Executive Summary
On July 18, 2025, the GENIUS Act was enacted into law by President Trump. The GENIUS Act creates the first uniform federal charter for payment stablecoins, seeking to safeguard consumers, reinforce market integrity, and cement U.S. leadership in digital payments.[1] The Act, which now applies to the roughly $240 billion of U.S. dollar‑backed stablecoins currently in circulation with a nexus to the U.S., will now require founders, DeFi platforms, fintech firms, and institutional investors to prepare for new licensing, reserve, and compliance obligations under this regime.[2]
Legislative Overview
The GENIUS Act was introduced on May 1, 2025, by Senator Bill Hagerty (R–Tenn.) and co-sponsored by Senators Kirsten Gillibrand (D-N.Y.), Cynthia Lummis (R-Wyo.), and Angela Alsobrooks (D-Md.).[3] The Act was signed into law on July 18, 2025, following Senate passage (Record Vote No. 318) and House approval.
Under the Administrative Procedure Act, the Department of the Treasury must publish a notice of proposed rulemaking within 30 days of enactment, open a 60-day public comment period, and finalize regulations within 180 days of the Notice of Proposed Rulemaking (NPRM).[4] Entities will then have a 180-day compliance window post-effective date.[5] The Federal Reserve and the Office of the Comptroller of the Currency (OCC) are anticipated to issue complementary guidance on reserve-account management and charter applications by Q4 2025, with enforcement expected in Q3 2026.[6]
Compliance Obligations
Section 2 of the GENIUS Act defines a “payment stablecoin issuer” as any entity that issues digital tokens that have a primary purpose for payment or settlement and are redeemable one-for-one in U.S. dollars or other permitted liquid assets.[7] To engage in such issuance, the GENIUS Act stipulates that entities must obtain a charter from an “appropriate Federal banking agency,” although entities with less than $10 billion outstanding may, at their election, instead operate under state charters that the Treasury Secretary certifies as “substantially similar” to the federal framework.[8] The Act requires issuers to maintain 100 percent reserves in cash, U.S. Treasury securities with maturities no greater than 93 days, overnight reverse repurchase agreements, or other assets approved by the Treasury Secretary.[9]An issuer’s reserves must guarantee on-demand redemption at par value for all stablecoin holders.[10] In addition, the Act imposes monthly public disclosures of reserve composition and mandates annual audited financial statements for issuers exceeding $50 billion in outstanding tokens.[11] To combat illicit-finance risks, all payment stablecoin issuers must register under the Bank Secrecy Act, implement anti-money-laundering controls and sanctions screening, and designate compliance officers.[12] Finally, the Act explicitly confines itself to fiat-backed payment stablecoins.[13] This means that algorithmic stablecoins such as TerraUSD and Ampleforth, endogenously collateralized tokens such as MakerDAO’s DAI and Synthetix’s sUSD, and other asset-backed digital tokens such as Paxos’s PAX Gold and Tether Gold are all excluded from the GENIUS Act’s oversight.[14]
In many respects, the requirements imposed on issuers by the GENIUS Act mirror long-standing industry best practices. For example, several leading stablecoin issuers already meet the GENIUS Act’s reserve and reporting requirements. Circle’s US Dollar Coin (USDC), Gemini’s GUSD, and Paypal’s PYUSD all post monthly independent auditor attestations confirming their 1:1 backing in cash and short-dated U.S. Treasuries, while USDC goes further, publishing reports on weekly reserve holdings.[15] In contrast, some issuers must adjust their structures to qualify under the Act’s 93-day maturity and reserve requirements.
