What is the GENIUS Act, and how does it regulate stablecoins in the US?
In July 2025 the United States got its first federal law written specifically for stablecoins. It decides who may issue them, what must back them and what holders can expect, but much of it depends on rules still being written.
Education only, not investment, tax or legal advice. Crypto-assets are high-risk — risk disclosure.
The short answer
The GENIUS Act is a US federal law, enacted on July 18, 2025, that sets rules for dollar-style payment stablecoins. Only approved issuers may issue them, each coin must be backed at least one-for-one by safe, liquid assets, reserves must be disclosed monthly, and issuers may not pay holders interest.
Key takeaways
- The law's full name is the Guiding and Establishing National Innovation for U.S. Stablecoins Act; it is Public Law 119-27.
- Only a permitted payment stablecoin issuer, approved at federal or state level, may issue a payment stablecoin in the United States.
- Reserves must at least match the coins in circulation and be limited to cash-like assets such as short-dated Treasury bills, with monthly public reports.
- Stablecoins are not government-guaranteed or FDIC-insured, and issuers may not pay holders interest or yield just for holding them.
- As of October 2026, regulators were still proposing the detailed rules, and the Treasury expected the law to take effect on January 18, 2027.
What is the GENIUS Act?
GENIUS is an acronym for the Guiding and Establishing National Innovation for U.S. Stablecoins Act. It became Public Law 119-27 on July 18, 2025, and its stated purpose is to provide for the regulation of payment stablecoins1.
The law does three big things. It decides who may issue a payment stablecoin, it sets out what must back each coin, and it spells out what holders get, including disclosure and priority if an issuer fails. It does not cover every token that calls itself stable, only those that fit its definition of a payment stablecoin.
What counts as a payment stablecoin?
Under the Act, a payment stablecoin is a digital asset designed to be used for payment or settlement, where the issuer is obliged to convert or redeem it for a fixed amount of monetary value and says it will keep a stable value relative to that amount1. In plain terms: a token that promises to be worth one dollar and to be swapped back for one dollar.
The definition excludes national currencies, bank deposits and securities1. In March 2026 the SEC, in an interpretation joined by the CFTC, listed payment stablecoins as defined in the GENIUS Act among the crypto-assets it does not treat as securities4. Our stablecoins explainer covers how such coins work in practice.
Inside and outside the definition Source: [1]
| Feature | Payment stablecoin under the Act | Not covered |
|---|---|---|
| Purpose | Used for payment or settlement | Tokens built for investment returns |
| Redemption | Issuer must redeem for a fixed amount of money | No redemption promise |
| Legal form | A digital asset | National currency, bank deposits, securities |
Who is allowed to issue a stablecoin under the GENIUS Act?
The Act makes it unlawful for anyone other than a permitted payment stablecoin issuer to issue a payment stablecoin in the United States1. There are three routes to that status, all for entities formed in the US1:
- A subsidiary of an insured depository institution that has been approved to issue payment stablecoins.
- A Federal qualified payment stablecoin issuer, approved and supervised at federal level.
- A State qualified payment stablecoin issuer, supervised by a state regulator.
The state route has a size limit. A state-qualified issuer with no more than $10 billion of payment stablecoins outstanding may stay under a state regime, provided that regime is substantially similar to the federal one1. Above that size, federal oversight comes into play; the OCC's proposal, for example, covers state-qualified issuers with more than $10 billion outstanding2.
The Act also reaches the platforms that sell coins. Starting three years after enactment, which is July 18, 2028, digital asset service providers may not offer or sell to people in the US a payment stablecoin that does not come from a permitted issuer13.
What must back each coin, and what must issuers disclose?
Issuers must hold reserves at least equal to the coins outstanding, one-for-one, and only in a short list of safe, liquid assets1. The list includes US coins and currency, demand deposits at insured institutions, Treasury bills, notes or bonds with 93 days or less to maturity, certain overnight repurchase agreements backed by Treasuries, and registered government money market funds1.
