The GENIUS Act, short for the Guiding and Establishing National Innovation for U.S. Stablecoins Act, decides who may issue a dollar stablecoin to people in the United States and what they owe holders in return. This guide works through the enrolled text on Congress.gov, adds what regulators have written since, and closes with a table of what changes for anyone who holds the coins. For the mechanics of a peg, see how stablecoins work; for the wider web of agencies, see crypto regulation in the US; and for the asset class as a whole, start at the crypto hub.
What does the GENIUS Act do?
It licenses payment stablecoin issuers: once it applies, issuing one in the US without approval is a federal crime, and approved issuers must meet reserve and redemption rules.
The timeline in one line: Signed July 18, 2025 (Public Law 119-27); takes effect January 18, 2027 (Congress.gov, as of Nov 1, 2026). The Senate passed the bill on June 17, 2025 and the House on July 17, 2025.
Section 2 defines a payment stablecoin as a digital asset used for payment or settlement whose issuer must redeem it for a fixed amount of money and says it will hold a stable value. National currencies, bank deposits (including deposits recorded on a blockchain) and securities are carved out, so neither a tokenized bank deposit nor a tokenized money market fund share counts. Knowingly issuing without approval can bring a fine of up to $1 million per violation and up to five years in prison, and regulators can add civil penalties of up to $100,000 for each day unapproved coins are issued.
Who can issue a payment stablecoin under the GENIUS Act?
Only a permitted payment stablecoin issuer formed in the United States: a bank subsidiary approved by its regulator, a federally licensed nonbank or a state-licensed issuer.
| Type of permitted issuer | Who it is | Approved and supervised by |
|---|---|---|
| Subsidiary of an insured depository institution | A subsidiary of an FDIC-insured bank or a federally insured credit union | The parent's federal regulator: the Fed, the FDIC, the OCC or the NCUA |
| Federal qualified issuer | A nonbank, an uninsured national bank such as a national trust bank, or a federal branch of a foreign bank | The OCC |
| State qualified issuer | A company licensed under a state stablecoin regime that passes federal review | The state regulator, with federal backstops |
Applicants file with their regulator, which must say within 30 days whether an application is complete and decide within 120 days after that. An application left undecided is deemed approved, and issuing on an open, public blockchain is not by itself a reason to deny one.
Every issuer faces the same conditions. Anyone convicted of a felony involving insider trading, embezzlement, cybercrime, money laundering, terrorist financing or financial fraud may not be an officer or director, and issuers are limited to issuing, redeeming, managing reserves, custody and closely related work. A public company that is not mainly in financial services, such as a large technology firm, also needs a unanimous vote of the Stablecoin Certification Review Committee, which the Treasury Secretary chairs with the heads of the Fed and the FDIC.
How do the federal and state paths and the $10 billion threshold work?
Issuers with $10 billion or less outstanding may choose a state regime that matches federal principles; above $10 billion, they generally must move under federal oversight.
Section 4(c) sets the test for a state regime. Treasury writes the principles for what counts as substantially similar to the federal rules, and proposed them on April 3, 2026. Each state must certify its regime within a year after the law takes effect and every year after, and the review committee has 30 days to approve, which takes a unanimous finding. Even then, the Fed and the OCC can act against a state issuer in unusual and exigent circumstances, after 48 hours' notice to the state regulator.
Worked example: A state issuer that grows past $10 billion
A state-licensed issuer that is not a bank has 8.5 billion coins outstanding, and circulation grows 4% a month.
- After four months: 8.5 billion × 1.04^4 ≈ 9.94 billion, still under the line
- After five months: 8.5 billion × 1.04^5 ≈ 10.34 billion, past $10 billion
- From the day it crossed, it has 360 days to move into joint supervision by its state regulator and the OCC, without needing a federal charter, or it must stop issuing new coins until circulation falls back under $10 billion.
- A waiver can keep it under state supervision alone. The regulator weighs its capital, its examination history, the state regulator's experience and the state's framework, and states that already licensed stablecoin issuers before the law passed get a presumption in favor.
What reserves must issuers hold, and how are they reported?
Every coin must be backed at least one-for-one by a short list of safe, liquid assets, and the issuer must publish the mix every month with an accountant's examination.
The statute's list, from section 4(a)(1): at least 1:1 reserves in cash or Federal Reserve balances, deposits at insured banks and credit unions, Treasuries with 93 days or less to maturity, overnight repos and reverse repos backed by Treasuries, government money market funds that hold only those assets, other liquid federal government assets a regulator approves, and tokenized versions of the non-repo assets. Reserves may not be pledged or reused, except in narrow cases such as repo trades that raise cash for redemptions.
Each month the issuer must post the number of coins outstanding and the amount, composition, average tenor and custody location of every reserve category. A registered public accounting firm examines that report monthly, and the chief executive and chief financial officer certify it to their regulator, with criminal penalties for a knowingly false certification. Issuers with more than $50 billion outstanding that are not SEC reporting companies must also publish audited annual financial statements.
