GENIUS Act

The Guiding and Establishing National Innovation for U.S. Stablecoins Act, or GENIUS Act, is a United States federal law that regulates payment stablecoins. Signed by President Donald Trump on 18 July 2025 as Public Law 119-27, it limits issuance to permitted issuers, requires one-to-one reserves in cash and short-term government assets, bars issuers from paying interest to holders, and states that compliant payment stablecoins are not securities or commodities. It takes effect no later than 18 January 2027.¹² Critics in Congress objected that it does not stop the president's family from profiting from its own stablecoin, and banks say it leaves room for exchanges to pay rewards on stablecoin balances.³⁴

BackgroundReport an error

Before the Act, stablecoin issuers in the United States had no federal framework of their own. New York regulated issuers it had licensed, through guidance published on 8 June 2022 that required full reserves and redemption at par.⁵ The two largest dollar stablecoins, USDT and USDC, had each faced questions about their reserves: Tether settled with the New York Attorney General and the Commodity Futures Trading Commission in 2021, and USDC fell to about 86 cents when Silicon Valley Bank failed in March 2023.⁶⁷⁸

Legislative historyReport an error

The Senate first tried to advance the bill on 8 May 2025. The cloture vote failed 48 to 49, short of the 60 needed. Republicans Josh Hawley and Rand Paul voted against it, and Majority Leader John Thune changed his vote to no as a procedural step so that the bill could be brought back. He said Democrats were not "ready to get serious".⁹ Six Democrats who had supported the bill opposed advancing it. Mark Warner said he could not ask colleagues to vote for it "when the text isn't yet finished". Decrypt reported that Democrats also cited anti-money laundering requirements and President Trump's crypto ventures.¹⁰

A new draft followed, which Democrats said included concessions on conflicts of interest, national security, and large technology companies. The bill cleared cloture with more than 60 votes on 19 May, after five of the six Democrats changed their votes. Under that draft, senior executive branch officials could not launch stablecoins, but the president and vice president could.¹¹

The Senate adopted a substitute amendment from Senator Bill Hagerty and passed the bill 68 to 30 on 17 June 2025, with 17 Democrats joining 51 Republicans.¹²¹ Trump urged the House to pass a "clean" bill, while some House members wanted to combine it with market-structure or House stablecoin legislation.¹³ During the Republican leadership's "Crypto Week", holdouts in the party delayed procedural votes.¹⁴ The House passed the Senate text unamended on 17 July, by 308 to 122, and Trump signed it the next day.¹²¹⁵

ProvisionsReport an error

Who can issue

Section 3 makes it unlawful for anyone other than a permitted payment stablecoin issuer to issue a payment stablecoin in the United States. Knowing participation in a violation carries a fine of up to US$1 million per violation, up to five years in prison, or both.¹

A payment stablecoin is a digital asset used or designed to be used for payment or settlement, whose issuer is obligated to redeem it for a fixed amount of monetary value and represents that it will hold a stable value. The definition excludes national currencies, deposits, and securities.¹

Permitted issuers fall into three groups: subsidiaries of insured depository institutions, federal qualified issuers, and state qualified issuers. A state qualified issuer with up to US$10 billion outstanding may stay under a state regime if that regime is substantially similar to the federal framework. Above that level it must move to federal oversight within 360 days or stop issuing until it falls back under the limit.¹

Reserves and disclosure

Issuers must hold identifiable reserves of at least one to one. Eligible assets are:¹

• US coins and currency, and balances at a Federal Reserve Bank
• deposits at insured depository institutions
• Treasury bills, notes, and bonds with 93 days or less to maturity
• overnight repurchase and reverse repurchase agreements on Treasury collateral
• shares of registered government money market funds that invest only in those assets
• other similarly liquid federal government assets approved by a regulator
• tokenised forms of the eligible assets

Reserves generally may not be pledged, rehypothecated, or reused. Issuers must publish their redemption policy and fees, and must publish the composition of their reserves every month. A registered public accounting firm must examine that report each month, and the chief executive and chief financial officer must certify it, with criminal penalties for a knowingly false certification. Issuers with more than US$50 billion outstanding that do not already file with the SEC must publish audited annual financial statements.¹

Interest

Section 4 states that no permitted or foreign issuer may pay a holder "any form of interest or yield (whether in cash, tokens, or other consideration) solely in connection with the holding, use, or retention of such payment stablecoin".¹ The provision names issuers, which is the basis of the dispute over rewards.

