The GENIUS Act Explained: What the Stablecoin Law Requires

What the GENIUS Act is and when it applies

The Guiding and Establishing National Innovation for U.S. Stablecoins Act began as Senate bill S. 1582. It passed the Senate 68 to 30 on 17 June 2025 and the House 308 to 122 on 17 July 2025, with 206 Republicans and 102 Democrats voting yes in the House. The President signed it the next day, making it Public Law 119-27.

The Act takes effect on the earlier of two dates: 18 months after enactment, or 120 days after regulators issue final rules. No final rule arrived early enough to beat the 18-month date, so the operative date is 18 January 2027.

A payment stablecoin, in the Act's definition, is a digital asset used for payment or settlement whose issuer must redeem it for a fixed amount of money and represents that it will hold a stable value. Bank deposits, national currencies and securities are excluded. For background on how these tokens work, see our guide to what a stablecoin is.

Who can issue a payment stablecoin

Section 3 makes it unlawful for anyone other than a permitted payment stablecoin issuer to issue a payment stablecoin in the United States. A permitted issuer must be formed in the US and fall into one of three groups:

• Bank subsidiaries. A subsidiary of an insured bank or credit union, approved by its federal regulator.
• Federal qualified issuers. Nonbank companies, uninsured national banks and federal branches approved by the Office of the Comptroller of the Currency (OCC). Regulators must decide a substantially complete application within 120 days.
• State qualified issuers. Companies chartered under state law. An issuer with $10 billion or less outstanding may stay under a state regime, provided the state certifies to the Stablecoin Certification Review Committee that its rules are substantially similar to the federal framework under principles set by Treasury.

Two further limits apply. A public company that is not mainly in financial services, along with its subsidiaries, may issue only with a unanimous vote of the Stablecoin Certification Review Committee. Foreign issuers face their own tests. Their coins may be sold in the US only if the issuer can, and will, comply with US lawful orders. To be exempt from US licensing, the issuer must also be supervised in a country whose regime Treasury finds comparable, register with the OCC and hold enough reserves at a US financial institution to meet US customers' liquidity needs.

From 18 July 2028, three years after enactment, a digital asset service provider such as an exchange may not offer or sell a payment stablecoin to a person in the US unless it comes from a permitted issuer, subject to those foreign-issuer rules and any Treasury safe harbors.

Reserve, disclosure and audit rules

Section 4 requires each issuer to hold identifiable reserves of at least $1 for every $1 of tokens outstanding. The permitted reserve assets are:

• US coins and currency, or money held in an account at a Federal Reserve Bank;
• demand deposits at insured banks and insured shares at credit unions;
• Treasury bills, notes or bonds with a remaining maturity of 93 days or less, or issued with that maturity;
• overnight repurchase agreements backed by Treasury bills of 93 days or less, and overnight reverse repurchase agreements collateralised by Treasuries;
• government money market funds invested only in the assets above;
• other similarly liquid federal government assets a regulator approves, and tokenised versions of the eligible assets.

Corporate bonds, commercial paper, gold and other digital assets are not on the list, and Treasury securities count only inside the 93-day maturity limit. Reserves may not be pledged, rehypothecated or reused, apart from narrow exceptions for margin, custody and short-term repo to meet redemptions.

Section 4 also sets these disclosure and audit duties:

• Monthly reserve report. Published on the issuer's website, showing tokens outstanding and the amount and composition of reserves, including average tenor and where each category is held in custody.
• Monthly examination. Each report must be examined by a registered public accounting firm.
• Executive certification. The chief executive and chief financial officer certify the report to the regulator each month. A knowingly false certification carries the criminal penalties in 18 U.S.C. 1350(c), the Sarbanes-Oxley provision for false certifications of company financial reports.
• Annual audit. An issuer with more than $50 billion outstanding that does not already file reports with the SEC must prepare audited annual financial statements.
• Redemption terms. Issuers must publish a redemption policy with clear procedures and all fees, and give at least 7 days' notice before changing fees.

Regulators must also set capital, liquidity and risk management standards tailored to issuers. Those standards are part of the rules still being written.

What holders get, and what they give up

The Act gives holders a priority claim. If a permitted issuer fails, holders' claims on the required reserves rank ahead of the issuer and every other creditor, and are paid ratably among holders.

It also sets limits that apply to every holder:

• No interest. No permitted or foreign issuer may pay holders "any form of interest or yield" solely for holding, using or keeping the token. The ban covers issuers; rewards paid by exchanges are the subject of the pending CLARITY Act.
• No government guarantee. Payment stablecoins are not backed by the full faith and credit of the United States and are not covered by FDIC or credit union share insurance. Issuers may not market them as legal tender or as issued or guaranteed by the government.
• Freezes on lawful order. An issuer may issue only if it has the technical ability to comply with lawful orders, which the Act defines to include orders to seize, freeze, burn or block the transfer of tokens.
• Bank Secrecy Act coverage. Issuers are treated as financial institutions for money laundering and sanctions laws, with customer identification, suspicious activity monitoring and the ability to block impermissible transactions.

The trade is a clearer legal claim and stricter reserves in exchange for bank-style monitoring duties and no yield from the issuer. A payment stablecoin from a permitted issuer is also excluded from the definition of a security under the federal securities laws.

Where the rulemaking stands

Section 13 gave regulators and Treasury until 18 July 2026 to issue implementing rules. None had a final rule by that date. Of the 15 GENIUS Act rulemakings our tracker follows in the Federal Register, one is final, one is an interim final rule and 13 remain at the proposal stage, including Treasury's advance notice from September 2025.

The Federal Reserve and Treasury comment periods close on 30 November 2026, so more final rules could arrive close to, or after, the 18 January 2027 start date. Our CBDC and stablecoin tracker updates this list from the Federal Register.

What it means for the dollar and Treasuries

The reserve list ties every regulated stablecoin to cash, bank deposits and short-term government debt. Executive Order 14178 of 23 January 2025 makes that an explicit policy goal: agencies are to "promote the development and growth of lawful and legitimate dollar-backed stablecoins worldwide." Dollar-pegged coins already made up 99.4% of the $303.3 billion stablecoin supply on 27 October 2026, according to DefiLlama.

The Treasury market is the main channel. A presentation to the Treasury Borrowing Advisory Committee in April 2025 estimated that stablecoin issuers then held more than $120 billion of Treasury bills, and said the market had the potential to reach about $2 trillion by 2028. For scale, marketable Treasury bills outstanding totalled $7.12 trillion on 30 September 2026. If the whole current stablecoin supply were held in bills it would amount to 4.3% of that stock. Supply has not grown over the past year: it was $306.8 billion on 27 October 2025.

The same presentation examined the other side: how far stablecoin growth could draw money out of bank deposits, which it said may depend on whether stablecoins pay yield. That question is still open in Congress. The Senate Banking Committee's version of the CLARITY Act would extend the interest ban to exchanges and their affiliates, stating as the sense of Congress that interest-like payments on stablecoin balances may inhibit the key functions of banks.

A regulated issuer's reserve dollars end up as cash, bank deposits or short-term loans to the federal government. Our national debt clock tracks the borrowing side.