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Crypto Law/Level III · Tokens and securities law/3.2 US rules in motion/Lesson 4

The GENIUS Act: a federal stablecoin law

What the 2025 federal stablecoin statute requires of issuers, what it gives and denies holders, and where its implementing rules stood in October 2026.

Education, not legal, tax or investment advice. Crypto law differs between countries and states and changes often. Check the current rules where you live with a qualified lawyer or tax adviser before you act.

The lean path

The cheapest, lowest-tax, simplest and most private route the law allows, best first. Each step names the rule it rests on and the condition that keeps it lawful.

  1. Holding a payment stablecoin requires no licence; cheapest is a coin from a permitted issuer, redeemed directly at par, with a priority claim on reserves if it fails. The catch: no deposit insurance or federal backing, and the GENIUS Act bars issuer yield on holdings.
  2. Builders should integrate an existing permitted issuer’s coin rather than issue one; only a permitted payment stablecoin issuer may issue in the US under section 3. From 18 July 2028 service providers may not offer non-permitted stablecoins to US persons.
  3. A small issuer can stay under a substantially similar state regime while outstanding issuance is no more than $10 billion, avoiding federal oversight; above that it must transition within 360 days or stop issuing. Bank Secrecy Act duties apply either way.
  4. Timing: the Act takes effect on 18 January 2027 or 120 days after final rules, whichever is earlier; until then only existing state money-transmission and federal law apply. Whether platforms may pay rewards on balances remains open in pending legislation.

MaterialsThe text of Public Law 119-27, the GENIUS Act (S. 1582), on govinfo.gov, especially sections 3, 4, 17 and 20One stablecoin issuer’s latest monthly reserve report, read side by side with section 4(a)(1) of the ActThe Federal Register list of GENIUS Act rulemakings (search ‘payment stablecoin’ on federalregister.gov)

Wonder

  1. Who is allowed to issue a dollar stablecoin in the United States now?
  2. Can a stablecoin holder earn interest, and is the coin insured?
  3. When does the law actually take effect?

Explore

  1. The Guiding and Establishing National Innovation for U.S. Stablecoins Act, or GENIUS Act (S. 1582), passed the Senate 68-30 on 17 June 2025 and the House 308-122 on 17 July, and was signed on 18 July 2025 as Public Law 119-27. It regulates ‘payment stablecoins’: digital assets designed for payment or settlement whose issuer must convert, redeem or repurchase them for a fixed amount of monetary value and which are meant to hold a stable value against that amount. National currencies, bank deposits and securities are excluded from the definition. Lesson 1.2.5 explains stablecoins in general.
  2. Section 3 makes it unlawful for anyone other than a ‘permitted payment stablecoin issuer’ to issue a payment stablecoin in the United States. There are three kinds: a subsidiary of an insured bank approved by its regulator; a ‘Federal qualified’ issuer approved by the Comptroller of the Currency, which can be a nonbank; and a ‘State qualified’ issuer approved by a state regulator. A state issuer with no more than $10 billion outstanding may stay under a state regime that is ‘substantially similar’ to the federal one. Above $10 billion it must either move under federal oversight within 360 days or stop issuing new coins.
  3. Section 4 sets the reserve rules. Coins must be backed at least one-for-one by listed assets: cash, demand deposits at insured institutions, Treasury bills, notes or bonds with 93 days or less to maturity, certain overnight repurchase and reverse repurchase agreements, government money market funds, other approved federal assets, and tokenized versions of these. Reserves generally may not be pledged or reused. Each month the issuer must publish the size and composition of its reserves, and its chief executive and chief financial officers must certify the report’s accuracy to the regulator. The issuer must also publish its redemption policy.
  4. For holders, section 4(a)(11) bars an issuer from paying ‘any form of interest or yield’ solely for holding, using or retaining a payment stablecoin. The Act states that payment stablecoins are not backed by the full faith and credit of the United States and are not covered by federal deposit or share insurance, and it forbids suggesting otherwise. If an issuer fails, holders’ claims have priority over other creditors’ claims to the required reserves. Issuers are treated as financial institutions under the Bank Secrecy Act and must be able to block, freeze and reject transactions and comply with lawful orders (lesson 5.2.3).
  5. Section 17 amends six statutes: the Securities Act of 1933, the Securities Exchange Act of 1934, the Investment Company Act and the Investment Advisers Act of 1940, the Securities Investor Protection Act and the Commodity Exchange Act. Under each, a ‘payment stablecoin issued by a permitted payment stablecoin issuer’ is not a ‘security’ or, for the last, a ‘commodity’. The exclusion depends on the issuer’s permitted status, so a coin from an unapproved issuer does not get it automatically. Whether a platform, rather than an issuer, may pay rewards on stablecoin balances is left open and is being fought over in the market-structure bill (lesson 3.2.5).
  6. Under section 20 the Act takes effect on the earlier of 18 months after enactment, 18 January 2027, or 120 days after the primary federal regulators issue final implementing rules. Regulators had one year to write rules. By October 2026 Treasury, the OCC, the FDIC, the Federal Reserve, the NCUA and FinCEN had published proposals, but none of the primary regulators had published a final rule, so 18 January 2027 is the likely start date. From 18 July 2028, digital asset service providers may not offer non-permitted stablecoins to US persons, subject to an exception for comparably regulated foreign issuers. The EU’s MiCA takes a different route (lesson 3.3.3).

Key facts

  • The GENIUS Act was signed on 18 July 2025 as Public Law 119-27 after passing the Senate 68-30 and the House 308-122.
  • Only a permitted payment stablecoin issuer may issue a payment stablecoin in the United States under section 3 of the Act.
  • A state-qualified issuer may remain under a substantially similar state regime only while its outstanding issuance is no more than $10 billion.
  • Reserves must back payment stablecoins at least one-for-one, and Treasury securities count only with a maturity of 93 days or less.
  • Permitted issuers may not pay holders interest or yield solely for holding, using or retaining a payment stablecoin.
  • The Act takes effect on the earlier of 18 January 2027 or 120 days after the primary federal regulators issue final implementing rules.

Exercise nine, six, three, one

9CollectList up to 9 features of a dollar stablecoin you hold or have studied, such as its issuer, the issuer’s licence, its reserve report, its redemption terms or any rewards offered on it (some lists are shorter).
6ClusterSort them into 6 categories: issuer status, reserve assets, disclosure and attestation, redemption rights, rewards or yield, and freeze or compliance powers.
3DistillReduce the 6 categories to 3 groups: features the GENIUS Act requires, features it forbids, and features it leaves to other rules or to contract.
1CrystallizeWrite 1 sentence explaining, in your own words, what a payment stablecoin holder can and cannot rely on under the GENIUS Act.

Fact check

Dates, figures and claims checked against the published sources listed below.

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