The GENIUS Act, signed into law on July 18, 2025, sets the federal compliance regime for payment stablecoin issuers in the United States. Issuers must hold qualifying reserves, publish monthly attestations, and register through a federal or state path. Treasurers and corporate users gain a defined asset class; custodians fall under expanded BSA/AML and sanctions duties under the Apr 2026 FinCEN and OFAC NPRMs. Compliance flow differs by entity type, federal bank, non-bank PPSI, or state-chartered issuer.
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GENIUS Act compliance refers to the operational, financial, and disclosure obligations that the Guiding and Establishing National Innovation for U.S. Stablecoins Act of 2025 (Public Law 119-27, signed July 18, 2025) imposes on payment stablecoin issuers and the agencies that supervise them. The statute creates a federal framework for "permitted payment stablecoin issuers," requires 1:1 reserves in narrowly defined high-quality liquid assets, mandates monthly reserve disclosures certified by an executive officer, and applies the Bank Secrecy Act to issuers as financial institutions. As of April 28, 2026, federal rulemaking is in flight, with a statutory effective date of January 18, 2027 (or 120 days after final rules, whichever is earlier). This guide walks general counsel and compliance teams through the practical steps to register, capitalize, audit, and disclose under the new regime.
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Who needs to comply
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The GENIUS Act applies to any entity that issues a "payment stablecoin" to a U.S. person. Section 2 of the statute defines a payment stablecoin as a digital asset designed to maintain a stable value relative to a fixed monetary value, where the issuer is obligated to redeem at a fixed amount, and that is used or designed to be used as a means of payment or settlement. Securities, deposits, and central bank money are excluded by the same section. The full text on Congress.gov for S.1582 sets out the scope.
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Three issuer categories are recognized. Subsidiaries of insured depository institutions follow their primary federal banking regulator (the OCC, Federal Reserve, or FDIC). Federal qualified nonbank issuers operate under a new charter administered by the Office of the Comptroller of the Currency. Under Section 4(c) of the enrolled text of Public Law 119-27, a state qualified issuer with consolidated total outstanding issuance of not more than $10,000,000,000 may opt for a state-level regime that Treasury's Stablecoin Certification Review Committee certifies as "substantially similar" to the federal framework. Foreign issuers , including offshore USDT issuance by Tether , face a separate registration pathway and reciprocity test administered by Treasury.
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Issuers at or under the $10,000,000,000 threshold may stay state-supervised. Section 4(d) of the enrolled text of Public Law 119-27 gives an issuer that crosses it 360 days to transition to the federal framework, or it must stop issuing new payment stablecoins until it falls back under the threshold. The statute does not ban algorithmic stablecoins. Section 14 instead directs Treasury to study non-payment stablecoins, including "endogenously collateralized payment stablecoins," and report to Congress within 365 days of enactment.
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Fig 1. The pathway turns on charter type and circulating supply, not on the chain or token standard.
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Registration and charter pathways
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For nonbank issuers electing federal oversight, the OCC accepts applications for a federal qualified nonbank payment stablecoin issuer charter under Section 5 of the statute. The application and registration standards for permitted payment stablecoin issuers are still in proposed form. The OCC's GENIUS Act notice of proposed rulemaking would place them in a new 12 CFR 15, alongside standards for activities, reserve assets, redemption, risk management, custody, and capital.
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State pathways operate through the existing money transmitter framework augmented by GENIUS-specific provisions. New York's BitLicense and limited purpose trust charter, administered by NYDFS, already covered Paxos (USDP, PYUSD), Gemini (GUSD), and PayPal's stablecoin partner Paxos. NYDFS published guidance on payment stablecoin issuance in February 2026 aligning examination expectations to the federal regime. Wyoming's Special Purpose Depository Institution charter and Texas's Money Services Modernization Act offer alternative state homes. Each state must seek certification from Treasury's Stablecoin Certification Review Committee within 12 months of final federal rules.
