GENIUS Act Aims to Standardize Stablecoin Rules: New Regulations for Issuers and Users

The GENIUS Act of 2025 (Guiding and Establishing National Innovation for US Stablecoins) sets out to do exactly what it says: create a national framework for "payment stablecoins." These are digital assets pegged to a stable value, like the US dollar, and used for payments or settlements. Think of them as a digital dollar, but issued by private companies, not the government.

Stablecoin Standards

The core of the bill restricts who can issue these digital dollars. Only "permitted payment stablecoin issuers" can play. This includes subsidiaries of insured banks, federally approved nonbank issuers, and state-approved issuers. The goal? Making sure anyone issuing stablecoins is financially sound and playing by the rules.

• Reserve Requirements: Issuers have to back their stablecoins at least 1:1 with safe assets. This means U.S. coins and currency, funds held as demand deposits at insured depository institutions, short-term Treasury bills, repurchase agreements backed by those bills, reverse repurchase agreements collateralized by Treasury notes/bills/bonds, certain money market funds, and central bank reserve deposits. (Section 4)
• Redemption Policies: Companies must clearly spell out how you can cash out your stablecoins and ensure timely redemptions. (Section 4)
• Monthly Reports: Issuers must publicly post monthly reports detailing their reserves and outstanding stablecoins. These reports must be examined by a registered public accounting firm, and CEOs/CFOs must certify their accuracy, facing penalties for false statements. (Section 4)

Who's in Charge?

The GENIUS Act creates a dual-regulatory system. Big banks and credit unions issuing stablecoins through subsidiaries fall under their usual federal regulators. Nonbank issuers get regulated by the Comptroller of the Currency. However, smaller players (under $10 billion market cap) can opt for state regulation, if the state's rules are similar to the federal ones. States have to get certified by the Treasury, and there's a process for review and potential rejection. If a state-regulated issuer hits that $10 billion mark, they have 360 days to switch to federal regulation or stop issuing new stablecoins. (Section 4)

Real-World Rollout

Imagine you're a small business owner accepting stablecoin payments. Under this law, you'd know the stablecoins you're receiving are backed by solid reserves and issued by a regulated entity. Or, if you're a consumer using stablecoins, you'd have more confidence knowing there are rules in place for redemption and transparency. However, if you're a small stablecoin startup, the compliance costs could be a significant hurdle. (Section 5)

Protecting Your Digital Dollars

The bill treats stablecoin issuers as financial institutions under the Bank Secrecy Act, meaning they have to comply with anti-money laundering rules. (Section 4) It also prioritizes stablecoin holders in case of insolvency. If an issuer goes bust, you, as a stablecoin holder, get paid back before other creditors. (Section 9) Businesses offering custodial services (holding your stablecoins or private keys) also face new rules, requiring segregation of customer assets and prohibiting commingling with their own funds. (Section 8)

The Big Picture

The GENIUS Act explicitly states that payment stablecoins are not securities or commodities. (Section 14) This is a big deal, providing clarity for the industry. The bill also pushes for interoperability – making sure different stablecoins can work together seamlessly. (Section 10) Federal regulators have 180 days to issue regulations, and the Act takes effect either 18 months after enactment or 120 days after those regulations are finalized. (Section 16) There's also a provision for waivers of up to 12 months for companies with pending applications to become permitted issuers. (Section 16)

One area the bill doesn't fully address is "endogenously collateralized stablecoins" – those backed by another digital asset created by the same issuer. The Treasury has to study these and report back to Congress within a year. (Section 11) This suggests potential future regulation in that area.