For the first time, the U.S. has passed federal legislation dedicated to establishing a regulatory framework in the cryptocurrency space, as President Trump signed the Guiding and Establishing National Innovation for U.S. Stablecoins (GENIUS) Act into law on July 18, 2025. The Act will impose requirements surrounding the issuance and custody of “payment stablecoins,” a specific category of stablecoins defined in the Act that are intended for use as a means of payment or settlement.
Below, we highlight critical next steps for regulators following passage of the Act. Payment stablecoin issuers, entities providing custodial or safekeeping services for payment stablecoins, and other actors in the stablecoin space should take note of these and plan accordingly.
For a detailed analysis of the requirements of the Act, please see our prior alert. For a broad overview of the paths to issuance available to nonbank companies, please see our recently published GENIUS Act Gameplan.
What Key Rulemakings Will Result from the Act?
The Act grants rulemaking authority to federal and state regulators. Unless otherwise stated in the Act, such rules must be promulgated no later than July 2026.
Other than rules surrounding the application process, which we outline below, rulemakings provided for under the Act that industry participants should take note of are:
- Capital and Liquidity Requirements: The Act requires the primary federal payment stablecoin regulators, and where applicable, state payment stablecoin regulators, to issue regulations implementing capital requirements tailored to the business model and risk profile of payment stablecoin issuers. Additionally, the Act requires the regulators to issue liquidity standards implementing the Act’s requirement for permitted payment stablecoin issuers to maintain identifiable reserves backing outstanding payment stablecoins on a 1 to 1 basis.
- Risk Management: The Act requires the primary federal payment stablecoin regulators, or state payment stablecoin regulators if applicable, to issue operational, compliance, and information technology risk management requirements and standards, including Bank Secrecy Act and sanctions compliance standards, that are tailored to the business model and risk profile of permitted payment stablecoin issuers. From August 2025 to October 2025, the Act requires the Secretary of the Treasury to “seek public comment to identify innovative or novel methods, techniques, or strategies that regulated financial institutions use, or have the potential to use, to detect illicit activity, such as money laundering, involving digital assets.” Finally, the Act requires the primary federal payment stablecoin regulators to issue “reserve asset diversification, including deposit concentration at banking institutions, and interest rate risk management standards” for permitted payment stablecoin issuers.
- Foreign Issuers: For a payment stablecoin issuer governed under the laws of another country to issue payment stablecoins in the U.S., the Secretary of the Treasury, in consultation with the other members of the Stablecoin Certification Review Committee, must determine that the regulatory and supervisory regime in the issuer’s home country is comparable to the one created under the Act. The Act requires the Secretary of the Treasury to issue rules implementing this section and to keep a publicly available current list of foreign countries for which such a determination has been made.
- Nonfinancial Services Public Companies: With respect to “public companies” defined as “an issuer that is required to file reports under section 13(a) or 15(d) of the Securities Exchange Act of 1934,” that are not “predominantly engaged in 1 or more financial activities,” as such activities are defined in the Bank Holding Company Act, the Act imposes an additional layer of process before such companies may issue a payment stablecoin. These companies must first obtain unanimous approval from the Stablecoin Certification Review Committee. The Act requires the Stablecoin Certification Review Committee to issue an interpretive rule clarifying the application of this paragraph of the Act.
- Tying: The Act generally prohibits a permitted payment stablecoin issuer from engaging in “tying,” defined as providing services to a customer on the condition that the customer obtain additional paid products or services from the issuer or any of its subsidiaries or agrees to not obtain any paid product or service from a competitor. The Act states that the Federal Reserve Board, in consultation with the other primary federal payment stablecoin regulators, may by regulation or order permit exceptions to this provision that the Federal Reserve Board considers to not be contrary to the purposes of the Act.
What Key Dates and Timelines Should Industry Actors Be Aware Of?
The Act takes effect on the earlier of 18 months after the date of enactment or the date that is 120 days after the primary federal payment stablecoin regulators issue any final regulations implementing the Act. This means that the latest date that the Act could become effective is January 18, 2027. However, if any of the primary federal payment stablecoin regulators, consisting of the Office of the Comptroller of the Currency (OCC), Federal Deposit Insurance Corporation (FDIC), the Federal Reserve Board, and the National Credit Union Administration, issue final regulations before then, the Act could become effective sooner.
Once the Act takes effect, it will generally be unlawful for any person other than a permitted payment stablecoin issuer to issue a payment stablecoin in the U.S., with violators facing penalties of up to $1 million for each violation. The Act requires each primary federal payment stablecoin regulator to issue regulations establishing an application process for issuers and to begin accepting and processing applications no later than July 2026.1
Some issuers may continue to operate without having obtained licensure even after the effective date. The law permits the primary federal payment stablecoin regulators to waive the application of the requirements of the Act for a period not to exceed 12 months beginning on the effective date of the Act, with respect to “(1) a subsidiary of an insured depository institution, if the insured depository institution has an application pending for the subsidiary to become a permitted payment stablecoin issuer on that effective date; or (2) a Federal qualified payment stablecoin issuer with a pending application on that effective date.”
