Key Takeaways
- On July 18, 2025, President Trump signed into law the GENIUS Act (S.1582). This landmark legislation—unchanged from the version passed by the Senate on June 17, 2025—sets forth a new federal regulatory framework for the issuance of payment stablecoins.
- The Act requires promulgation of approximately eighteen regulations within a relatively limited timeframe.
- Our summary chart describing these prospective regulations.
- Regulatory proposals will be subject to public notice and comment processes; interested stakeholders have a unique opportunity to provide input as these regulations are proposed.
Introduction
On July 18, 2025, President Trump signed into law S. 1582, the Guiding and Establishing National Innovation for U.S. Stablecoins Act (the “GENIUS Act” or the “Act”). The Act covers payment stablecoins[1]—a relatively new form of digital money, issued and transferred onchain, and pegged to a fiat currency. The Act will likely take effect, at the earliest, during the first quarter of 2027.
As detailed below, the GENIUS Act establishes a national regulatory framework for issuance of U.S. payment stablecoins (which it generally defines as digital assets issued for payment or settlement and redeemable at a predetermined fixed amount (e.g., $1)). Issuers will be required to hold at least one dollar of permitted reserves (e.g., insured deposits, short-term U.S. Treasuries, reverse repo agreements, government money market funds) for every one dollar of issued stablecoins.
Issuers’ activities will be limited to issuance, redemption, managing stablecoin reserves, providing custodial or safekeeping services (for stablecoins, required reserves, or private keys), and other associated activities.
The Act also sets up a two-tiered regulatory framework across federal and state regulators for stablecoin issuance. For example, a nonbank issuer with under $10 billion in total outstanding issuance could opt into a state regulatory regime, but one that grows above that threshold will be subject to federal supervision (unless they are granted a waiver).[2]
Only U.S. entities that are “permitted payment stablecoin issuers” (PPSIs) will be able to issue payment stablecoins. These include (i) subsidiaries of insured depository institutions or credit unions; (ii) nonbanks, uninsured national banks, and federal branches approved by the Office of the Comptroller of the Currency (OCC); and (iii) and any nonbank entity approved by a state qualified payment stablecoin regulator that is certified by the U.S. Treasury.
The Act prohibits non-financial services public companies, and their wholly or majority‑owned subsidiaries or affiliates, from issuing stablecoins unless such companies meet various requirements (e.g., they demonstrate that they will not pose a material risk to the safety and soundness of the U.S. banking system, the financial stability of the United States, or the Federal Deposit Insurance Corporation (FDIC)’s deposit insurance fund). Non-financial services public companies must obtain a unanimous vote of the special stablecoin certification review committee (SCRC),[3] which is chaired by the U.S. Treasury Secretary and comprised of the chairs of the Board of Governors of the Federal Reserve System and the FDIC.
Now that the GENIUS Act is signed into law, there will be extensive opportunity for interested parties to comment as regulators propose approximately eighteen different rules to implement the Act. Below we summarize key provisions.
Key Provisions
Definitions
The GENIUS Act defines the term “payment stablecoin” as a digital asset (digital representation of value) that is, or is designed to be, used as a means of payment or settlement and that the issuer:
- Is obligated to convert, redeem, or repurchase for a fixed monetary value;
- Represents that the issuer will maintain, or create the reasonable expectation that it will maintain, a stable value relative to the value of a fixed monetary value.
This definition does not include a digital asset that is a national currency, a deposit, or a security.[4] Additionally, payment stablecoins issued by a PPSI are specifically excluded from the definitions of “security” and “commodity” under the federal securities and commodities laws, respectively.[5]
A PPSI is a person formed in the United States that is:
- a subsidiary of an insured depository institution (IDI) that has been approved to issue payment stablecoins;
- a federal qualified payment stablecoin issuer; or
- a state qualified payment stablecoin issuer.[6]
A “federal qualified payment stablecoin issuer” is (i) a nonbank approved by the OCC; (ii) an uninsured national bank chartered and approved by the OCC; or (iii) a federal branch approved by the OCC.[7]
No PPSI or foreign payment stablecoin issuer can pay the holder of any stablecoin any form of interest or yield (whether in cash, tokens, or other consideration) solely in connection with the holding, use, or retention of the stablecoin.[8]
A “state qualified payment stablecoin issuer” is legally established under the laws of a state and approved to issue stablecoins by a state payment stablecoin regulator, and is not an uninsured national bank chartered by the OCC, a federal branch, an IDI, or a subsidiary of such national bank, federal branch, or IDI.
