On June 17, 2025, the U.S. Senate passed the Guiding and Establishing National Innovation for U.S. Stablecoins Act—better known as the GENIUS Act. This legislation introduces a comprehensive federal framework for the regulation of payment stablecoins.
For tax and accounting professionals, the GENIUS Act is more than just a policy milestone—it’s a signal that stablecoins are entering the mainstream financial system. Understanding how this law affects your clients’ reporting obligations, accounting treatment, and compliance posture is now essential.
Under the GENIUS Act, a “payment stablecoin” is defined as a digital asset that:
- Is used (or designed to be used) for payments or settlements;
- Is redeemable for a fixed amount of monetary value; and
- Maintains a stable value relative to a fiat currency.
Only “permitted payment stablecoin issuers”—entities approved by federal or state regulators—are allowed to issue these assets in the U.S
Tax implications for stablecoin holders and issuers
Classification and reporting
- Stablecoins are still treated as property for federal tax purposes unless the IRS issues new guidance.
- Each transaction involving a stablecoin—whether it’s a purchase, redemption, or exchange—may trigger a taxable event.
- Businesses accepting stablecoins must record the fair market value at the time of receipt, which becomes the basis for future gains or losses.
Accounting treatment
- Stablecoins issued by non-permitted entities cannot be classified as cash or cash equivalents.
- This affects how businesses report digital assets on their balance sheets and may require separate line items or disclosures.
Redemption and valuation
- Although stablecoins are designed to maintain a fixed value, timing differences between acquisition and redemption can still result in capital gains or losses.
- Professionals should advise clients to maintain detailed records of acquisition cost and redemption value.
Foreign issuers and cross-border risks
- Stablecoins issued by foreign entities face additional scrutiny under the Act.
- U.S. persons holding or transacting with these assets may be subject to FATCA, FBAR, and other international reporting requirements.
Action steps for tax and accounting professionals
Review Client Exposure
Identify which clients hold, issue, or transact in stablecoins and assess their compliance posture.
Update Accounting Policies
Ensure your firm’s accounting treatment of digital assets aligns with the GENIUS Act and GAAP standards.
Monitor IRS and Treasury Guidance
Stay alert for new tax rules or clarifications related to stablecoins, especially regarding classification and reporting.
Educate Clients
Help clients understand the risks of using non-compliant stablecoins and the importance of working with permitted issuers.
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