Moreover, issuers currently regulated by an existing state framework that covers payment stablecoins could continue to operate without seeking federal approval, provided that their consolidated outstanding issuance does not exceed $10 billion in most cases.2 However, this exception is time limited. No later than one year after the effective date of the Act, each state with a regulatory framework covering payment stablecoins will need to submit to the Stablecoin Certification Review Committee, consisting of the Secretary of the Treasury, Chair or Vice Chair for Supervision of the Federal Reserve Board, and Chair of the FDIC, a certification that the state’s regulatory framework is “substantially similar” to the federal one created by the Act. The Act requires the Secretary of the Treasury to issue a rule laying out broad principles for determining whether a state regulatory framework is substantially similar to the federal one.
Within 30 days of each submission, the Stablecoin Certification Review Committee must either approve or deny the state’s certification. For states with a “prudential regulatory regime (including regulations and guidance) for the supervision of digital assets or payment stablecoins” in place by January 2026, the Act provides that the Stablecoin Certification Review Committee shall take “all necessary steps to endeavor that” the certification process takes place on an expedited timeline following the effective date. A state whose request for certification is denied will be given an opportunity to make any changes necessary to its regulatory regime to meet the substantial similarity standard and may ultimately appeal the denial in federal court.
Other digital asset service providers3, including digital asset custodians, will have a longer grace period under the Act. Beginning July 2028, it will be unlawful for a digital asset service provider to offer, sell, or otherwise make available in the U.S. a payment stablecoin that is not issued by a permitted payment stablecoin issuer.
How Might Other Pending Legislation Impact Payment Stablecoins?
The same day as it passed the GENIUS Act, the House of Representatives passed the Digital Asset Market Clarity Act of 2025 (the CLARITY Act), which addresses the broader market structure for listing and trading of digital assets. While the GENIUS Act carves out payment stablecoins from the definitions of a security or a commodity under the federal securities and commodities laws, the CLARITY Act would specify that the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) retain authority over transactions involving payment stablecoins in limited circumstances.
In particular, under the CLARITY Act, the SEC would retain jurisdiction over transactions involving permitted payment stablecoins when brokered, traded, or custodied by or through SEC-regulated entities, national securities exchanges, or alternative trading systems. Likewise, the CFTC would have jurisdiction over transactions involving permitted payment stablecoins only when made on or subject to the rules of a CFTC-registered entity. Attention surrounding market structure legislation now shifts to the Senate, where the Senate Banking Committee has released a discussion draft expanding on the CLARITY Act.
In addition, the recently released Strengthening American Leadership in Digital Financial Technology report by the President’s Working Group on Digital Asset Markets urges federal agencies “to faithfully and expeditiously implement GENIUS, as required by law.” The report specifically recommends that:
- the OCC further clarify the permissibility of banks holding stablecoin reserves as deposits, beyond its interpretive letter issued earlier this year.
- the U.S. Department of the Treasury seek to establish international legal, regulatory, and technical standards and best practices for new payments technologies to promote U.S. leadership in the space.
- The Financial Crimes Enforcement Network reevaluate its existing guidance from 2013 and 2019 on the application of the Bank Secrecy Act to digital assets and consider whether additional guidance would be helpful for particular segments of the digital asset market.
[1] Factors to be considered in the application include: (1) the ability of the applicant (or, in the case of an applicant that is an insured depository institution, the subsidiary of the applicant), based on financial condition and resources, to meet capital, reserve, risk management, and other requirement outlined in the Act; (2) whether an individual who has been convicted of a felony offense involving insider trading, embezzlement, cybercrime, money laundering, financing of terrorism, or financial fraud is serving as an officer or director of the applicant; (3) the competence, experience, and integrity of the officers, directors, and principal shareholders of the applicant, its subsidiaries, and parent company; (4) whether the redemption policy of the applicant meets the standards set out in the Act; (5) any other factors established by the primary federal payment stablecoin regulator that are necessary to ensure the safety and soundness of the permitted payment stablecoin issuer. Once a regulator receives a substantially complete application, it must render a decision on it within 120 days.
[2] “The applicable primary Federal payment stablecoin regulator may permit a State qualified payment stablecoin issuer with a payment stablecoin with a consolidated total outstanding issuance of more than $10,000,000,000 to remain solely supervised by a State payment stablecoin regulator.” The Act states that “the primary Federal payment stablecoin regulator shall consider the following exclusive criteria” when determining whether to issue such a waiver: “(i) The capital maintained by the State qualified payment stablecoin issuer; (ii) the past operations and examination history of the State qualified payment stablecoin issuer; (iii) the experience of the State payment stablecoin regulator in supervising payment stablecoin and digital asset activities; (iv) the supervisory framework, including regulations and guidance, of the State qualified payment stablecoin issuer with respect to payment stablecoins and digital assets.”
[3] “Digital asset service provider” means “a person that, for compensation or profit, engages in the business in the United States (including on behalf of customers or users in the United States) of—(i) exchanging digital assets for monetary value; (ii) exchanging digital assets for other digital assets; (iii) transferring digital assets to a third party; (iv) acting as a digital asset custodian; or (v) participating in financial services relating to digital asset issuance; and (B) does not include—(i) a distributed ledger protocol; (ii) developing, operating, or engaging in the business of developing distributed ledger protocols or self-custodial software interfaces; (iii) an immutable and self-custodial software interface; (iv) developing, operating, or engaging in the business of validating transactions or operating a distributed ledger; or (v) participating in a liquidity pool or other similar mechanism for the provisioning of liquidity for peer-to-peer transactions.”
