US Regulation for Stablecoins: New GENIUS Act Explained

Stablecoin regulation remains a top issue in financial and crypto law. The U.S.—a major digital asset market—has taken a landmark step with the GENIUS Act (Guiding and Establishing National Innovation for U.S. Stablecoins Act), aimed at standardizing payment stablecoin rules and resolving state-level regulatory fragmentation.

The U.S. House of Representatives passed the Act on June 17, 2025, following Senate approval in May. It is expected to take effect in Q3 2026.

Our CVA Regulatory Working Group Chair, Dr. Katharina Lasota Heller has summarized and broke down for us what is included in the GENIUS Act.

Key Provisions of the GENIUS Act

Definition of a Payment Stablecoin

A payment stablecoin is defined as a digital asset used for payments, with:

• A redemption obligation at fixed face value

• Stable value relative to that amount

• Not classified as legal tender, deposit, interest-bearing instrument, or regulated security (with some exceptions)

Licensing Requirements

Only authorized Payment Stablecoin Issuers (PPSIs) may issue stablecoins. Unauthorized issuance carries criminal penalties.

PPSI eligibility:

• U.S. business presence

• Federal or state licensing

• Compliance with capital, risk, and control standards

Issuer types:

• Federal: OCC-supervised national banks/trust companies

• State: Licensed entities in cooperating states (e.g., Paxos, Circle)

• Depository institutions: Traditional banks meeting extra criteria

Reserve Requirements

All payment stablecoins must be fully backed 1:1 by:

• U.S. dollars

• Fed deposits or insured demand deposits

• U.S. Treasuries maturing within 93 days

Disclosure & Redemption

While no whitepaper is required, PPSIs must disclose:

• Redemption policies

• Monthly data on:

   

  • Total stablecoins in circulation

  • Reserve composition and value

   

Redemption at par value is a core requirement.

Foreign Issuers

Public issuance in the U.S. is restricted to licensed PPSIs.

Conditions include:

• U.S. presence

• USD-based reserves

• Comparable home regulation

• Registration with the Comptroller

• Reserve assets for U.S. users held in the U.S.

Foreign issuers can’t publicly offer or treat unlicensed stablecoins as cash equivalents, though private trading remains permitted.

Conclusion

The GENIUS Act offers a rigorous, unified framework for stablecoin issuance in the U.S. Foreign issuers seeking access must plan early for compliance. Without registration, market entry will be severely restricted and legally risky.

Read full article and other expert insights from Dr. Katharina Lasota Heller here.