The Guiding and Establishing National Innovation for U.S. Stablecoins Act (GENIUS Act) is a United States federal law enacted on July 18, 2025, which establishes the nation’s first comprehensive regulatory framework for payment stablecoins. The act defines a payment stablecoin as a digital asset designed to be used as a means of payment or settlement, where the issuer is obligated to redeem it for a fixed amount of monetary value, typically a U.S. dollar, ensuring a stable value relative to a fixed benchmark. To qualify as a stablecoin under the law, these digital assets must be fully backed one-for-one by high-quality, liquid assets such as U.S. dollars or Treasuries, making them redeemable on demand.
The GENIUS Act creates a dual federal and state supervision system, allowing entities to choose between federal or state regulation, though state regulation is limited to those with a stablecoin issuance of $10 billion or less. Federal qualified payment stablecoin issuers are approved by the Office of the Comptroller of the Currency (OCC), while state-qualified issuers must be authorized by a state payment stablecoin regulator. The primary federal payment stablecoin regulator is determined by the issuer’s entity type, with the OCC overseeing federal qualified issuers. The act also establishes the Stablecoin Certification Review Committee, composed of the Treasury Secretary, the FDIC Chair, and the Federal Reserve Chair, to certify state regulatory regimes as substantially similar to the federal framework and to approve foreign regulatory regimes for international issuers.
The law aims to strengthen consumer protection, foster responsible innovation, and bolster the U.S. dollar’s position as the world’s reserve currency by closing a longstanding regulatory gap in the issuance and custody of stablecoin reserves. It also seeks to mitigate financial stability and illicit finance risks, with the U.S. Department of the Treasury issuing an Advance Notice of Proposed Rulemaking (ANPRM) in September 2025 to solicit public comment on implementing regulations related to anti-money laundering (AML) obligations, BSA compliance, tax issues, and the balance between federal and state oversight. The Treasury had previously issued a Request for Comment in August 2025 to gather insights on detecting illicit activity involving digital assets.
Critics, including the nonprofit organization Consumer Reports, argue that the act does not provide sufficient consumer protection and allows large technology companies to engage in bank-like activities without being subject to the same stringent regulations as traditional banks. Despite this, the GENIUS Act is seen as a landmark moment for the U.S. cryptocurrency industry, potentially enabling widespread adoption of stablecoins in traditional finance and payments, and encouraging international harmonization, such as with Canada, where stablecoins are currently classified as securities or derivatives, unlike the U.S. classification as payment instruments. The act may also disrupt traditional payment systems by offering instant settlement, programmability, and lower costs, potentially reducing the $187 billion in annual merchant fees.