The monthly transparency cycle
- 1
Publish the reserve mix
Each month the issuer posts the composition of its reserves on its website1.
- 2
Get an accountant's examination
A registered public accounting firm examines the monthly report1.
- 3
Executives certify
The chief executive and chief financial officer certify that the report is accurate1.
Two more rules shape what holders get. Issuers may not pay holders any form of interest or yield, whether in cash, tokens or anything else, solely for holding, using or keeping the coin1. And the Act states plainly that payment stablecoins are not backed by the full faith and credit of the United States and are not covered by FDIC deposit insurance or NCUA share insurance1.
Risk warning
A stablecoin is not a bank account
Reserve rules reduce the risk of a stablecoin losing its peg, but no government insurance stands behind it. A coin from an unpermitted or offshore issuer may offer none of these protections. Read our risk disclosure.
When does the GENIUS Act take effect?
Signing the law did not switch everything on at once. The Act takes effect on the earlier of two dates: 18 months after enactment, or 120 days after the main federal stablecoin regulators issue final implementing rules2. Eighteen months after July 18, 2025 is January 18, 2027, so that is the latest possible start. The law asked regulators to finish those rules within one year of enactment, that is by July 18, 20262.
Figure · From signature to full effect
- Jul 18, 2025Becomes law
- Mar 2, 2026OCC publishes its proposed rule
- Jul 18, 2026Statutory target for final rules
- Aug 18, 2026Treasury proposes issuance rules
- Jan 18, 2027Expected effective date
- Jul 18, 2028Platform ban
As of October 2026 the rule-writing was still under way. The Office of the Comptroller of the Currency (OCC) published a proposal in March 20262, and the Treasury Department published a proposal on who may issue, offer and sell payment stablecoins on August 18, 2026, with comments open until October 19, 20263. Details in those proposals can change before they are finalised. In an interim final rule published on September 30, 2026, the Treasury said it expects the Act to take effect on January 18, 2027, the 18-month date7.
What does the GENIUS Act mean for people who hold stablecoins?
For holders, the key protection is priority. If a permitted issuer becomes insolvent, the claims of stablecoin holders on the reserve assets rank ahead of other creditors1. Issuers are also treated as financial institutions for anti-money-laundering purposes and must be technically able to block, freeze and reject specific transactions when the law requires1, so a coin can be frozen in a wallet.
US and EU approaches side by side
| Question | US: GENIUS Act | EU: MiCA e-money tokens |
|---|---|---|
| Who issues | Permitted issuers: bank subsidiaries, federal or state qualified issuers1 | Credit institutions or electronic money institutions5 |
| Legal status | Not a deposit; not federally insured1 | Treated as electronic money5 |
| Interest to holders | Issuers may not pay it1 | Banned for issuers, and for crypto firms in services linked to EMTs8 |
| Status as of Oct 2026 | Law enacted; rules still proposed3 | Applying since 30 June 20246 |
Compare the full EU picture in our MiCA explainer, and see how the US splits other crypto between agencies in SEC vs CFTC.
Common beginner mistakes
Assuming every stablecoin is covered
The protections apply to payment stablecoins from permitted issuers. Tokens from other issuers, or that do not fit the definition, may have none of them.
Treating it like an insured deposit
The Act says payment stablecoins are not FDIC- or NCUA-insured. Reserves and priority are the protection, not a government guarantee.
Chasing yield on stablecoins
Issuers cannot pay interest just for holding. Any yield offered by a third party comes from somewhere else and carries its own risks.
Thinking the rules are final
As of October 2026 key regulations were still proposals. Dates and details can move until final rules are published.
Frequently asked questions
When did the GENIUS Act become law?
It was enacted on July 18, 2025 as Public Law 119-27 of the 119th Congress1. Becoming law and taking effect are different steps, as explained above.
