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Standard Summary
Comprehensive overview in 1-2 paragraphs
The GENIUS Act of 2025 establishes a comprehensive federal framework to regulate payment stablecoins in the United States. It creates a licensing and regulatory regime that designates who may issue payment stablecoins (permitted issuers) and sets strict standards for reserves, disclosure, risk management, and supervision. The law envisions coexistence with state-level regimes for smaller issuers, but includes a clear pathway for federal regulation as issuers grow, with a focus on safety, soundness, and consumer protection. Primary regulators include the Comptroller of the Currency (for federal nonbank issuers), the Federal Reserve Board, the Federal Deposit Insurance Corporation, and the National Credit Union Administration, with State regulators able to participate under a substantially similar framework. Violations carry penalties, and the act provides formal processes for licensing, supervision, and enforcement. In short, the bill aims to ensure that payment stablecoins are fully backed, transparent, and subject to robust oversight, while creating a transition path from state to federal regulation for larger issuers and providing a structured, rule-based approach to governance, risk management, and enforcement.
Key Points
- 1Federal regulatory framework and designation of primary regulators
- 2- Sets up a federal framework for regulating payment stablecoins and identifies the primary regulators (including the Comptroller, the Board of Governors of the Federal Reserve, the FDIC, and the NCUA) with jurisdiction over different issuer types, alongside a State-level option.
- 3- Requires joint or coordinated rulemaking and establishes a 180-day deadline to issue regulations to carry out the Act.
- 4Who may issue payment stablecoins and transition rules
- 5- It is unlawful for anyone who is not a “permitted payment stablecoin issuer” to issue a payment stablecoin in the United States.
- 6- Permitted issuers include: (a) a subsidiary of an insured depository institution approved to issue stablecoins, (b) a Federal qualified nonbank payment stablecoin issuer approved to issue stablecoins, or (c) a State qualified payment stablecoin issuer.
- 7- Creates a pathway for State-regulated issuers with market capitalization up to $10 billion to operate under a State-level regime if substantially similar to the federal framework; otherwise, firms would fall under the federal regime.
- 8Reserve backing, disclosure, and redemption standards
- 9- Permitted issuers must back all outstanding stablecoins 1-to-1 with reserves composed of specified assets, including cash, deposits at insured institutions, short-term Treasuries, certain repos, money market funds, and Central Bank reserve deposits.
- 10- Requires public disclosure of redemption policies, timely redemption procedures, and monthly reporting of reserve composition and outstanding stablecoins on the issuer’s website.
- 11- Reserves may not be rehypothecated (reused as collateral) except for limited liquidity purposes tied to redeemable stability, with safeguards such as central clearing or regulator consent.
- 12Capital, liquidity, risk management, and accountability
- 13- Regulators must establish capital, liquidity, and risk management standards appropriate to the issuer’s risk profile, with flexibility to tailor requirements and to differentiate among issuers.
- 14- Requires monthly examinations of reserve disclosures by a registered public accounting firm and CEO/CFO certifications of accuracy, with criminal penalties for false certifications.
- 15- Treats permitted issuers as financial institutions for Bank Secrecy Act purposes, reinforcing compliance and supervisory expectations.
- 16Issuer licensing, supervision, and enforcement
- 17- The primary federal regulator reviews and approves applications for issuing through subsidiaries of depository institutions or other nonbank entities, with a formal 120-day decision window after an application is complete, procedures for denials (including hearings), and an appeal process.
- 18- Subsections provide detailed supervisory and enforcement tools, including suspension or revocation of registration, cease-and-desist orders, removal of institution-affiliated persons, civil penalties for non-compliance or illegal issuance, and established due process procedures modeled after banking agency processes.
- 19- Establishes annual reporting on pending applications and authorizes rulemaking to regulate the issuance of payment stablecoins.
- 20State-level issuers and cooperation with the Board
- 21- State regulators can regulate State-qualified issuers and may enter into memoranda of understanding with the Federal Reserve Board to enable Board-driven supervision of State-qualified issuers.
- 22- Information sharing between State regulators and the Board is mandated, and State-level rules may be issued that apply to State-qualified issuers to the same extent as federal rules apply to non-State issuers.
- 23Transition provisions and thresholds
- 24- A State-regulated depository institution-generated issuer with market cap above $10 billion must transition to federal regulation within a specified period, or halt issuing new stablecoins until under the threshold.
- 25- Other issuers with market caps above the threshold also face a transition timeline to federal regulation, with conditional approvals and potential waivers to remain under state regulation in limited circumstances.
Impact Areas
Primary group/area affected- Payment stablecoin issuers (both bank-affiliated and nonbank), insured depository institutions, and regulatory-compliance teams responsible for digital asset issuance and management.Secondary group/area affected- Federal and state banking regulators (OCC/Comptroller, Federal Reserve, FDIC, NCUA) and state payment stablecoin regulators; accounting firms, custodians, and custodial services involved in reserve management and disclosures.Additional impacts- Consumers and merchants using stablecoins as a means of payment, given heightened transparency, reserve backing, and protections against misuse.- Potential changes to innovation and competition in the stablecoin space due to licensing requirements, capital and liquidity standards, and supervisory expectations.- Enhanced financial system stability and anti-money-laundering/sanctions compliance through Bank Secrecy Act alignment and regulated oversight.The provided text ends partway through Section 7, so there may be additional provisions in the full bill not captured here. The summary above reflects the material available in the provided text.
Generated by gpt-5-nano on Nov 18, 2025