GENIUS Act

The GENIUS Act creates a comprehensive federal framework for "payment stablecoins" — digital assets an issuer must redeem at a fixed monetary value. Only approved "permitted payment stablecoin issuers" may issue such tokens: these include subsidiaries of insured banks or credit unions, federally chartered nonbank entities licensed by the Office of the Comptroller of the Currency, and state-chartered entities with up to $10 billion in outstanding issuance. Issuers must maintain one-to-one reserves in liquid assets — U.S. currency, Treasury bills with maturities of 93 days or fewer, or government money market funds — and publicly disclose reserve compositions monthly. Issuers are treated as financial institutions under Bank Secrecy Act anti-money laundering rules. Stablecoin holders hold priority claims over required reserves in bankruptcy proceedings.

The law explicitly excludes payment stablecoins from the definitions of "security" and "commodity" under federal securities and commodities laws, removing them from SEC and CFTC jurisdiction. It bars issuers from paying interest or yield to holders, prohibits convicted financial felons from serving as issuer officers or directors, and establishes a registration pathway for foreign issuers whose home jurisdictions the Treasury Department certifies have comparable regulatory regimes. Non-financial public companies seeking to issue stablecoins must obtain unanimous approval from a newly created Stablecoin Certification Review Committee.

Current and prospective stablecoin issuers — including bank subsidiaries, credit unions, and nonbank fintech companies — that must obtain regulatory approval or exit the market. Digital asset service providers that exchange or trade stablecoins. Consumers and businesses holding payment stablecoins, who gain reserve-backed protections and bankruptcy priority. State financial regulators that may establish certified frameworks. Foreign issuers seeking access to U.S. customers.

Issuers that operate without approval face criminal penalties of up to $1 million per violation and five years imprisonment. Consumers gain assurance that stablecoins are backed dollar-for-dollar by safe assets and hold first-priority claims over those reserves in any insolvency. Financial institutions and fintech companies gain clear legal authority to engage in stablecoin activities without risking securities law liability — a question that had deterred bank participation.

Federal regulators — the OCC, Federal Reserve, FDIC, and NCUA — must issue implementing regulations within one year of enactment; the law takes effect on the earlier of 18 months after enactment or 120 days after those regulations are finalized. Applicants for issuer status receive mandatory 120-day review windows, with deemed approval if regulators miss the deadline. States may opt into the framework by obtaining certification from the Stablecoin Certification Review Committee, chaired by the Treasury Secretary, which must act within 30 days of a state submission. FinCEN must conduct public comment and research on anti-money laundering innovation, then issue guidance and rules within three years. Federal regulators report annually to Congress on industry trends and financial stability risks.