Overview & Purpose
The GENIUS Act was signed into law by President Donald J. Trump on July 18, 2025. Debevoise+3The White House+3The White House+3 It is formally Senate Bill 1582. The White House+2Wikipedia+2
The Act provides the first comprehensive federal regulatory framework for payment stablecoins in the United States—that is, cryptocurrencies designed to maintain stable values by being pegged to real assets (often the U.S. dollar or similar low‐risk assets), and which are used for payments or as a medium of exchange. Wikipedia+2Greenberg Traurig+2 Key goals include protecting consumers, combating illicit use (money laundering, sanctions evasion), ensuring transparency and financial stability, and preserving the U.S. dollar’s role globally. The White House+2Greenberg Traurig+2
The Act had strong bipartisan support: it passed the Senate on June 17, 2025 by a vote of 68–30. Wikipedia+2Mayer Brown+2 The House passed it on July 17, 2025 (308–122) and then the President signed it the next day. Mayer Brown+3Greenberg Traurig+3Wikipedia+3
What the Act Does: Key Provisions
Here are the main provisions of the GENIUS Act, in somewhat more detail.
Definition & Who is Covered
Payment stablecoins are specifically defined; only permitted issuers may legally issue them for use in the U.S. market. Debevoise+1
Issuers are categorized by size: those with large issuance (over US$10 billion in consolidated stablecoin outstanding) fall under federal regulation; smaller issuers may be regulated under state frameworks if they meet qualifying criteria. Greenberg Traurig+1
Regulation & Oversight
The Act removes stablecoins from regulatory definitions of “security” or “commodity”—so the SEC and CFTC do not have primary jurisdiction over payment stablecoins under this new law. Greenberg Traurig+1
Instead, oversight is assigned to federal banking regulators: FDIC, OCC, the Board of Governors of the Federal Reserve (“Fed”), etc. Greenberg Traurig+1
Stablecoin issuers must be “permitted payment stablecoin issuers” or foreign issuers that satisfy comparable regulation. If not, their stablecoins cannot receive the same privileges or recognitions (e.g. as cash or collateral) in certain financial or payment systems. Debevoise+2Greenberg Traurig+2
Reserve Requirements & Backing
Issuers must maintain full reserve backing — a 1:1 backing with high‐quality liquid assets: U.S. dollars, short‐term Treasuries, or similarly safe assets. Greenberg Traurig+2Mayer Brown+2
They must provide regular, public disclosures of reserves (“reserve composition”), audits, etc. Greenberg Traurig+1
The Act prohibits stablecoins from being interest‐ or yield‐bearing, meaning issuers cannot pay holders interest or rewards simply for holding the stablecoin. Mayer Brown+1
Consumer Protection, Transparency & Marketing
Marketing rules are strict: issuers cannot mislead users into thinking their stablecoins are backed by the U.S. government, are legal tender, or are insured by FDIC unless they really are. The White House+2Greenberg Traurig+2
Redemption rights must be clear. Disclosures must be in plain language. Audit reports must be made public. Greenberg Traurig+1
Anti‐Money Laundering, National Security, & Illicit Use
Stablecoin issuers are treated as financial institutions under the Bank Secrecy Act (BSA). That means they must have risk‐based AML (Anti‐Money Laundering) programs, customer identification (KYC), suspicious activity reports, sanctions screening, etc. Mayer Brown+1
U.S. Treasury has significant powers to designate foreign issuers or block non‐compliant ones, including civil penalties. Mayer Brown+1
Bankruptcy & Insolvency Protections
If a permitted payment stablecoin issuer becomes insolvent, stablecoin holders get priority claims over other creditors, especially regarding reserve assets. If reserves are insufficient, holders may get a “superpriority” claim for deficiencies. Greenberg Traurig+1
Also, required reserve assets are excluded from the issuer’s bankruptcy estate (i.e. they are protected). Mayer Brown+1
Regulators are to study how insolvency and resolution regimes should work for stablecoin issuers in the future. Mayer Brown
Transition Periods & Implementation
The law does not take immediate effect for all provisions. The effective date is the earlier of:
18 months after enactment (so roughly January 18, 2027) or
120 days after the primary federal stablecoin regulators issue final implementing rules/regulations. Greenberg Traurig+2Debevoise+2
Digital asset service providers (e.g. exchanges, custodians, wallet providers, payment apps) are given a three‐year transition period to comply. After that, as of July 18, 2028, they may only deal in payment stablecoins issued by permitted issuers under the Act. Greenberg Traurig+1
Other Notable Restrictions & Clarifications
Non‐financial public companies are broadly prohibited from acting as stablecoin issuers unless given specific approval. Mayer Brown
Foreign entities: Complying foreign issuers may be recognized, but there is oversight and possible restrictions for foreign issuers who do not meet compliance standards. Mayer Brown+1
The Act explicitly clarifies that it does not expand or contract eligibility for a Federal Reserve master account. Mayer Brown
The Act prohibits stablecoins from misleading claims: e.g. falsely saying they are FDIC‐insured when they are not. The White House+2Mayer Brown+2
Impacts & Effects
What are the likely effects of the GENIUS Act, and what challenges or criticisms have been raised?
