The GENIUS Act of 2025 (S.1582) aims to establish a comprehensive federal framework for regulating payment stablecoins—digital assets pegged to a fixed value (e.g., $1) and used for payments or settlements. Although the Senate did not advance the bill on May 8, it outlines key proposals that may shape future legislation.
Key Requirements for Issuers
- Full Reserve Backing: 1:1 backing with permitted reserves (e.g., cash, T-bills, insured deposits, repos).
- Usage Restrictions: Reserve assets can only be used for redemptions and approved financial operations.
- Disclosure & Reporting: Issuers must publish redemption procedures, periodic reserve reports, and—if outstanding issuance exceeds $50B—audited financials.
- Compliance: Must follow AML/CFT rules under the Bank Secrecy Act; FinCEN must provide tailored compliance guidance.
- Governance: Individuals with certain financial crime convictions are barred from serving as officers or directors.
Issuer Types & Regulatory Oversight
- Banks/Credit Unions: Can issue via subsidiaries under existing banking regulators.
- Nonbanks: Must register with the OCC or appropriate federal agency.
- State Option: Nonbank issuers under $10B may register under a “substantially similar” state regime (subject to federal approval).
Supervision & Enforcement
- Federal regulators can halt issuance or enforce compliance.
- State regulators supervise state-based issuers but may cede authority to the Fed in exceptional cases.
- Foreign issuers must register with the OCC, hold reserves in U.S. institutions, and meet interoperability standards within 3 years.
Other Provisions
- Custodians: Must be regulated and may not commingle client and firm funds.
- Legal Protections: Stablecoin holders have priority in issuer bankruptcy.
- Classification: Payment stablecoins are not securities or commodities, and are not FDIC-insured.
- Government Ethics: Senior federal officials are prohibited from issuing stablecoins.
https://www.congress.gov/crs_external_products/IN/PDF/IN12553/IN12553.2.pdf