GENIUS Act Signed, Creating the First US Federal Framework for Stablecoins

What the Act requires

Under section 3, only a permitted payment stablecoin issuer may issue a payment stablecoin in the United States. Permitted issuers are subsidiaries of insured depository institutions approved under section 5, federal qualified issuers and state qualified issuers. Section 4 requires issuers to hold identifiable reserves on at least a one-to-one basis, limited to assets such as US currency, insured deposits, Treasury bills with a maturity of 93 days or less, qualifying repurchase agreements and government money market funds. Reserves generally may not be rehypothecated.

Issuers must publish their redemption policy and, each month, the composition of their reserves. The monthly report must be examined by a registered public accounting firm and certified by the chief executive and chief financial officer. Issuers with $10 billion or less in outstanding stablecoins may opt into a substantially similar state regime, while larger issuers must move to federal oversight. The definition of payment stablecoin excludes instruments that are securities, and the White House summary notes that issuers are subject to the Bank Secrecy Act and that holders have priority over other creditors on reserve assets if an issuer fails.

Timetable

Section 13 requires the federal and state regulators and the Treasury to issue implementing regulations within one year of enactment. Under section 20, the Act takes effect on the earlier of 18 months after enactment or 120 days after the primary federal regulators issue final regulations. Three years after enactment, digital asset service providers may no longer offer or sell to US persons a payment stablecoin that was not issued by a permitted issuer.

Who is affected

Banks, fintech firms and existing stablecoin issuers serving US users will need to decide which licensing route to pursue and how to meet the reserve, disclosure and compliance requirements. Exchanges and custodians will need to review which stablecoins they can continue to offer once the three-year transition ends.

Sources

• GovInfo: S. 1582 GENIUS Act enrolled bill text
• US Department of the Treasury: Statement from Secretary Bessent on enactment of the GENIUS Act
• The White House: Fact sheet on the signing of the GENIUS Act