GENIUS Act Signed as Landmark Stablecoin Framework Takes Effect

On July 18, 2025, the Guiding and Establishing National Innovation for U.S. Stablecoins Act (GENIUS Act) was signed into law by President Donald J. Trump, marking the first major federal legislative action in the U.S. digital asset sector [1]. The law creates a comprehensive regulatory framework for “payment stablecoins,” which are digital assets backed 100% by highly liquid assets such as cash and U.S. Treasuries, pegged to a national currency, and redeemable at a fixed value [2]. The legislation was introduced during what has been called “Crypto Week” in the U.S. House of Representatives, and it was passed alongside the CLARITY Act and the Anti-CBDC Surveillance State Act [3].

A central provision of the GENIUS Act is the establishment of a licensing regime for “permitted payment stablecoin issuers.” The Act restricts stablecoin issuance to entities approved by either a federal banking regulator, a state regulator, or a newly created oversight body—the Stablecoin Certification Review Committee (SCRC). The SCRC, composed of the Treasury Secretary, FDIC Chair, and Federal Reserve Chair, will ensure consistency between state and federal regulatory frameworks [4]. Issuers are also subject to strict reserve requirements, prohibited from misleading marketing, and limited to core functions such as issuance, redemption, and custody [5].

The Act excludes payment stablecoins from the definitions of “security” and “commodity” under U.S. federal law, removing them from the jurisdiction of the SEC and CFTC [6]. This move is expected to reduce regulatory ambiguity for market participants and clarify the role of federal banking regulators in overseeing stablecoin activities [7]. The legislation also mandates that the Treasury Secretary conduct a study on non-payment stablecoins, such as crypto-backed or algorithmic stablecoins, within one year [8].

Compliance obligations under the GENIUS Act include requirements for asset transparency, AML protocols, and customer protections. Issuers must disclose their monthly reserve compositions and maintain separate accounting for stablecoin assets. The Act prohibits “tying” arrangements, where stablecoin access is contingent on purchasing other financial products, and mandates that custodians of stablecoin reserves be federally or state-supervised and not commingle assets [9].

The impact of the GENIUS Act is expected to be most pronounced for large payments companies, fintechs, and financial institutions that have already issued stablecoins. These entities will need to apply for federal or state licenses under the new framework. While the Act grants a 12-month grace period for existing issuers with pending applications, it does not guarantee that regulators will extend it [10]. For the broader market, the Act could enhance the legitimacy of stablecoin-based payments, potentially enabling faster, cheaper, and more transparent financial transactions [11].

The passage of the GENIUS Act is part of a broader U.S. strategy to position the country as a global leader in digital assets. It aligns with other initiatives, such as the White House’s AI Action Plan and the recent creation of a strategic bitcoin reserve, aimed at modernizing financial infrastructure and reducing regulatory bottlenecks [12]. Implementation is expected to begin within 18 months of enactment or 120 days after final regulations are issued, with federal banking regulators tasked with developing detailed rules by the end of 2025 [13].

Source:

[1] The GENIUS Act Ushers in a New Era for Stablecoin

(https://www.jdsupra.com/legalnews/the-genius-act-ushers-in-a-new-era-for-3412549/)

[2] The GENIUS Act: A New Era in U.S. Crypto Regulation

(https://lamag.com/news-and-politics/the-genius-act-a-new-era-in-us-crypto-regulation)

[3] The GENIUS Act: US law for payment stablecoins

(https://www.jdsupra.com/legalnews/the-genius-act-us-law-for-payment-9089272/)

[4] United States: The GENIUS Act — A new federal framework for stablecoin issuers

(https://www.globalcompliancenews.com/2025/07/30/https-insightplus-bakermckenzie-com-bm-technology-media-telecommunications_1-united-states-the-genius-act-a-new-federal-framework-for-stablecoin-issuers-custodians-and-banks_07252025/)

[5] The GENIUS Act: A New Era in U.S. Crypto Regulation

[6] Crypto week in the U.S. House of Representatives

(https://www.hoganlovells.com/en/publications/crypto-week-in-the-us-house-of-representatives-the-genius-act-and-the-push-for-regulatory-clarity)

[7] GENIUS Act and a New Digital Asset Era

(https://www.swlaw.com/publication/genius-act-and-a-new-digital-asset-era/)

[8] The GENIUS Act: US law for payment stablecoins

[9] The GENIUS Act: US law for payment stablecoins

[10] The GENIUS Act Passed - Now the Real Work Begins

(https://www.paradigm.xyz/2025/07/the-genius-act-passed-now-the-real-work-begins)

[11] What Is The GENIUS Act? A CEO's Guide To The US Stablecoin Legislation

(https://transak.com/blog/what-is-the-genius-act-a-ceos-guide-to-the-us-stablecoin-legislation)

[12] The GENIUS Act: A New Era in U.S. Crypto Regulation

[13] The GENIUS Act: US law for payment stablecoins