The Guiding and Establishing National Innovation for U.S. Stablecoins Act -- the GENIUS Act -- is the first comprehensive federal law governing payment stablecoins. Passed with bipartisan support (Senate 68-30, House 308-122) and signed July 18, 2025, it mandates 1:1 reserve backing, monthly attestations, and creates a national trust bank charter pathway. Five institutions received conditional OCC approvals within six months. For institutional participants, the law transforms stablecoins from a regulatory gray zone into a defined component of the U.S. financial system.
From Patchwork to Federal Framework
Before July 2025, stablecoin issuers in the United States operated under a patchwork of more than 50 state money transmitter licensing regimes. New York's BitLicense, Wyoming's Special Purpose Depository Institution charter, and various state-specific frameworks each imposed different requirements. No federal standard existed. The resulting ambiguity kept institutional capital on the sidelines and left compliance officers without clear guidance on which rules applied.
The GENIUS Act (S.1582) resolved this by establishing a single federal framework for payment stablecoins -- digital assets pegged to a currency and designed for transactions. Introduced by Senator Bill Hagerty (R-TN) in May 2025, the legislation moved through Congress with unusual speed. After an initial cloture vote fell short (48-49 on May 8), the bill gained momentum through bipartisan negotiation. By June 17, the Senate passed it 68-30, with 18 Democrats joining the majority. The House followed on July 17 with a 308-122 vote, including 102 Democrats. President Trump signed it into law the following day.
Treasury Secretary Scott Bessent called the signing "a seminal moment for digital assets and dollar supremacy," adding: "Stablecoins represent a revolution in digital finance. The dollar now has an internet-native payment rail that is fast, frictionless, and free of middlemen."
What the Law Requires
The GENIUS Act establishes four pillars for payment stablecoin regulation:
Reserve backing. Every payment stablecoin must be backed 1:1 by high-quality liquid assets. Permitted reserves include U.S. Treasury securities with maturities of 93 days or less, demand deposits at FDIC-insured institutions, repurchase agreements backed by Treasuries, qualifying money market funds, and central bank reserves. Reserves cannot be pledged, rehypothecated, or reused -- except to meet margin obligations or redemption requests.
Transparency and audits. Issuers must publicly disclose their reserve composition monthly, with reports examined by registered accounting firms. CEOs and CFOs must personally certify accuracy. Issuers with more than $50 billion in outstanding stablecoins must publish audited annual financial statements.
Issuer licensing. Three categories of entities may issue payment stablecoins: OCC-chartered national trust banks, subsidiaries of FDIC-insured depository institutions, and state-regulated entities meeting "substantially similar" standards. Issuers with more than $10 billion in outstanding stablecoins require federal authorization; smaller issuers may operate under qualified state frameworks.
Consumer protection. Stablecoin holders receive bankruptcy priority over all other claims. Full AML/KYC/CFT compliance is required, with issuers classified as financial institutions under the Bank Secrecy Act. Foreign issuers must register with the OCC and hold reserves in U.S. financial institutions.
One provision drew particular attention: the explicit prohibition on yield-bearing stablecoins. Issuers may not pay interest to holders solely for holding, using, or retaining a stablecoin. This distinction separates payment stablecoins from investment products -- and directs institutions seeking returns toward tokenized securities and money market products built on blockchain infrastructure.
The yield prohibition matters: By barring interest on stablecoins, the GENIUS Act channels institutional demand toward tokenized Treasury products, money market funds, and real-world asset instruments. The law does not restrict stablecoins; it clarifies their role as payment rails -- and in doing so, creates a larger addressable market for tokenized yield products.
OCC Charters: The Institutional On-Ramp
The GENIUS Act's most consequential near-term effect arrived on December 12, 2025, when the Office of the Comptroller of the Currency conditionally approved five national trust bank charter applications. Circle received approval for its First National Digital Currency Bank. Ripple was approved for its National Trust Bank. Paxos, BitGo, and Fidelity Digital Assets converted from state to federal charters.