Can a GENIUS Act stablecoin pay interest?
Are foreign stablecoins banned in the US?
The Act limits issuance in the US to permitted issuers and, from July 18, 2028, bars digital asset service providers from offering unpermitted payment stablecoins to people in the US3. The Act also contains separate provisions for foreign issuers.
Is a payment stablecoin a security?
The Act excludes securities from its definition, and the SEC's March 2026 interpretation lists GENIUS Act payment stablecoins among crypto-assets it does not treat as securities4.
Can my stablecoins be frozen?
Yes. Issuers must be able to block, freeze and reject specific transactions to comply with lawful orders and anti-money-laundering rules1.
The bottom line
The GENIUS Act gives the United States a federal rulebook for dollar-style stablecoins: approved issuers only, one-for-one reserves in cash-like assets, monthly disclosure, no interest to holders and priority for holders if an issuer fails. As of October 2026 the detailed rules were still being proposed, and the Treasury expected the law to take effect on January 18, 2027. It reduces some risks; it does not make a stablecoin an insured deposit.
Sources
- Public Law 119-27: Guiding and Establishing National Innovation for U.S. Stablecoins Act (GENIUS Act) — U.S. Government Publishing Office (govinfo.gov), 2025 Primary source
- Implementing the GENIUS Act for the Issuance of Stablecoins by Entities Subject to the Jurisdiction of the OCC (proposed rule) — Federal Register, Office of the Comptroller of the Currency, 2026 Primary source
- GENIUS Act Regulations on Payment Stablecoin Issuance, Offer, and Sale (proposed rule) — Federal Register, U.S. Department of the Treasury, 2026 Primary source
- Application of the Federal Securities Laws to Certain Types of Crypto Assets: fact sheet (Release 33-11412) — U.S. Securities and Exchange Commission, 2026 Primary source
- MiCA Article 48: Requirements for the offer to the public of e-money tokens — ESMA Interactive Single Rulebook, 2023 Primary source
- MiCA Article 149: Entry into force and application — ESMA Interactive Single Rulebook, 2023 Primary source
- Forms and Procedures for Review of State Certifications by the Stablecoin Certification Review Committee (interim final rule), 91 FR 61688 — Federal Register, U.S. Department of the Treasury (via govinfo.gov), 2026 Primary source
- MiCA Article 50: Prohibition of granting interest — ESMA Interactive Single Rulebook, 2023 Primary source
How we checked this page: every figure above links to the numbered source it came from. Spotted an error? Tell the desk — see our editorial policy.
Read next
Policy · ExplainerWhat is MiCA, and how does the EU regulate crypto-assets?Since the end of 2024 one law has set the ground rules for crypto issuers and service providers across the European Union. Here is what it covers and what changed when its transition ran out in July 2026.
Finance · ExplainerWhat is a stablecoin, and how does it stay at one dollar?Stablecoins are crypto tokens built to stay boring: one token, one dollar. Whether they manage it depends on what backs them, who can redeem them and what the law requires.
Policy · ExplainerSEC vs CFTC: which US regulator is in charge of crypto?For years the answer to "who regulates crypto in America?" was "it depends". In 2026 the two main market regulators published a shared map, but Congress has not yet written the split into law.
Assets · ProfileWhat is USD Coin (USDC), and how does it stay worth a dollar?USDC is a dollar token issued by Circle. This profile explains what backs it, who can swap it for real dollars and what happened when its peg broke in 2023.
Assets · ProfileWhat is Tether (USDT), and what really stands behind each token?USDT is designed to stay worth one US dollar. Whether it does depends on the company behind it, so this profile focuses on how issuance, reserves and redemption actually work.
Finance · ExplainerWhat is a money market fund, and is it as safe as a bank account?Money market funds are where many people and companies park cash they may need soon. They are built to be steady, but they are investments, not bank deposits, and that difference matters most in a crisis.