Under the GENIUS Act, a robust regulatory framework has been instituted to govern payment stablecoins issued by U.S. entities, marking a significant advancement in digital asset oversight. This legislation, enacted with bipartisan support and signed into law, firmly establishes the conditions under which payment stablecoins may be issued, focusing on safeguarding financial stability and protecting consumers. Central to the framework is the prohibition of issuance by any entity that is not a permitted payment stablecoin issuer, ensuring that market participants operate within stringent regulatory confines. The act outlines a clear definition of payment stablecoins as digital assets redeemable for a fixed value, simultaneously excluding authorized stablecoins from classification as securities, thus clarifying their regulatory status. Given the fragmented cryptocurrency regulations worldwide, this act represents a critical step toward regulatory clarity in the U.S.
Permitted issuers encompass a diverse array of entities, including subsidiaries of insured depository institutions, federally qualified nonbank stablecoin issuers, state-qualified issuers capped at $10 billion in issuance, public companies not primarily involved in financial services but subject to rigorous unanimous approval by the Stablecoin Certification Review Committee (SCRC), and foreign issuers operating under comparable regulatory regimes via domestic digital asset service providers. The SCRC’s unanimous approval requirement ensures alignment across federal and state jurisdictions. This layered structure balances inclusion with risk mitigation, while reserve requirements mandate a strict 1:1 backing with U.S. currency or similarly liquid assets, emphasizing reserve quality and liquidity. Additionally, issuers must maintain transparent redemption policies, publish monthly reserve details, and secure CEO and CFO certifications to affirm compliance.
Oversight is consolidated under the SCRC, comprising key federal financial regulators, which holds expansive authority to approve, monitor, or revoke state certifications and individual issuers, ensuring ongoing adherence to federal standards. The act also prohibits issuers from providing services conditioned on the purchase of additional paid products, reinforcing consumer protections. Banks are expected to issue stablecoins through federally supervised subsidiaries, while nonbank entities face supervision by the Office of the Comptroller of the Currency or relevant state authorities, contingent on defined criteria. Capital adequacy, risk management, anti-money laundering compliance, and the prohibition of interest payments to holders constitute additional regulatory pillars, reinforcing prudence and integrity. The progression timeline is structured for clarity, with federal rulemakings and multiple reporting requirements initiating within twelve months, underscoring a methodical, transparent progression to a regulated stablecoin ecosystem within the United States.
