The GENIUS Act, signed on July 18, 2025, is a US federal law that limits payment stablecoin issuance to approved issuers. It requires at least 1:1 backing in cash and short-dated Treasuries, monthly public reserve reports, and a ban on issuers paying holders interest. It takes effect on January 18, 2027. As of November 2026, the OCC has finalized its main rule, while other agencies' rules are mostly still proposals. This is an explainer, not legal advice.
What counts as a payment stablecoin?
The law regulates one defined category and not every token that calls itself a stablecoin. Under section 2 of the Act, a payment stablecoin is a digital asset designed for payment or settlement, whose issuer must redeem it for a fixed amount of money and represents that it will hold a stable value. National currencies, bank deposits and securities are excluded.
A stablecoin backed mainly by its own sister token, the design that failed with TerraUSD, could not meet the reserve list below. Section 14 orders a Treasury study of such "non-payment stablecoins". Knowingly marketing a product in the US as a payment stablecoin when it is not issued under the Act can bring fines of up to $500,000 per violation.
Who is allowed to issue one?
Section 3 makes it unlawful for anyone other than a permitted payment stablecoin issuer to issue a payment stablecoin in the United States. A permitted issuer must be formed in the US and fit one of three routes. Foreign issuers have a separate exception.
| Route | Who qualifies | Main regulator |
|---|---|---|
| Bank subsidiary | Subsidiary of an insured bank or credit union, approved under section 5 | The parent's federal regulator (FDIC, Federal Reserve, OCC or NCUA) |
| Federal qualified issuer | Nonbank approved by the OCC, an uninsured national bank, or a federal branch of a foreign bank | OCC |
| State qualified issuer | State-established entity approved by a state regulator | State regulator, up to the $10 billion limit below |
| Foreign issuer (section 18) | Issuer from a regime Treasury finds comparable, registered with the OCC, holding enough reserves in a US institution for US customers | Home regulator plus OCC registration |
A public company not mainly engaged in financial activities cannot issue a payment stablecoin without a unanimous finding by the Stablecoin Certification Review Committee on safety, data use and tying rules.
What are the 1:1 reserve rules?
Section 4 requires identifiable reserves worth at least $1 for every $1 of tokens outstanding, and only these assets count:
- US coins and currency, or balances at a Federal Reserve Bank.
- Demand deposits at insured banks or credit unions, subject to regulators' limits.
- Treasury bills, notes or bonds with 93 days or less to maturity, or issued with that maturity.
- Overnight repurchase and reverse repurchase agreements tied to Treasuries, under set conditions.
- Registered government money market funds that hold only the assets above.
- Other similarly liquid federal assets a regulator approves, and tokenized versions of many of these, if lawful.
Reserves generally cannot be pledged or reused. The narrow exceptions cover margin on reserve repurchase deals, standard custody and raising cash for redemptions.
A worked example
Say an issuer has 1,000,000,000 tokens outstanding, each redeemable for $1. It needs at least $1 billion in eligible reserves. Test four holdings:
| Holding | Eligible? | Why |
|---|---|---|
| $600 million in Treasury bills with 60 days left | Yes | Within the 93-day limit |
| $300 million in demand deposits at insured banks | Yes | Subject to any regulatory limits |
| $100 million in Treasury notes with 120 days left | No | Remaining maturity is over the 93-day limit |
| $50 million in corporate bonds or bitcoin | No | Not on the list |
The eligible total is $900 million, so this issuer is $100 million short.
The Act also requires public redemption procedures and fee disclosure. It says "timely" without setting a number of days, and regulators fill that in. The OCC's final rule keeps a two-business-day outer limit, and the FDIC has proposed a similar standard.
What must issuers disclose each month?
Issuers must publish their reserve composition on their website every month, and their top executives must certify it.
- The report shows the total tokens outstanding and the amount and type of reserves, including average maturity and where each category is held.
- A registered public accounting firm must examine the month-end information each month.
- The CEO and CFO must certify its accuracy to the regulator. Knowingly false certification carries criminal penalties.
- Issuers above $50 billion that are not already SEC reporting companies must also publish audited annual financial statements.
The monthly step is an examination of the reserve report, not a full audit. A common misreading is that every stablecoin gets audited each month.
Does the Act ban yield on stablecoins?
It bans issuers from paying yield, and how far that reaches beyond issuers is the live dispute. Section 4(a)(11) says no permitted or foreign issuer may pay a holder "any form of interest or yield (whether in cash, tokens, or other consideration) solely in connection with the holding, use, or retention" of the coin.
If $1 billion in reserves earned 4% a year (an illustrative rate), that is $40 million the issuer cannot pass to holders for simply holding. The text names issuers, not exchanges or other platforms. So could an issuer pay a crypto exchange that then offers users rewards?
The OCC's proposal included a rebuttable presumption that paying an affiliate or related third party, which then paid yield to holders, broke the ban. Its final rule dropped that presumption. It kept its anti-evasion authority, offered no safe harbor, and said it may address the question in a later rule.
