The GENIUS Act creates the first federal framework for U.S. payment stablecoins. These 10 rules cover licensed issuers, 1:1 reserves, redemptions, yield, state oversight, foreign issuers, AML and crypto platforms.
U.S. stablecoin regulation now has a dedicated federal framework under the GENIUS Act, signed into federal law on July 18, 2025. For stablecoin issuers, digital asset service providers, exchanges and other market participants, the main changes involve licensing, reserve assets, redemption rights, disclosures, state supervision, foreign issuers and anti-money laundering compliance.
Key Takeaways
The GENIUS Act generally restricts U.S. payment stablecoin issuance to permitted payment stablecoin issuers.
Issuers must maintain at least 1-to-1 reserves using qualifying liquid assets and provide redemption rights.
State-qualified issuers with no more than $10 billion outstanding may use an approved state-level regulatory regime.
Foreign issuers face regulatory-comparability, OCC registration and U.S. enforcement requirements.
January 18, 2027 is the expected effective date; digital asset service provider restrictions expand on July 18, 2028.
10 New U.S. Stablecoin Rules Affecting Crypto Markets
Only Permitted Issuers Can Issue Payment Stablecoins
The biggest change is licensing. The GENIUS Act framework generally makes it unlawful to issue payment stablecoins in the United States unless the entity qualifies as a permitted payment stablecoin issuer.
Eligible structures can include subsidiaries of insured depository institutions, qualifying nonbanks and certain credit unions. Federal regulators, including the Federal Reserve Board, OCC, FDIC and NCUA, share responsibilities under the federal regulatory framework.
Stablecoins Need 1-to-1 Reserve Backing
Payment stablecoin issuers must maintain issuer's reserves with a value of at least the fixed monetary value of outstanding stablecoins.
Eligible reserve assets can include U.S. currency, bank deposits, Treasury bills and other qualifying Treasury securities, repurchase agreements, reverse repurchase agreements, government money market funds and permitted cash equivalents. Remaining maturity and counterparty risk restrictions apply to certain assets.
The rule is designed to reduce risks from poorly collateralized crypto assets and strengthen financial stability.
Reserve Assets Must Be Segregated
Stablecoin reserves cannot simply be mixed with operating capital. The GENIUS Act requires segregated reserves, separating assets backing payment stablecoins from ordinary operational funds.
This strengthens consumer protection because reserve assets supporting the fixed amount promised to holders are identifiable rather than being treated as general business assets.
Stablecoin Holders Get Redemption Rights
Permitted issuers must establish procedures allowing holders to redeem stablecoins for their fixed monetary value.
Clear redemption rights are therefore a core part of the regulatory framework. For a dollar-linked payment stablecoin, the issuer must explain how redemption works and the conditions under which holders can receive the corresponding fiat currencies or fixed amount.
Issuers Must Publish Reserve Disclosures
Stablecoin issuers must publish monthly information about their reserve composition on an ongoing basis.
Applicable certifications and financial reporting requirements increase transparency around Treasury bills, deposits, cash equivalents and other assets backing stablecoin issuance. Larger issuers also face annual financial statement requirements involving an appropriate registered public accounting firm.
Issuers Cannot Pay Interest Just for Holding Stablecoins
The GENIUS Act prevents permitted payment stablecoin issuers from paying interest or yield solely because someone holds a payment stablecoin.
This distinction helps separate payment stablecoins from bank deposits and other yield-bearing financial products. It also matters for the broader banking system because stablecoins are increasingly used as a bridge between fiat and digital assets.
State-Regulated Issuers Face a $10 Billion Threshold
State governments and state regulators retain an important role.
An issuer with no more than $10 billion in consolidated outstanding payment stablecoins may generally operate under a state law framework when the state-level regulatory regime is substantially similar to the federal framework.
The Stablecoin Certification Review Committee evaluates these regimes. Issuers exceeding the statutory threshold generally must transition toward federal oversight.
Foreign Stablecoin Issuers Need U.S. Approval
Foreign banks and other foreign issuers can participate, but the requirements are stricter.