A “state payment stablecoin regulator” must have a state regulatory regime that is “substantially similar” to the federal regulatory framework, as certified by the U.S. Treasury.[9]
Beginning three years after enactment, the Act prohibits the offer or sale of a payment stablecoin by a digital asset service provider other than a PPSI.[10] Knowing violations of the GENIUS Act could result in fines of not more than $1 million for each violation, imprisonment for not more than five years, or both.[11]
Reserve Requirements
A PPSI must maintain identifiable reserves backing the outstanding payment stablecoins on at least a 1:1 basis, and reserves must be comprised of specific assets such as bank deposits, short-term U.S. Treasuries, repurchase agreements backed by U.S. Treasuries, and money market funds.[12]
Audited Financial Statements
Issuers above a total consolidated issuance of $50 billion will be required to prepare an annual financial statement—audited by a registered public accounting firm, in accordance with all applicable Public Company Accounting Oversight Board auditing standards—which must disclose any related party transactions, as defined by GAAP.[13] Each PPSI required to prepare an annual audited financial statement is also required to make its audited financial statements publicly available on its website, and annually report them to their primary federal payment stablecoin regulator.
Redemption Policy
A PPSI must publicly disclose clear and conspicuous procedures for timely redemption of outstanding payment stablecoins and all fees associated with purchasing or redeeming payment stablecoins, and must publish the monthly composition of reserves online.[14]
Applicability of the Bank Secrecy Act and Anti-Money Laundering Requirements
Issuers will be subject to the Bank Secrecy Act (BSA), and the Financial Crimes Enforcement Network (FinCEN) is required to write tailored anti-money-laundering (AML) rules (see chart). Among other things, the Act requires issuers to certify that they have implemented AML and sanctions compliance programs and prohibits anyone who has been convicted of certain financial crimes from being an officer or director of an issuer.[15]
Capital, Liquidity, and Risk Management Requirements
Capital, liquidity, and risk management requirements will be tailored to PPSI business models and risk profiles, and will include reserve asset diversification, interest rate risk management standards, operational compliance and IT risk management principles, and BSA and sanctions standards that are tailored to entity size and complexity.[16]
Federal regulators will also modify existing capital standards to comply with leverage capital requirements or risk-based capital requirements.
Consumer Protections
A PPSI may not use any deceptive names that might imply any relation to the U.S. government or otherwise market a payment stablecoin in such a way that a reasonable person would perceive it to be U.S. legal tender, issued by the U.S. government, or guaranteed by the U.S. government.[17]
Effective Date
The GENIUS Act takes effect on the earlier of eighteen months after its enactment or one hundred and twenty days after the date that the primary federal payment stablecoin regulator issues final regulations implementing its provisions.[18] At the earliest, the effective date will likely occur in Q1 2027.
What Comes Next
The GENIUS Act requires an extensive rulemaking process including at least eighteen different rules from the federal and state regulators, issued within one to two years after enactment. This chart outlines the rulemaking process to implement the Act:
We expect opportunities for a wide range of stakeholders to engage on these rulemakings as each proposed rule is required to be published for notice and comment.[19]
More broadly, as the United States and other countries develop digital asset regulatory frameworks in parallel—including for stablecoins—there is risk of market fragmentation. In order to help ensure a level playing field for stablecoins, the U.S. Treasury will determine the extent to which other jurisdictions must have “comparable” frameworks with the Act—e.g., consistent reserve requirements; adequate anti-money laundering and countering financing of terrorism (AML/CFT) programs and sanction compliance standards; and adequate supervisory and enforcement capacity to facilitate international transactions and interoperability with U.S. dollar-denominated stablecoins.[20]
We will be monitoring these broader cross-developments and future bilateral engagement closely.
[1] All references to “stablecoins” refer only to “payment stablecoins,” as this term is defined in the Act.
[2] See Sec. 4(c)(1), (d).
[3] See Sec. 2(27).
[4] See Sec. 2(22).
[5] See Sec. 17.
[6] See Sec. 2(23).
[7] See Sec. 2(11).
[8] See Sec. 4(a)(11).
[9] See Secs. 2(23), 4(c)-(d).
[10] See Secs. 2(23), 3(a), (b).
[11] See Sec. 3(f).
[12] See Sec. 4(a)(1)(A).
[13] See Sec. 4(a)(10).
[14] See Sec. 4(a)(1)(B), (C).
[15] See Secs. 4(a)(5), 4(f), 5(i).
[16] See Sec. 4(a)(4), (5).
[17] See Sec. 4(a)(9).
[18] See Sec. 20.
[19] See Sec. 13(a).
[20] See Sec. 18(b)(1).
[View source.]