A May 2026 Senate compromise in the separate CLARITY Act would bar rewards economically equivalent to deposit interest while allowing activity-based rewards. That is not law, and a procedural Senate vote failed 49-50 in September 2026.
How do federal and state oversight fit together?
Smaller issuers can choose a state regime, and larger ones generally move under federal oversight. A state qualified issuer with $10 billion or less outstanding may opt for state regulation if that regime is "substantially similar" to the federal framework. The Stablecoin Certification Review Committee reviews state certifications, and Treasury proposed the principles for that test in April 2026.
An issuer above $10 billion has two options under section 4(d). It can move to the federal framework within 360 days, or stop issuing new tokens until it falls back under the limit. Regulators can grant a waiver on set criteria.
What protections do holders get?
The Act gives holders a priority claim, but no government guarantee.
- Insolvency. Section 11 gives holders priority over other creditors on the required reserves.
- No government backing. Payment stablecoins may not be backed by the full faith and credit of the United States or carry federal deposit or share insurance.
- Securities status. Section 17 says a payment stablecoin from a permitted issuer is not a security or a commodity under the laws it amends.
- Freezes. Issuers must have the technical ability to comply with lawful orders, which can require seizing, freezing or burning tokens.
What are the key dates?
Section 20 sets the effective date as the earlier of 18 months after enactment or 120 days after the primary federal regulators issue final regulations. The OCC's October 21, 2026 rule falls too late to change it, since 120 days later is February 18, 2027. So January 18, 2027 stands.
| Date | What happens |
|---|---|
| July 18, 2026 | One-year deadline for implementing rules, which agencies missed |
| January 18, 2027 | Act takes effect, including the licensing requirement |
| July 18, 2028 | Service providers may no longer offer or sell non-permitted payment stablecoins to people in the US, apart from the foreign issuer exception |
Where does rulemaking stand as of November 2026?
Only part of the rulebook is final, and proposals can still change. This status comes from agency releases available through late October 2026.
| Agency | Status |
|---|---|
| OCC | Final rule issued October 21, 2026, effective January 18, 2027. Includes a $5 million capital floor and a backstop tied to 12 months of expenses. Anti-money laundering rules come separately. |
| Treasury | Proposed rule on issuance, offers and sales, August 2026. Interim final rule on state certification forms, effective September 30, 2026. Anti-money laundering and customer identification proposals, April and June 2026. |
| Federal Reserve | Two proposals issued September 24, 2026. |
| FDIC | Application proposal, December 2025. Broader standards proposal, April 2026. |
| NCUA | Licensing and standards proposals, February and May 2026. |
How does it compare with the EU's MiCA?
The EU's Markets in Crypto-Assets Regulation (MiCA) came first and is stricter in some respects. Its rules for e-money tokens, the closest match to a dollar stablecoin, have applied since June 30, 2024.
| Topic | GENIUS Act | MiCA (e-money tokens) |
|---|---|---|
| Who can issue | Three US routes, plus a foreign exception | Credit institutions or e-money institutions |
| Reserves | Listed cash-like assets, at least 1:1 | At least 30% in separate bank accounts, the rest in secure, low-risk liquid assets in the same currency |
| Redemption | "Timely"; the OCC sets two business days | At any time, at par, generally with no fee |
| Interest | Issuers barred from paying it solely for holding, use or retention | Issuers and service providers barred, and benefits tied to holding time count, including from third parties |
The interest row may matter most to users, because the GENIUS text names only issuers. Readers following tokenized assets or DeFi should watch how each regime treats on-chain rewards.
What does it mean for an ordinary holder?
The law tightens rules on reserves and disclosure, but it does not make a stablecoin risk-free. Depegs can still happen during banking stress, as USDC showed in March 2023. Many tokens also live on blockchains such as Ethereum, where smart contract risk is separate from reserve quality. See our regulation hub for more.
Before relying on a stablecoin, check who issues it, whether the issuer is permitted once the law applies, and what its latest report shows. Rules vary, so ask a qualified lawyer before relying on them.
Key takeaways
- The GENIUS Act became law on July 18, 2025, and takes effect on January 18, 2027.
- Only permitted issuers may issue payment stablecoins in the US, and foreign issuers need a separate exception.
- Reserves must back tokens at least 1:1 with listed cash-like assets, reported monthly and certified by the CEO and CFO.
- Issuers cannot pay yield solely for holding, using or retaining a coin. How that applies to exchange rewards is unsettled.
- From July 18, 2028, service providers generally cannot offer non-permitted payment stablecoins to people in the US.
- As of November 2026, the OCC's rule is final, while most other agencies' core rules are still proposals.
Sources
- Public Law 119-27, the GENIUS Act
- OCC final rule news release, October 21, 2026
- OCC final rule in the Federal Register, October 23, 2026
- Treasury notice of proposed rulemaking on section 3, August 17, 2026
- Federal Reserve proposals, September 24, 2026
- FDIC proposed standards for permitted issuers, April 2026
- MiCA Article 50, ESMA Interactive Single Rulebook
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