GENIUS Act

The Guiding and Establishing National Innovation for U.S. Stablecoins Act, or the GENIUS Act, creates a regulatory framework for payment stablecoins, aiming to foster innovation while ensuring financial stability and consumer protection. It restricts the issuance of payment stablecoins in the United States to only "permitted payment stablecoin issuers," which include subsidiaries of insured depository institutions, Federal qualified payment stablecoin issuers, and State qualified payment stablecoin issuers. A core requirement for permitted issuers is maintaining 1:1 reserves of highly liquid assets, such as U.S. currency, Federal Reserve deposits, or short-term Treasury bills. Issuers must also publicly disclose their redemption policies, including clear procedures and associated fees, and publish monthly reports detailing their reserve composition. These reports must be certified by the issuer's CEO and CFO and examined by a registered public accounting firm, with criminal penalties for false certifications. The Act subjects permitted payment stablecoin issuers to comprehensive regulatory oversight, including tailored capital, liquidity, and risk management requirements issued by primary Federal and State regulators. Crucially, these issuers are treated as financial institutions under the Bank Secrecy Act , necessitating robust anti-money laundering (AML), customer identification, and sanctions compliance programs. The Secretary of the Treasury is tasked with issuing tailored rules to implement these AML provisions and coordinating with issuers to ensure compliance with lawful orders. The legislation outlines a dual regulatory path, allowing State qualified payment stablecoin issuers with less than $10 billion in outstanding stablecoins to operate under State-level regimes deemed "substantially similar" to the Federal framework. However, larger State issuers must transition to Federal oversight or cease new issuance, though waivers are possible under specific conditions. A Stablecoin Certification Review Committee , comprising the Secretary of the Treasury, the Chair of the Federal Reserve Board, and the Chair of the FDIC, is established to review and approve State regulatory regimes. Significantly, the Act amends various securities and commodities laws to clarify that payment stablecoins issued by permitted issuers are not considered securities or commodities , and permitted issuers are not investment companies. It also introduces specific insolvency protections , granting stablecoin holders priority claims over required reserves in the event of an issuer's insolvency and excluding these reserves from the bankruptcy estate. For foreign payment stablecoin issuers, the Act prohibits their public offering or sale in the U.S. unless their home jurisdiction's regulatory regime is deemed comparable to the U.S. framework by the Treasury Secretary, they register with the Comptroller, and they hold sufficient U.S. reserves. The Treasury can designate non-compliant foreign issuers and prohibit secondary trading. The Act also mandates Treasury research and rulemaking on innovative AML methods for digital assets, including standards for monitoring transactions and identifying illicit activity. Finally, the bill clarifies that regulated banking institutions can engage in payment stablecoin activities, including issuing digital assets representing deposits and providing custody services, without these custodial assets being treated as liabilities on their balance sheets. Federal regulators are directed to review and amend existing guidance to reflect these authorizations, and the Act calls for the development of interoperability standards for stablecoin issuers.