Stablecoin issuers are not the only industry actors affected by the GENIUS Act. The Act’s provisions introduce restrictions and penalties against actors that interact with non-compliant stablecoins.[16] Blockchain platforms that on-ramp, custody, or settle non-compliant stablecoins risk running afoul of regulated banks’ risk-management policies and, as a result, may find themselves unable to clear U.S. dollar payments through U.S. correspondent banking networks.[17]These restrictions build upon past agency guidance, such as OCC Interpretive Letter 1183, which instructs banks to apply “safe and sound” risk controls to any crypto-asset activity and suggests that banks will limit or decline relationships involving tokens that lack the Act’s required reserves, disclosures, or charter status.[18]
The GENIUS Act introduces higher regulatory compliance costs to smaller‐cap companies, start-ups, and Web3/blockchain platforms whether they themselves are issuers or simply integrating existing stablecoin products in their own offerings. The Act’s stringent reserve and reporting mandates could divert scarce resources from core product development and innovation, with many emerging firms likely lacking the capital to maintain 100 percent reserves and support recurring third-party audits.[19] Likewise, wallets, decentralized exchanges, payment gateways, and NFT marketplaces that custody or facilitate non-compliant stablecoins must evaluate whether handling these tokens exposes them to indirect regulatory obligations or banking “de-risking” measures, because FinCEN treats virtual-currency exchangers and administrators as money-transmitters under the Bank Secrecy Act.[20] Without tailored legal strategies, such as structuring partnerships with chartered issuers, implementing robust AML/BSA policies, and engaging with regulators on rulemaking, these firms could face operational disruptions, enforcement actions, or loss of banking access.
Takeaways and Unresolved Questions
Although the GENIUS Act introduces added compliance costs to new participants, its proposed shift to a single federal charter promises to replace a patchwork of over twenty state licensing regimes, which could lower compliance costs and complexity for qualified issuers.[21] Its strict 100 percent reserve and disclosure mandates serves to bolster consumer confidence and increase platform stability.[22] By clarifying reserve and AML requirements, the Act is poised to unlock greater institutional adoption; an opportunity now within reach for well-prepared firms.[23]
Yet, the same clarity can create pitfalls for those unprepared or underfunded for such compliance. Start-ups and smaller projects may struggle to gather the liquidity, auditing support, and legal infrastructure needed for full compliance. These risks can stall product launches or expose firms to costly enforcement actions.[24] The exclusion of algorithmic and crypto-collateralized models, which have been the source of widespread scrutiny for their highly publicized failures, mean that these types of assets continue to rest in a regulatory gray area despite their heightened risk. The lack of clarity for these types of assets may inadvertently sweep innovative designs outside the safe harbor, forcing costly redesigns or limiting market participation.[25] The Act’s promise of “substantially similar” state charters offers a potential lifeline for under-$10 billion issuers, but it provides no clear road map on which states will qualify or the certification process they must follow.[26] This uncertainty may act as a regulatory moat, enabling only the largest issuers to seek compliance via costly federal charter. Offshore issuers of U.S.-dollar stablecoins face even greater ambiguity: without an explicit extraterritorial clause, it remains unclear whether tokens issued abroad but offered to U.S. persons must comply with U.S. charter, reserve, and AML rules or instead trigger separate money-transmission and securities obligations.[27]
Compounding these uncertainties, the Administrative Procedure Act’s mandatory notice-and-comment cycles could stretch final rule publication well beyond the Act’s 180-day target. This could delay enforcement dates and leave compliance windows in limbo, heightening operational risk.[28] Failure to navigate these evolving deadlines, or to register properly under charter and BSA statutes could expose officers to civil penalties, which could include fines up to twice an individual’s net worth, charter revocation, and restitution orders.[29]
Global Context
With the GENIUS Act, the US is joined by several other jurisdictions that have begun to regulate stablecoins or similar types of assets. The European Union’s Markets in Crypto-Assets Regulation (MiCA) requires issuers of “e-money tokens” to be licensed as credit institutions or e-money institutions, with capital, governance, and disclosure mandates similar to those in the GENIUS Act.[30] In the United Kingdom, the Financial Conduct Authority’s Consultation Paper CP 22/20 outlines requirements for the financial promotion of crypto-assets to retail clients, with final rules expected in 2026 under a joint FCA–Bank of England framework.[31] Across the Asia-Pacific region, jurisdictions such as Hong Kong and Singapore emphasize robust custody arrangements, audit protocols, and investor protections.[32] While each regime reflects unique policy priorities, the GENIUS Act’s comprehensive U.S. federal framework sets a de facto global standard for stablecoin corridors and cross-border digital payments.[33]
The GENIUS Act introduces new compliance obligations not only for stablecoin issuers, but also for other participants in the ecosystem that utilize stablecoins in their own product offerings. These new obligations, coupled with the Act’s open questions make early, tailored legal guidance indispensable.