Activities and technology companies

Issuers may only issue and redeem stablecoins, manage reserves, provide custody, and carry out activities that directly support those functions. They may not make services conditional on buying another product. A public company not predominantly engaged in financial activities may issue only with a unanimous finding of the Stablecoin Certification Review Committee, which comprises the Treasury Secretary, the Federal Reserve chair or vice chair for supervision, and the FDIC chair. The company must also agree to limits on using transaction data for advertising.¹

Money laundering, sanctions, and freezing

Issuers are treated as financial institutions under the Bank Secrecy Act and must run anti-money laundering and sanctions programs. They must have the technical ability to block, freeze, and reject transactions and to comply with lawful orders.¹

Insolvency and legal status

Holders have priority over all other claimants to required reserves if an issuer fails. Any shortfall ranks first against the estate, to the extent that compliance would have required more reserves.¹ Section 17 amends the securities and commodities laws so that a payment stablecoin from a permitted issuer is neither a security nor a commodity.¹

Foreign issuers and sales

From three years after enactment, a digital asset service provider may not offer or sell a payment stablecoin to a person in the United States unless a permitted issuer issued it. That date is 18 July 2028.¹¹⁶

Section 18 exempts a foreign issuer if Treasury finds its home regime comparable, it registers with the Comptroller, and it keeps enough reserves at a US financial institution to meet US customers' liquidity needs. A foreign issuer's coin may be offered in the United States only if the issuer can comply with lawful orders. The prohibition does not cover direct transfers between individuals or self-custody wallets.¹

Algorithmic and other stablecoins

The Act requires Treasury to study non-payment stablecoins, including endogenously collateralised coins that rely solely on another digital asset from the same originator, and to report within 365 days.¹

ImplementationReport an error

Section 13 required regulators to issue rules within one year of enactment. The Act takes effect on the earlier of 18 months after enactment or 120 days after regulators issue final rules.¹ Treasury asked for public comment on 19 September 2025. Proposals followed from the Federal Deposit Insurance Corporation (FDIC), the National Credit Union Administration (NCUA), the Office of the Comptroller of the Currency (OCC), and Treasury:²

The OCC issued a final rule on 21 October 2026, after the one-year deadline, effective 18 January 2027. WilmerHale describes it as the first final rule from a federal banking agency. Compared with the March proposal, it dropped a rebuttable presumption on prohibited yield, cut the daily liquidity floor from 10% to 5%, and removed a requirement for large issuers to hold insured deposits. It keeps a US$5 million minimum capital floor and two-business-day redemption, and requires notice to the OCC within 24 hours if redemption requests pass 10% of outstanding value in 24 hours. Approved issuers are not grandfathered.¹⁷

As of 31 October 2026 this article has not confirmed final rules from Treasury, the FDIC, the NCUA, or the Federal Reserve.

CriticismReport an error

Conflicts of interest

Senator Elizabeth Warren argued in October 2025 that the law was a "light-touch regulatory framework for crypto banks", and asked Treasury how its rules would be shielded from conflicts of interest tied to President Trump, whose family's World Liberty Financial sponsors the USD1 stablecoin.³ Bartlett Naylor of Public Citizen said lawmakers had "forfeited their opportunity to confront Trump's crypto grift".¹³ The Act says that existing ethics rules bar members of Congress and senior executive branch officials from issuing a payment stablecoin during public service.¹ Decrypt reported that critics say this still leaves the president and vice president, and their families, free to take part in stablecoin ventures.¹³

Stablecoin rewards

The American Bankers Association and 52 other groups wrote to Senate Banking Committee leaders in August 2025, asking Congress to extend the interest ban to exchanges, brokers, dealers, and affiliates. They said "when deposits flow into stablecoins chasing yield, credit creation suffers".⁴ They repeated the request in December 2025.¹⁸ Paul Grewal, chief legal officer of Coinbase, said there was no loophole and described the campaign as an effort to avoid competition.⁴

The dispute moved to market-structure legislation. A May 2026 text of the CLARITY Act barred yield equivalent to bank interest but kept rewards tied to activity. The version the Senate Banking Committee reported in June 2026 would have the SEC, the CFTC, and Treasury write joint rules on the line between them within one year. The bill failed to reach 60 votes in the Senate on 15 September 2026.¹⁹²⁰²¹

Financial stability

Warren said the law lacks safeguards to "ensure that stablecoins don't blow up our entire financial system". The Block reported that Federal Reserve Governor Michael Barr made similar points about regulatory gaps the same month.³ Bank trade groups also raised concerns about state regulation and non-financial companies issuing stablecoins.⁴

EffectsReport an error

Tether announced USAT for the US market in September 2025 and launched it in January 2026 through Anchorage Digital Bank.²²²³ CoinDesk reported in July 2026 that USDT faced the two-year countdown to the sale restriction on US platforms.²⁴ Circle received a national trust charter from the OCC in July 2026, and World Liberty Financial received preliminary conditional approval for one in August 2026.²⁵²⁶

TimelineReport an error

See alsoReport an error

• Stablecoin, the general article and list of stablecoins
• USDC, issued by Circle
• Tether, issuer of USDT and sponsor of USAT
• CLARITY Act, the market-structure bill
• MiCA, the European Union's crypto-asset regulation

ReferencesReport an error