For the first time, the U.S. digital asset landscape has a comprehensive federal framework governing the issuance, use and oversight of payment stablecoins, which are cryptographic tokens designed to maintain a 1:1 value with the U.S. dollar. Learn more about the different parts of this new stablecoin bill and how the rules will impact businesses moving forward.
Key Takeaways
- The Genius Act introduces the first comprehensive regulatory framework specifically for stablecoin issuers, bringing clarity and legitimacy to the digital asset space.
- Stablecoin issuers will now be subject to oversight by federal banking regulators, which is expected to enhance consumer protection and financial stability.
- Issuers must obtain a federal license to operate to help ensure they meet stringent standards related to reserve backing, redemption rights and operational transparency.
- The Act introduces clear rules designed to boost investor confidence and promote broader adoption of stablecoins in mainstream financial systems.
- The robust compliance protocols and risk management practices could lead to increased costs and operational changes for existing and new stablecoin users.
What Is the GENIUS Act?
On July 18, 2025, the Guiding and Establishing National Innovation for U.S. Stablecoins (GENIUS Act) was signed into law, igniting a historic new phase for digital assets. It imposes stringent compliance burdens and offers clarity and legitimacy to a sector previously operating in a regulatory gray area.
At its core, the GENIUS Act seeks to ensure that stablecoins used in transactions are safe, transparent and fully backed (see examples below). The legislation responds to rising adoption among emerging fintech innovators and corporate treasuries, as well as growing concerns around consumer protection and financial stability.
Key Elements of the GENIUS Act
The GENIUS Act can be broken down into a few different parts:
Issuer Restrictions
As a result of the legislation, only permitted payment stablecoin issuers (PPSIs) may issue payment stablecoins in the U.S., including:
- Subsidiaries of Insured Depository Institutions, Banks (and Bank Subsidiaries) Insured by the Federal Deposit Insurance Corporation (FDIC) or the National Credit Union Administration (NCUA)
- Nonbanks With State or Federal Licenses
- Qualified Foreign Issuers
Anonymous or decentralized issuers cannot issue stablecoin payment, unless they become compliant within a three-year transition window. Entities can apply to their state or federal regulator to become a permitted stablecoin payment issuer. Federal regulators have 120 days from application to grant issuer status. Applications may be denied if the activities of the applicant are found to be unsafe. If a decision is not made by the regulating body within 120 days, the application is automatically approved.
For purposes of the Bank Secrecy Act (BSA), a payment stablecoin issuer will be considered a financial institution and, therefore, must implement a robust anti money laundering (AML) and sanctions compliance program, including the designation of an officer to supervise the program.
Per section 4(a)(5) of the GENIUS Act, Treatment Under the Bank Secrecy Act and Sanctions Laws, issuers shall adopt rules tailored to the size and complexity of issuers to implement application of the BSA and U.S. sanctions laws. Additionally, issuers must adopt a framework that establishes the ability to block, freeze and reject transactions that violate federal or state laws.
Reserve Requirements
Stablecoin issuers must maintain reserves in separate bankruptcy-remote accounts and provide monthly reporting or disclosures of reserve composition. This requirement prioritizes stability over yield. All stablecoins must be backed on a 1:1 basis by high-quality, liquid assets, specifically:
- U.S. Dollars and Coins
- Treasury Bills
- Overnight Repurchase Agreements
- Demand Deposits
- Shares in Registered Governed Money Market Funds
The GENIUS Act prohibits:
- Commercial Paper
- Algorithmic Stabilization Mechanisms
- Paying Interest to Stablecoin Holders
Regulatory Clarity, Audit and Disclosure Obligations
Monthly reserve attestations by third-party auditors are mandatory for stablecoin issuers. Reports must be published and should contain the amount and composition of reserves as well as the total number of outstanding stablecoin payments. Issuers over $10 billion must submit annual audits and enhanced oversight by federal regulators.
Stablecoin issuers will need to establish anti-money laundering and digital asset compliance programs with risk assessments. Issuers also need to have the capability to freeze, seize or burn payment stablecoin in the event they are given lawful orders to do so.
How the GENIUS Act Impacts Businesses
For companies operating in or adjacent to the digital asset space, the GENIUS Act brings long-awaited regulatory clarity to stablecoins, opening the door for broader institutional adoption, while also setting a standard for compliance.
For companies issuing or using stablecoins, the Act imposes strict requirements, and businesses will need to upgrade their financial controls and reporting mechanisms to adapt. Concurrently, the Act legitimizes the industry, giving banks, startups, and established institutions a path to explore stablecoin payments and treasury tools — opening up the opportunity for broader adoption.
Your Guide Forward
Cherry Bekaert’s CFO Advisory Servcies practice supports the structuring and auditing of stablecoin issuance programs and proof of reserves, helping you achieve compliance with evolving regulatory frameworks. We also help integrate stablecoin flows into financial reporting systems, providing a clear view of operational and treasury impacts. Our professionals are equipped to guide you through the evolving stablecoin regulations.
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