A foreign issuer generally needs supervision under a comparable foreign regulatory framework and must register with the OCC before qualifying to offer payment stablecoins through U.S. digital asset service providers.
The Treasury Secretary has up to 210 days after receiving a substantially complete request to determine foreign regulatory comparability. Foreign issuers must also meet applicable U.S. enforcement and jurisdiction requirements.
AML and KYC Rules Apply to Stablecoin Issuers
The GENIUS Act brings permitted issuers into the Bank Secrecy Act framework as financial institutions.
The federal customer-identification proposal requires effective customer identification programs, while Treasury and other federal regulators are developing anti money laundering and sanctions rules.
These proposed rules affect stablecoin issuance, financial activities, cross border payments and compliance obligations across the digital asset ecosystem.
Crypto Platforms Face New Stablecoin Restrictions
The rules extend beyond issuers. Beginning July 18, 2028, digital asset service providers generally cannot offer or sell nonqualifying payment stablecoins to U.S. persons unless statutory exceptions apply.
That means exchanges, custodial platforms and potentially other financial services businesses must consider whether a stablecoin's issuer qualifies under federal law.
Payment stablecoins issued by permitted issuers are also excluded from the definition of a security under relevant provisions of the Securities Act and Securities Exchange Act, narrowing the Securities and Exchange Commission's role for qualifying payment stablecoins while leaving other digital asset arrangements subject to separate analysis.
What Happens Next?
The law was enacted July 18, 2025, and generally directed federal regulators to promulgate regulations within one year. Several proposed rules and proposed rulemaking processes remained active in 2026.
The U.S. Treasury's August 2026 proposal identifies January 18, 2027 as the expected effective date, unless qualifying final regulations cause the GENIUS Act to take effect earlier under its statutory formula.
The compliance burden—covering capital requirements, reserves, audits, licensing and AML controls—may favor well-capitalized issuers, while greater regulatory clarity could support wider institutional adoption of stablecoins.
How Gate Can Help
Stablecoins remain central to crypto trading because they provide a tokenized form of stable value for settlement between digital assets. Market participants can compare supported stablecoin markets, liquidity and trading pairs through Gate Markets while separately assessing an issuer's reserves, regulatory status, redemption structure and jurisdiction.
Regulation can reduce some issuer risks, but it does not eliminate depegging, liquidity or counterparty risk.
Conclusion
The GENIUS Act changes U.S. stablecoin regulation through 10 major rules: licensed issuance, 1-to-1 reserves, segregated assets, redemption rights, monthly disclosures, restrictions on issuer-paid yield, state and federal supervision, foreign-issuer controls, AML compliance and new obligations for crypto service providers.
Implementation is still developing through final regulations, so market participants should distinguish statutory requirements from proposed rules that may change before taking effect.
FAQ
When was the GENIUS Act signed into law?
The GENIUS Act was signed into law on July 18, 2025, establishing the first federal law specifically creating a regulatory framework for payment stablecoins in the United States.
When does the GENIUS Act take effect?
The GENIUS Act takes effect on the earlier of January 18, 2027, which is 18 months after enactment, or 120 days after primary federal payment stablecoin regulators issue qualifying final regulations.
Do U.S. stablecoin issuers need 1-to-1 reserves?
Yes. Permitted issuers must maintain reserves with a value at least equal to outstanding payment stablecoins, using qualifying high-quality and liquid assets.
Can foreign stablecoin issuers sell stablecoins in the U.S.?
Yes, subject to strict criteria. A qualifying foreign payment stablecoin issuer must operate under a comparable regulatory regime, register with the OCC and satisfy applicable U.S. jurisdiction, supervision and enforcement requirements.
When do the rules for crypto exchanges and service providers begin?
The GENIUS Act's broader restriction on digital asset service providers offering or selling nonqualifying payment stablecoins to U.S. persons begins July 18, 2028, subject to statutory exceptions.
* The information is not intended to be and does not constitute financial advice or any other recommendation of any sort offered or endorsed by Gate.