Positive Impacts
Regulatory clarity: For an area (stablecoins) that for years has been regulated in a patchwork way (state regulation, federal oversight through other agencies, litigation), GENIUS gives a clear legal framework. That tends to reduce uncertainty for businesses, investors, and consumers. Greenberg Traurig+2Wikipedia+2
Consumer protection & financial stability: By requiring 1:1 reserve backing, frequent audits/disclosures, priority claims in insolvency, etc., risk of stablecoin failure harming users is reduced. Greenberg Traurig+2Mondaq+2
Boost for the U.S. dollar: The law is designed to reinforce demand for U.S. dollars and U.S. Treasury assets by making them central to reserve backing for stablecoins. This may preserve or enhance the U.S. dollar’s status globally. The White House+1
National security / AML: The Act strengthens U.S. capability to monitor and constrain illicit flows, requires compliance with sanctions, AML etc. The White House+1
Innovation / market growth: Many in the crypto/digital assets industry see this law as opening the door for more stablecoin usage, for clearer product development, possibly more institutional participation. Investopedia+2Mayer Brown+2
Challenges, Risks & Criticisms
Regulation speed & implementation risk: The Act requires regulators to issue final rules, which might be slow or subject to litigation or political pushback. The transition periods are long, but still, businesses must adapt. Greenberg Traurig+1
Consumer protection might still be insufficient: Some critics argue that some consumer risk remains, especially for smaller issuers or in edge cases. Also, enforcement and clarity in certain definitions may be weak. Wikipedia+1
Financial institutions and big tech influence: Concern that large companies or non‐bank financial institutions may gain undue advantage, or that oversight might favor incumbents. Also concerns that large tech firms could issue stablecoins without being subjected to bank‐level regulation. Wikipedia
Extraterritorial difficulties: Enforcement of foreign issuer rules, cross‐border transactions, and regulatory arbitrage may complicate governance. Ensuring foreign stablecoins comply is hard. Mayer Brown+1
Potential unintended consequences for competition: The threshold of $10B, state vs federal regulation dichotomy, and large compliance burdens might disadvantage small players or startups.
Timeline & Next Steps
Regulators have to issue rules and regulations to implement the GENIUS Act. Debevoise+1
The law takes effect at the earlier of 18 months post‐enactment (approx Jan 18, 2027) or 120 days after final implementing regulations from the primary regulators are in place. Greenberg Traurig+1
Digital‐asset service providers get a three‐year transition period; by July 18, 2028, they must deal only in payment stablecoins issued under the permitted issuer regime. Greenberg Traurig
Regulators (federal & state) will need to coordinate: defining permitted payment stablecoin issuers, determining oversight responsibilities, auditing standards, etc.
Broader Significance
Legal precedent: This is the first U.S. federal statute to specifically regulate stablecoins, rather than depending mainly on agency actions or state law. Greenberg Traurig+1
Positioning in global competition: With other countries developing digital currency regulations, central bank digital currencies (CBDCs), etc., this gives the U.S. a clearer legal footing to shape norms internationally. The White House+1
Political implications: The law reflects the Trump administration’s stated goal of making the U.S. the “crypto capital of the world.” The White House+1