The OCC's final rule adds numbers for its issuers: at least 5% of reserves in demand deposits or Fed balances, no more than 40% with any one counterparty (the US government, qualifying custodians and centrally cleared repos aside), and the monthly report posted by noon on the last day of each month.
Worked example: Checking a $2 billion reserve against the OCC rule
An OCC-supervised issuer has 2,000,000,000 coins outstanding, so it needs at least $2 billion of eligible reserves at all times.
- Liquidity floor: 5% × $2 billion = at least $100 million in demand deposits or Fed balances
- Concentration cap: 40% × $2 billion = at most $800 million with any one bank or repo dealer
- A sample mix: $150 million of deposits at two banks + $1.2 billion of Treasury bills maturing within 93 days + $500 million of overnight repo split between two dealers + $160 million in a government money market fund = $2.01 billion, a $10 million cushion
- If losses cut reserves to $1.99 billion, the issuer must stop issuing new coins at once, and after 15 consecutive business days short it must begin liquidating reserves and redeeming holders without fees
What does the law say about redemption?
Issuers must publish a redemption policy, redeem in a timely way and disclose every fee in plain language, with at least seven days' notice before a fee changes.
Under the statute, only regulators may impose discretionary limits on timely redemption. The OCC defines timely as within two business days of a request and requires its issuers to redeem any amount of one coin or more for customers they have onboarded and screened. An issuer must tell the OCC within 24 hours if requests top 10% of its coins in a day, and may ask for more time. The FDIC's April 2026 proposal also uses two business days.
The catch for small holders is the onboarding step: redemption is owed to customers who pass identity and sanctions checks, so most people will still sell coins on a platform rather than redeem them.
Why can't issuers pay interest on stablecoins?
Section 4(a)(11) forbids permitted and foreign issuers from paying holders any interest or yield, in cash, tokens or other consideration, solely for holding, using or keeping a coin.
The ban keeps payment stablecoins from working like uninsured deposit accounts. The OCC repeats it in its final rule and adds an anti-evasion clause, judging arrangements case by case rather than offering a safe harbor. Rewards that platforms fund themselves are a separate question, covered in the guide to stablecoin yield versus bank interest.
What happens to holders if an issuer fails?
Holders get first claim on the required reserves, which are kept out of the bankruptcy estate, and any shortfall ranks ahead of every other claim against the issuer.
Section 11 and its changes to the Bankruptcy Code do four things. Holders' claims on the reserves come first, shared ratably. The reserves are excluded from the estate under a new section 541(b)(11), although the automatic stay still covers them. A court can release reserves for redemptions and must use its best efforts to order the first distributions within 14 days of the required hearing. And under a new section 507(e), whatever holders cannot recover from the reserves becomes a claim against the estate with first priority, ahead of even the costs of running the case, to the extent the issuer should have held more reserves.
Worked example: How holders are paid if an issuer fails
An issuer enters bankruptcy with 1,000,000,000 coins outstanding. A custody loss has cut its required reserves to $960 million, and it owes $150 million to landlords, vendors and other creditors.
- Step 1: the $960 million of reserves sits outside the estate and is paid to holders ratably, 96 cents per coin, or $960 on 1,000 coins.
- Step 2: the missing $40 million becomes a first-priority claim on the issuer's other assets, ahead of the other creditors and the administrative costs of the case.
- Step 3: if those other assets are worth $25 million, holders collect all of it, reaching ($960 million + $25 million) ÷ 1 billion coins = 98.5 cents per coin, and the other creditors receive nothing.
Section 10 adds a parallel rule for custodians: stablecoins held for customers must be kept apart from the custodian's own property, and customers' claims to them come first. Recovering coins from a failed platform can still take months, as the guide to whether crypto is safe on an exchange explains.
What marketing claims does the law ban?
Issuers may not suggest a coin is government money: no names using United States or USG, and no claims of legal tender status, federal backing or insurance.
The name rule in section 4(a)(9) also covers United States Government, though USD is allowed. Section 4(e) adds that payment stablecoins are not backed by the full faith and credit of the United States or insured by the FDIC or the NCUA, makes claiming otherwise unlawful, and bars marketing any product as a payment stablecoin unless it was issued under the Act, with Treasury fines of up to $500,000 per violation. OCC issuers must also disclose every fee, link the reserve report and state that the coin is not legal tender, not a deposit and not federally insured. The guide to FDIC vs SIPC coverage explains why neither program covers a stablecoin balance.
How does the GENIUS Act treat foreign issuers like Tether?
A foreign issuer can reach US platforms only if Treasury finds its home rules comparable, it registers with the OCC and it keeps enough reserves in US institutions.
Under section 18, Treasury makes the comparability finding on the recommendation of the other committee members and publishes its reasons, within 210 days of a request. OCC registration is deemed approved 30 days after filing unless the OCC objects, and issuers based in sanctioned jurisdictions or primary money laundering concerns are excluded. As of November 2, 2026, Treasury had not published any comparability finding in the Federal Register.
