on the discussion draft and on a number of questions.37 Meanwhile, support for the Anti-CBDC Act appears to be split along party lines and Senate questions remain about central bank digital currencies.
Looking Forward
The GENIUS Act’s passage checks off a major policy priority for the Trump Administration and reflects the beginnings of regulatory clarity that cryptocurrency advocates have long argued will bring the asset class into the mainstream. Likewise, the House’s passage of both the CLARITY Act and Anti-CBDC Act, as well as the Senate Banking Committee’s discussion draft of digital asset market structure legislation, demonstrate the continued momentum for regulatory clarity in the digital asset space. While the bills’ paths may be tougher in the Senate, these recent actions signal a growing Congressional acknowledgment that digital assets are a permanent fixture of the financial landscape, warranting clear rules and oversight.
1Guiding & Establishing National Innovation for U.S. Stablecoins (“GENIUS”) Act of 2025, S. 1582, 119th Cong. (2025) (“GENIUS Act”), available at https://www.congress.gov/bill/119th-congress/senate-bill/1582/text; Kathryn Watson, Trump Signs Landmark GENIUS Act, Hailing “Exciting New Frontier” for Crypto, CBS NEWS (July 18, 2025), https://www.cbsnews.com/news/trump-signs-genius-act-crypto-bill/
2The bill passed in the Senate 68-30 and in the House 308-112. See S.394 - 119th Congress (2025-2026): GENIUS Act of 2025, S.394, 119th Cong. (2025); Guiding & Establishing National Innovation for U.S. Stablecoins (“GENIUS”) Act of 2025, S. 1582, 119th Cong. (2025) (“GENIUS Act”).
3See, e.g., Press Release, Gillibrand Statement On House Passage Of The Genius Act (July 17, 2025), available at https://www.gillibrand.senate.gov/news/press/release/gillibrand-statement-on-house-passage-of-the-genius-act/; Heath Tarbert, It’s Time for the House to Push the GENIUS Act Over the Finish Line, AM. BANKER (June 27, 2025), https://www.americanbanker.com/opinion/its-time-for-the-house- to-push-the-genius-act-over-the-finish-line.
4See Ehren Halse et al., Could Stablecoin Legislation Be Finally Leaving the Stable?, KING & SPALDING (Feb. 18, 2025), https://www.kslaw.com/news-and-insights/could-stablecoin-legislation-be-finally-leaving-the-stable.
5See generally Stablecoin Transparency & Accountability for a Better Ledger Economy (“STABLE”) Act of 2025, H.R. , 119th Cong. (2025) (“STABLE Act”), https://www.congress.gov/bill/119th-congress/house-bill/2392.
6See generally H.R. , 118th Cong. (2024) (“Waters Bill”), available at https://democrats- financialservices.house.gov/uploadedfiles/02.10.25_stable_2024_xml_12.3.24.pdf.
7GENIUS Act § 2(22).
8GENIUS Act § 2(22)(B).
9See Ehren Halse et al., supra note 4.
10GENIUS Act § 4(c)(1).
11GENIUS Act § 5(b)–(c).
12GENIUS Act § 5(d)(2)(C)(i).
13GENIUS Act § 4(a)(1)(A).
14GENIUS Act § 4(a)(2).
15GENIUS Act § 4(a)(5)(A).
16GENIUS Act § 10(c).
17GENIUS Act § 11(a)(1).
18GENIUS Act § 4(a)(1)(B).
19GENIUS Act § 4(a)(7)(A).
20GENIUS Act § 4(f)(1).
21GENIUS Act § 6(b)(1).
22GENIUS Act § 6(b)(2).
23GENIUS Act § 6(b)(3).
24GENIUS Act § 14(a).
25GENIUS Act § 14(b); see also Sen. Hagerty (R-TN) et al., GENIUS Act Section-by-Section, U.S. Senate, https://www.gillibrand.senate.gov/wp- content/uploads/2025/02/GENIUS-Act-Section-by-Section-v3.pdf.
26GENIUS Act § 3(b)(1).
27GENIUS Act § 3(b)(2).
28GENIUS Act § 3(f).
29GENIUS Act § 3(c)(1).
30GENIUS Act § 3(c)(2)(A).
31GENIUS Act § 3(c)(2)(B).
32H.R.3633 - 119th Congress (2025-2026): Digital Asset Market Clarity Act of 2025, H.R.3633, 119th Cong. (2025), https://www.congress.gov/bill/119th-congress/house-bill/3633.
33Id.
34H.R.1919 - 119th Congress (2025-2026): Anti-CBDC Surveillance State Act, H.R.1919, 119th Cong. (2025), https://www.congress.gov/bill/119th- congress/house-bill/1919.
35Compare Majority Press Release, Scott Pushes for Regulatory Clarity in Digital Asset Market Structure Legislation (July 9, 2025), https://www.banking.senate.gov/newsroom/majority/scott-pushes-for-regulatory-clarity-in-digital-asset-market-structure-legislation, with Minority Press Release, At Hearing, Ranking Member Warren Releases Principles for Crypto Market Structure Legislation (July 9, 2025), https://www.banking.senate.gov/newsroom/minority/at-hearing-ranking-member-warren-releases-principles-for-crypto-market-structure-legislation.
36Majority Press Release, Scott, Lummis, Colleagues Release Market Structure Discussion Draft, Issue Request for Information from Stakeholders (July 22, 2025), https://www.banking.senate.gov/newsroom/majority/scott-lummis-colleagues-release-market-structure-discussion-draft-issue-request- for-information-from-stakeholders.
37Id.; see also Senate Bank Committee Digital Asset Market Structure Request for Information, https://www.banking.senate.gov/imo/media/doc/market_structure_rfi.pdf.
