On July 18, 2025, President Trump signed into law the Guiding and Establishing National Innovation for U.S. Stablecoins Act, also known as the GENIUS Act. The GENIUS Act marks the first US federal law providing a broad legal framework for digital assets products, including oversight and requirements for payment stablecoins. In doing so, it aims to establish an environment that encourages responsible innovation and adoption by establishing prudential, risk management, and compliance requirements.
The GENIUS Act stipulates that payment stablecoins may only be issued or marketed in the United States by entities granted approval from an appropriate federal or state regulatory authority. A payment stablecoin, as defined by the GENIUS Act, is a token issued by an approved issuer, fully backed 1:1 by cash or short-term Treasuries, designed for payments and required to be redeemable at par value.
Reserves
The monthly mix of reserves must be published on the issuer’s website, examined by a registered public accounting firm each month, and certified by company executives. Issuers with more than $50 billion in outstanding coins are required to prepare an annual financial statement for audit and publish it on their website. An issuer’s reserves can only be “rehypothecated” — used to fund other investments — under specific circumstances, such as shortterm repurchase agreements cleared through a registered CCA to meet redemption requests.
Paid interest
The GENIUS Act does not allow stablecoin issuers to pay their holders any form of interest or yield (whether in the form of cash, tokens or other consideration) if it is solely related to holding, retention or use of the coins. The boundary between prohibited yield and permissible rewards tied to other activity may be subject to future rulemaking and regulatory interpretation.
Anti-money laundering
Stablecoin issuers will be subject to the same AML, sanctions compliance, and know-your-customer (KYC) rules that apply to financial institutions, including the requirement to report suspicious transactions. Treasury is required to issue rules tailored to an issuers’ size and complexity. Issuers must have the technical capacity to comply with federal orders to seize, freeze or prevent the transfer of stablecoins.
Accounting treatment
The legislation prohibits federal regulators from requiring a bank or credit union to include digital assets held in custody as a liability on their balance sheet, or to hold capital reserves against them (unless the institution owns those assets). In addition, a payment stablecoin not issued by an issuer approved under the GENIUS Act cannot be considered as cash, cash equivalent for accounting, margining or wholesale payment settlement purposes.
The GENIUS Act establishes the first comprehensive federal framework for payment stablecoins, creating clearer pathways for both bank and non-bank issuers to enter the market. It provides regulatory guidance that is expected to drive a wave of new entrants, institutional adoption, and innovation in dollarbacked digital assets.
The adoption of stablecoin legislation marks a critical moment for financial institutions, FinTechs, and corporate treasuries to evaluate how they want to position themselves strategically in the digital asset ecosystem and how to manage the attendant risks.