Guiding and Establishing National Innovation for U.S. Stablecoins Act

The law limits the U.S. stablecoin market to approved issuers, requires liquid reserves and disclosures, and protects holders if an issuer fails. It also sets operating rules for banks, state-chartered institutions, and qualifying foreign issuers.

What the law does ​

• Restricts stablecoin issuance and U.S. distribution to approved federal, state, or qualifying foreign issuers.
• Requires issuers to maintain dollar-for-dollar liquid reserves, publish monthly reserve information, disclose redemption terms, and undergo accounting reviews.
• Imposes anti-money-laundering, customer identification, sanctions, monitoring, and lawful-order requirements.
• Prohibits issuers from paying interest solely for holding stablecoins or marketing them as federally guaranteed, approved, or insured.
• Gives regulators licensing, supervision, corrective-action, removal, and penalty powers, while prioritizing holders’ claims to reserves during insolvency.
• Preserves lawful digital-asset activities by banks, credit unions, and trust companies and limits balance-sheet and capital treatment of customer assets held in custody.
• Excludes qualifying payment stablecoins from specified federal securities, commodities, and investment-company treatment.
• Allows qualifying state-chartered institutions to provide certain stablecoin services across state lines, subject to host-state consumer protection enforcement.

Who it affects ​

• Stablecoin issuers, digital-asset service providers, custodians, and their executives.
• Banks, credit unions, trust companies, and qualifying state-chartered financial institutions.
• Stablecoin holders, customers, and qualifying foreign issuers seeking access to the U.S. market.
• Federal and state financial regulators responsible for approval, supervision, enforcement, and implementing rules.

Context ​

The law takes effect on the earlier of 18 months after enactment or 120 days after federal regulators issue final implementing regulations.

Breakdown ​

Guiding and Establishing National Innovation for U.S. Stablecoins Act (part 1 of 2) ​

This part of the GENIUS Act creates a federal and state regulatory framework for payment stablecoins offered in the United States. It limits issuance to approved issuers, requires full backing with specified liquid reserves, establishes disclosure and compliance duties, and gives regulators licensing, supervision, and enforcement powers. It also protects stablecoin holders and customer assets during custody and insolvency and sets rules for foreign issuers, anti-money-laundering controls, interoperability, studies, and reports.

Key takeaways

• Only approved federal or state issuers may issue payment stablecoins in the United States, and digital asset service providers generally may not offer unapproved stablecoins to people in the United States.
• Permitted issuers must maintain at least one dollar of specified liquid reserves for each dollar of stablecoins outstanding, publish monthly reserve information, provide clear redemption terms, and obtain monthly accounting review and executive certification.
• Issuers must follow anti-money-laundering, customer identification, sanctions, transaction-monitoring, and lawful-order requirements, and they may not pay interest or yield solely for holding a stablecoin.
• Stablecoins are not backed or guaranteed by the United States and are not covered by federal deposit or credit union share insurance, and issuers may not market them as government-issued, government-approved, or insured.
• State-regulated issuers may operate under certified state frameworks when outstanding issuance does not exceed $10 billion, while larger issuers generally must transition to joint federal oversight unless granted a waiver.
• Regulators may deny, suspend, or revoke approval, order corrective action, remove responsible officials, and impose civil or criminal penalties for violations, while stablecoin holders receive priority claims to required reserves if an issuer becomes insolvent.

Guiding and Establishing National Innovation for U.S. Stablecoins Act (part 2 of 2) ​

This part preserves banks’ and credit unions’ authority to conduct lawful digital-asset and stablecoin activities, sets accounting and capital rules for assets held in custody, and allows qualifying state-chartered institutions to offer stablecoin-related services across states. It also excludes qualifying payment stablecoins from federal securities and commodities definitions, establishes conditions for foreign stablecoin issuers to operate in the United States, and sets the Act’s effective date.

Key takeaways

• Banks, credit unions, and trust companies may continue lawful activities such as issuing digital representations of deposits, using distributed ledgers, and providing stablecoin custody services.
• Federal regulators must clarify that regulated entities may conduct the stablecoin activities and investments authorized by the Act.
• Financial institutions generally cannot be required to record customer-owned digital assets held in custody as their own liabilities or maintain capital against them, except as needed to address custody-related operational risks.
• Qualifying state-chartered institutions with permitted stablecoin-issuing subsidiaries may provide money transmission and custody services in other states, while host-state regulators retain authority to enforce applicable consumer protection laws.
• Payment stablecoins issued by permitted issuers are not treated as securities or commodities under the listed federal laws, and permitted issuers are excluded from investment company treatment.
• Foreign stablecoin issuers may access the U.S. market if they are comparably regulated, register with the Comptroller, satisfy applicable U.S. reserve requirements, and do not operate from sanctioned or high-risk jurisdictions.
• Payment stablecoin holdings of $5,000 or less are excluded from the specified federal financial disclosure requirement.
• The Act takes effect on the earlier of 18 months after enactment or 120 days after federal regulators issue final implementing regulations.