Adapting to the GENIUS ACT
The GENIUS Act introduces one of the most consequential regulatory shifts in the history of U.S. digital asset policy. Its reach extends well beyond stablecoin issuers, affecting platforms, protocols, and financial service providers across the broader digital payments ecosystem. Navigating this complexity requires targeted legal, regulatory, and operational strategies. Please reach out to learn more about how this Act affects your business and for guidance on best compliance practices.
Get in Touch
For help in analyzing the GENIUS Act or aligning your compliance strategy with emerging requirements, please schedule a consultation.
Contributors: This update was prepared with contributions from Charles Scrimalli, Esq., Wylie Schnorr (Canadian counsel) and other attorneys at Bull Blockchain Law LLP.
Disclaimer: This memorandum is provided for educational purposes only and does not constitute legal advice.
Footnotes
[1] 171 Cong. Rec. S318 (daily ed. June 17, 2025).
[2] Guiding and Establishing National Innovation for U.S. Stablecoins Act (“GENIUS Act”), Pub. L. No. 119‑35, 139 Stat. 3085, § 3(a) (2025); GENIUS Act, Pub. L. No. 119‑35, 139 Stat. 3085, §§ 4–6 (2025).
[3] Senate Banking Comm., Myth vs. Fact: The GENIUS Act (May 8, 2025), https://www.banking.senate.gov/imo/media/doc/myths_v_facts_-_genius_act_5_8_25pdf.pdf.
[4] Admin. Procedure Act, 5 U.S.C. § 553 (2018), https://www.law.cornell.edu/uscode/text/5/553
[5] GENIUS Act § 9, S. 1582, 119th Cong. (2025), https://www.congress.gov/bill/119th-congress/senate-bill/1582/text#toc-SEC_9
[6] Press Release, Sen. Tim Scott, Scott Champions Historic Senate Passage of the GENIUS Act (June 17, 2025), https://www.banking.senate.gov/imo/media/doc/scott_genius_act_pr.pdf
[7] GENIUS Act §§ 4–5, S. 1582, 119th Cong. (2025).
[8] GENIUS Act § 3, S. 1582, 119th Cong. (2025), https://www.congress.gov/bill/119th-congress/senate-bill/1582/text#toc-SEC 3).
[9] Guiding & Establishing Nat’l Innovation for U.S. Stablecoins Act § 4(a)(1)(A), S. 1582, 119th Cong. (2025), https://www.congress.gov/bill/119th-congress/senate-bill/1582/text#toc-SEC_4.
[10] Id.
[11] GENIUS Act § 4(a)(3), S. 1582, 119th Cong. (2025), https://www.congress.gov/bill/119th-congress/senate-bill/1582/text#toc-SEC_4.
[12] Bank Secrecy Act, 31 U.S.C. §§ 5311–5330 (2018), https://www.law.cornell.edu/uscode/text/31/5311.
[13] Guiding & Establishing Nat’l Innovation for U.S. Stablecoins Act § 2(c), S. 1582, 119th Cong. (2025), https://www.congress.gov/bill/119th-congress/senate-bill/1582/text#toc-SEC_2.
[14] Ampleforth, How Ampleforth’s Protocol Works, https://www.ampleforth.org (last visited June 2025); MakerDAO, MakerDAO Whitepaper (2019), https://makerdao.com/en/whitepaper (last visited June 2025); Synthetix, sUSD: The Stablecoin of the Synthetix Ecosystem, https://www.synthetix.io (last visited June 2025); Paxos, PAX Gold—Learn More, https://www.paxos.com/paxgold (last visited June 2025); Tether, Tether Gold (XAUₜ), https://tether.to/en/transparency (last visited June 2025).
