The GENIUS Act, a significant stablecoin regulatory bill, is on the verge of becoming law as President Donald Trump prepares to sign it. This legislation aims to set clear regulations for stablecoin issuers operating within the United States, impacting the industry both domestically and internationally.
Following the US House’s approval of three cryptocurrency-related bills, including the GENIUS Act—Guiding and Establishing National Innovation for US Stablecoins Act—the bill only awaits the president’s signature to become enforceable law. The signing ceremony is scheduled for 2:30 pm on Friday in Washington, DC, as reported by journalist Eleanor Terrett.
Once signed, the GENIUS Act will come into effect 18 months later or 120 days following the issuance of final regulations by primary federal stablecoin regulators such as the Treasury Department and the Federal Reserve.
Here’s what to expect from the GENIUS Act:
Stablecoin Issuers Encouraged to Obtain Banking Licenses
Legal expert Logan Payne from Winston & Strawn explains that the Act encourages stablecoin issuers to pursue formal banking licenses. The new licensing under the Act restricts companies strictly to stablecoin issuance, but many issuers currently engage in broader activities. Given this, seeking a national trust bank charter, as done by firms like Circle and Ripple, offers a comprehensive regulatory framework allowing wider operations without state-by-state licenses.
Interest Payments on Stablecoins Prohibited
One of the more contentious provisions bans issuing interest or yield on stablecoins. Yield incentives have been powerful tools for attracting users; for example, Circle’s USDC rewards holders on certain exchanges. This ban is expected to lead to significant changes in such yield arrangements moving forward.
Decentralized Finance Faces Regulatory Uncertainty
The GENIUS Act introduces ambiguity in how DeFi platforms can handle stablecoins. According to Payne, the legislation deliberately leaves this area undefined for now, prompting uncertainty. However, additional legislation and future regulations, such as the CLARITY Act which clarifies digital asset classification and regulatory authority, are anticipated to address these gaps over time.
Mandatory Monthly Reserve Reporting
Authorized stablecoin issuers will be required to back tokens one-to-one with US dollars or equivalent monetary instruments like Treasury bills. They must publicly disclose reserve compositions, have these reviewed by registered accounting firms, and certify report accuracy with relevant federal or state agencies.
Non-Approved Issuers Restricted; Foreign Stablecoins Regulated
Within three years after enactment, stablecoins issued by unapproved entities will be banned from the US market. Foreign stablecoins can be offered only if issuers comply with US legal requirements or originate from countries with comparable regulatory systems. Such issuers will register with the Office of the Comptroller of the Currency (OCC) and maintain sufficient US reserves.
Multiple Regulators Overseeing Stablecoins
The Act enables a range of regulated entities — including banks, credit unions, and select nonbanks — to issue stablecoins under a combined federal and state oversight framework. Depending on entity type, regulation arises from bodies such as the National Credit Union Administration, the Federal Deposit Insurance Corporation, the OCC, Treasury, or the Federal Reserve. Smaller issuers under $10 billion in stablecoin issuance may opt for state-level regulation, but states are not mandated to establish dedicated stablecoin regulators.