These charters enable custody services, settlement and payment processing, and digital asset management -- under the same regulatory framework that governs traditional trust companies. They do not, however, include deposit-taking or FDIC insurance access.
The signal is significant. By moving stablecoin oversight to banking regulators (OCC and Federal Reserve) rather than the SEC, Congress acknowledged stablecoins as payment technology rather than investment products. Combined with SAB 122, which enables banks to custody digital assets without on-balance-sheet liability classification, the infrastructure for institutional adoption is now in place.
A Market in Motion
The regulatory clarity has arrived at a moment of accelerating market growth. Stablecoin market capitalization reached $300+ billion by early 2026, driven by USDT at $186.6 billion (58% market share) and USDC at $74 billion (25%). Transaction volumes hit a record $33 trillion in 2025, up 72% year-over-year -- surpassing the combined volumes of Visa and Mastercard.
USDC's dominance in transaction volume despite USDT's larger market cap points to an institutional pattern: higher velocity suggests compliant stablecoins are the preferred rails for institutional settlement. The GENIUS Act reinforces this dynamic by creating a regulatory framework that institutional compliance departments can evaluate and approve.
GENIUS Act vs. MiCA: Two Frameworks, One Direction
The United States is not acting in isolation. The EU's Markets in Crypto-Assets Regulation (MiCA) took effect in stages beginning June 2023, with full enforcement by July 2026. Together, these frameworks cover the two largest regulated financial markets in the world. Their approaches differ in important ways, but converge on core principles.
| Dimension | GENIUS Act (U.S.) | MiCA (EU) |
|---|---|---|
| Scope | Payment stablecoins only | All crypto-assets (broader) |
| Reserve Backing | 1:1 in HQLAs; Treasuries max 93-day maturity | 1:1; 30-60% must be in EU banks |
| Yield Permitted | No -- explicitly prohibited | Not prohibited (varies by token type) |
| Federal Threshold | >$10B requires federal charter | Significant tokens subject to EBA oversight |
| Banking Risk | Limits bank deposit exposure | Requires 30-60% bank deposits |
| Full Enforcement | January 18, 2027 | July 1, 2026 |
Both frameworks require 1:1 conservative reserve backing, regular attestations, and redemption at par. The GENIUS Act is, in key respects, more conservative: it caps Treasury maturities at 93 days, excludes longer-maturity bonds, and limits bank deposit exposure in reserves. MiCA, by contrast, requires 30-60% of reserves to be held in EU banks -- introducing the banking credit risk that the U.S. approach deliberately avoids.
The convergence matters for institutions operating globally. A stablecoin issuer compliant with the GENIUS Act's reserve standards will find substantial overlap with MiCA requirements. The remaining differences -- scope, yield treatment, and bank deposit mandates -- are navigable for sophisticated compliance teams.
What Comes Next
The GENIUS Act is foundational, but not final. Implementing regulations from the OCC, Federal Reserve, and Treasury are due by July 18, 2026. Full compliance requirements take effect January 18, 2027 -- or 120 days after final regulations, whichever is later.
The CLARITY Act, which would establish a comprehensive market structure framework assigning jurisdiction between the SEC and CFTC for digital assets beyond stablecoins, passed the House 294-134 in July 2025 and is expected in Senate markup during 2026. Prediction markets assign an 80% probability of passage before the midterm elections.
For institutional participants, the strategic calculus has shifted. Stablecoins are no longer unregulated instruments with ambiguous legal status. They are payment technology governed by federal banking law, with defined reserve requirements, audit obligations, and consumer protections. The institutions that have waited for regulatory clarity now have it.
For the C-Suite: The GENIUS Act answers the question institutional boards have been asking: "Is there a regulatory framework we can underwrite?" The answer is now yes. With five OCC charter approvals, $300+ billion in market capitalization, and $33 trillion in annual transaction volume, payment stablecoins have transitioned from experimental technology to regulated financial infrastructure. The remaining question is not whether to engage, but how to position within the new framework.
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