Key Takeaways
The GENIUS Act (Guiding and Establishing National Innovation for U.S. Stablecoins Act) is the first U.S. federal law regulating stablecoins.
The legislation establishes a framework for USD-backed payment stablecoins, requiring one-to-one reserves and strict transparency.
The framework strengthens consumer protections and requires compliance with Anti-Money Laundering (AML) and Know Your Customer (KYC) regulations.
The law provides long-awaited regulatory clarity for fintech companies, traditional financial institutions, and blockchain platforms.
What Is the GENIUS Act?
The Guiding and Establishing National Innovation for U.S. Stablecoins Act, also known as the GENIUS Act, is the first federal law in the United States regulating stablecoins. Signed into law on July 18, 2025, the legislation creates a framework to ensure stablecoins are transparent, fully backed, and safely integrated into the U.S. financial system.
Stablecoins are digital assets designed to maintain a stable value by being pegged to reserve assets, typically fiat currencies like the U.S. dollar. They are commonly used for global transfers and on-chain settlement because they combine the programmability of blockchain technology with the stability of traditional currencies.
The GENIUS Act aims to strengthen this market by establishing clear rules for issuers, introducing oversight, and providing consumers with enhanced protection. The law reflects a global trend, as regions like the European Union adopt stablecoin regulations such as MiCA.
Key Components of the GENIUS Act
The GENIUS Act establishes a comprehensive framework for stablecoin issuers, introducing rules that focus on transparency, oversight, and consumer protection in the U.S. market.
Reserve requirements
Stablecoins must be backed 1:1 by safe and highly liquid assets such as U.S. dollars or short-term treasury bills (T-bills). These reserves cannot be used for lending or speculation. To ensure accountability, issuers must publish monthly reports on their reserves, and large issuers with more than 50 billion dollars in circulation must also undergo annual independent audits.
No interest payments
Issuers are not allowed to pay interest or yield directly on stablecoin holdings. This rule is intended to keep stablecoins focused on payments and value transfer, rather than acting like bank deposits or investment products.
Compliance obligations
Both banks and non-bank issuers must follow anti-money laundering (AML), sanctions, and Know Your Customer (KYC) rules under the Bank Secrecy Act. Issuers must also have the technical ability to freeze, seize, or burn tokens when required by lawful orders.
Consumer protections
If an issuer becomes insolvent, stablecoin holders are given priority claims on the reserves before other creditors. The law also sets strict rules on how stablecoins can be marketed, preventing issuers from suggesting they are government-backed, federally insured, or legal tender.
Regulatory oversight
Large issuers will be supervised by federal regulators, such as the Office of the Comptroller of the Currency (OCC), while smaller issuers may continue to operate under state-level oversight. Coordination with agencies, including the U.S. Treasury, the Securities and Exchange Commission (SEC), and the Commodity Futures Trading Commission (CFTC), ensures consistent supervision across the financial system.