The deadlines are staggered. From January 18, 2027, platforms may offer a foreign coin only if its issuer can and will obey lawful US orders to freeze, seize or burn coins; an issuer that ignores an order for 30 days after notice can be named publicly, and platforms must then stop facilitating secondary trading in its coin. From July 18, 2028, platforms may not offer or sell US persons coins from any issuer that is neither permitted nor an approved foreign issuer, a date Treasury's August 2026 proposal confirms. If a comparability finding is later withdrawn, platforms get 90 days to wind down. The comparison of USDC and USDT shows where the two largest coins stand.
Which implementing rules are final, and when does the law apply?
The law applies on January 18, 2027, because that 18-month date comes before the 120-day clock that starts once the primary regulators finalize their rules.
Section 20 sets the effective date as the earlier of 18 months after enactment or 120 days after the primary federal payment stablecoin regulators issue final rules, which section 13 asked for by July 18, 2026. Most agencies missed that date.
Worked example: Working out the effective date
- Signed: July 18, 2025
- First trigger, 18 months later: January 18, 2027
- Second trigger: the OCC issued its final rule on October 21, 2026, and 120 days later is February 18, 2027; the Fed, FDIC and NCUA had not finalized theirs by November 2, 2026
- The earlier date governs: January 18, 2027, the effective date in the OCC's rule and Bulletin 2026-50
| Agency | Rules for | Status on November 2, 2026 (Federal Register dates) |
|---|---|---|
| OCC | Federal qualified issuers and subsidiaries of national banks | Proposed March 2, 2026; final rule October 23, 2026, effective January 18, 2027 |
| Federal Reserve | Subsidiaries of state member banks | Two proposals September 29, 2026, comments due November 30 |
| FDIC | Subsidiaries of state nonmember banks | Proposals December 19, 2025 (applications) and April 10, 2026 (standards) |
| NCUA | Subsidiaries of credit unions | Proposals February 12, 2026 (investment and licensing) and May 18, 2026 (issuance, share insurance and tokenized shares) |
| Treasury | State regimes, offers and sales, the review committee | Proposals April 3 and August 18, 2026; interim final rule on committee procedures September 30, 2026 |
| FinCEN and OFAC | Anti-money-laundering and sanctions programs | Proposal April 10, 2026 |
Existing issuers get some breathing room. Regulators may grant waivers of up to 12 months to firms with a substantially complete application pending, and Bulletin 2026-51 says the OCC expects to waive only the prior-approval requirement, not the other rules. On November 2, 2026, the OCC was not yet accepting applications or waiver requests; its application forms went to the Office of Management and Budget for review on October 23.
What does the GENIUS Act change for stablecoin holders?
It gives holders reserve, disclosure and bankruptcy protections they lacked, but no insurance, no interest from the issuer and no right to redeem without an account.
| Question | Before the law | From January 18, 2027 |
|---|---|---|
| Who may issue to US users? | Firms with state money transmitter licenses, or offshore issuers | Permitted issuers only, plus approved foreign issuers through the section 18 route |
| What backs each coin? | Whatever the issuer chose and disclosed | At least $1 of cash, insured deposits, Treasuries of 93 days or less, qualifying repos or government money funds |
| How often are reserves shown? | Set by the issuer, often monthly or quarterly | Monthly, examined by a registered accounting firm and certified by the CEO and CFO |
| Can holders redeem? | Under the issuer's own terms | Under a published policy with disclosed fees; two business days at OCC issuers |
| What if the issuer fails? | Depended on the issuer's terms and state law | First claim on reserves kept outside the bankruptcy estate |
| Is the coin insured? | No | Still no, and claiming otherwise is illegal |
| Is it a security? | Unsettled | Not a security or commodity when a permitted issuer issues it |
| Can coins be frozen? | At the issuer's discretion | Issuers must be able to freeze, seize or burn coins under lawful orders |
Taxes do not change: the IRS treats stablecoins as property, so each sale or spend can produce a small gain or loss that brokers report, as the guide to Form 1099-DA explains. For cross-border payments, see sending money with stablecoins; the top stablecoins page tracks the largest coins.
What are the risks the GENIUS Act does not remove?
The law makes reserves safer and clearer, but a stablecoin can still trade below $1, be frozen, or lose value if an issuer or platform fails.
- No insurance. Reserves can still shrink through a bank failure, a custody error or fraud, and no federal fund makes holders whole.
- Market price. The law governs redemption, not trading, so coins can trade below $1 in a panic, and holders who cannot redeem take the market price.
- Freezes. A lawful order, or a mistaken sanctions match, can lock coins while it is sorted out.
- Platforms. A platform holding coins for customers can fail or halt withdrawals, and recovery takes time.
- Coins outside the framework. They carry none of these protections and may lose US liquidity after July 18, 2028.
- Unfinished rules. Only the OCC's rule is final, and agencies and Congress can still change the details.
- Everything else in crypto. None of this protects tokens bought with stablecoins, which are volatile and can lose most or all of their value.
Two pieces are still open. The law ordered a Treasury study of non-payment stablecoins, including algorithmic designs, and the Fed, FDIC and NCUA have yet to finalize the rules for the issuers they will supervise. Until they do, the statute and the OCC rule are the firmest guide to what a permitted issuer must do.