[15] Circle, Transparency & Stability, USDC (last visited July 10, 2025), https://www.circle.com/transparency; Gemini, Adding More Transparency to the Reserves Backing Gemini Dollar (GUSD) (June 2024), https://www.gemini.com/blog/adding-more-transparency-to-the-reserves-backing-gemini-dollar-gusd; Paxos, PayPal USD (PYUSD) Transparency Reports (last visited July 10, 2025), https://www.paxos.com/pyusd-transparency.
[16] Guiding and Establishing National Innovation for U.S. Stablecoins Act, S. 1582, § 3, 119th Cong. (2025); see also §§ 4, 6(b)(5)(E).
[17] GENIUS Act, Pub. L. No. 119‑35, 139 Stat. 3085, § 8 (2025).
[18] Id. at 1 (banks “must conduct all crypto-asset activities in a safe, sound, and fair manner”).
[19] U.S. Gov’t Accountability Off., Stablecoins: Risks, Regulatory Gaps, and Options 42–43 (GAO-21-100, June 2021), https://www.gao.gov/products/gao-21-100
[20] Application of FinCEN’s Regulations to Persons Administering, Exchanging, or Using Virtual Currencies, FIN-2013-G001, 78 Fed. Reg. 9742, 9743 (Feb. 14, 2013).
[21] GENIUS Act § 3, S. 1582, 119th Cong. (2025), https://www.congress.gov/bill/119th-congress/senate-bill/1582/text#toc-SEC_3
[22] GENIUS Act §§ 4–5, S. 1582, 119th Cong. (2025), https://www.congress.gov/bill/119th-congress/senate-bill/1582/text#toc-SEC_4
[23] Senate Banking Comm., Scott Champions Historic Senate Passage of the GENIUS Act (June 17, 2025), https://www.banking.senate.gov/imo/media/doc/scott_genius_act_pr.pdf
[24] U.S. Gov’t Accountability Off., Stablecoins: Risks, Regulatory Gaps, and Options 42–43 (GAO-21-100, June 2021), https://www.gao.gov/products/gao-21-100
[25] Senate Banking Comm., Myth vs. Fact: The GENIUS Act 1 (May 8, 2025), https://www.banking.senate.gov/imo/media/doc/myths_v_facts_-_genius_act_5_8_25pdf.pdf
[26] GENIUS Act § 9, S. 1582, 119th Cong. (2025), https://www.congress.gov/bill/119th-congress/senate-bill/1582/text#toc-SEC_9
[27] S. 1582 (lacking explicit extraterritorial clause), https://www.congress.gov/bill/119th-congress/senate-bill/1582/text
[28] Admin. Procedure Act, 5 U.S.C. § 553 (2018), https://www.law.cornell.edu/uscode/text/5/553
[29] 12 U.S.C. § 1818(b) (2018), https://www.law.cornell.edu/uscode/text/12/1818 ; 31 U.S.C. § 5318 (2018), https://www.law.cornell.edu/uscode/text/31/5318
[30] Regulation (EU) 2023/1114, 2023 O.J. (L 153) 1, https://eur-lex.europa.eu/eli/reg/2023/1114/oj.
[31] U.K. Fin. Conduct Auth., Consultation Paper CP 22/20: Financial Promotion of Cryptoassets to Retail Clients (Dec. 2022), https://www.fca.org.uk/publication/consultation/cp22-20.pdf.
[32] Securities & Futures Comm’n (Hong Kong), A-S-P-I-Re for a Brighter Future: SFC’s Regulatory Roadmap for Hong Kong’s Virtual Asset Market (Sept. 2024), https://www.sfc.hk/en/News-and-announcements/Policy-statements-and-announcements/A-S-P-I-Re-for-a-brighter-future-SFCs-regulatory-roadmap-for-Hong-Kongs-virtual-asset-market; Payment Services Act 2019 (No. 2 of 2019) (Sing.), https://sso.agc.gov.sg/Acts-Supp/18-2019.
[33] Crypto Council for Innovation, Global Stablecoin Policy Trends (June 2025), https://cryptoforinnovation.org/research/global-stablecoin-policy-trends.