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Foreign issuers come in through Section 18 of the enrolled text of Public Law 119-27, which turns on a Treasury determination that the home jurisdiction's regime is comparable, registration with the OCC, and holding reserves sufficient to meet U.S. customer liquidity demands at a U.S. financial institution. Under Section 18, Treasury may designate a foreign issuer noncompliant and bar U.S. digital asset service providers from making its token available, with civil penalties of up to $100,000 per violation per day for providers and $1,000,000 per violation per day for the foreign issuer.
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Whichever pathway an issuer chooses, the application clock starts when rulemaking finalizes. As of April 2026, the OCC, FDIC, Federal Reserve, and FinCEN are operating under the statute's joint rulemaking deadline of 12 months from enactment (July 18, 2026). Most observers tracking the Federal Register OCC docket expect proposed rules in May or June 2026 and finals in Q4 2026.
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Capital and reserve requirements
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Section 4(a) of the GENIUS Act requires every payment stablecoin to be backed 1:1 by reserves held in a defined set of high-quality liquid assets. Permitted reserves are: U.S. coins and currency; demand deposits at insured depository institutions; Treasury bills with 93 days or less to maturity; overnight repurchase agreements collateralized by Treasuries; reverse repos with the Federal Reserve; money market funds invested exclusively in the foregoing; and tokenized versions of the foregoing held with a qualified custodian. Commercial paper, corporate bonds, gold, and other crypto assets are explicitly excluded.
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The reserve composition rules pull issuers toward the existing institutional money market fund template. Circle's reserve, per its April 2026 attestation, holds 88.6% in the Circle Reserve Fund (a BlackRock-managed government money market fund) and 11.4% in cash at GSIB banks, a structure the statute would permit with minor adjustments to the cash leg. Tether's reserve, which historically held commercial paper and secured loans, would require restructuring to comply , its March 2026 attestation shows continued holdings of "secured loans" and "other investments" totaling roughly $7.8 billion that would not qualify under Section 4(a).
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Reserves must be segregated. Section 4(a)(2) of the enrolled text of Public Law 119-27 prohibits rehypothecation of reserves, with a narrow carve-out that lets Treasury bills held as reserves be sold into repurchase agreements of 93 days or less under stated conditions. Section 10 governs custody of reserves and collateral. The custody rule effectively closes the door on issuer-managed reserves and on offshore custody for tokens distributed to U.S. persons.
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Capital requirements apply in addition to the 1:1 reserve, but the statute sets no ratio. Section 4(a)(4) of the enrolled text of Public Law 119-27 directs the primary federal and state payment stablecoin regulators to issue capital, liquidity, and risk-management rules tailored to each issuer's business model and risk profile, and no higher than needed to ensure ongoing operations. The figures await that rulemaking, and this guide does not estimate them. The European Banking Authority's guidelines on EMT and ART issuers under MiCA are the closest comparable benchmark.
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Audit and attestation cadence
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Issuers must publish a monthly reserve composition report. Section 4(a)(1)(C) of the enrolled text of Public Law 119-27 requires the issuer to publish, on its own website, the total number of outstanding payment stablecoins and the amount and composition of reserves, including the average tenor and geographic location of custody of each reserve category. Section 4(a)(3) requires the prior month-end report to be examined each month by a registered public accounting firm and certified by the chief executive officer and chief financial officer. A knowingly false certification carries the criminal penalties set out in 18 U.S.C. 1350(c).
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The statute names the examiner, not the criteria: Section 4(a)(3) of the enrolled text of Public Law 119-27 requires a registered public accounting firm. In practice issuers examine against the AICPA's stablecoin reporting criteria, published at aicpa-cima.com. Circle, Paxos, First Digital, and Paxos-issued PYUSD already publish monthly attestations.
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Annual financial statement audits sit in Section 4(a)(10)(A) of the enrolled text of Public Law 119-27. A permitted issuer with more than $50,000,000,000 in consolidated total outstanding issuance that is not already an Exchange Act reporting company must prepare an annual financial statement under GAAP, including disclosure of related party transactions. Smaller issuers are not pulled into that requirement by the statute.
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Penalty exposure is meaningful. Section 6(b)(5) of the enrolled text of Public Law 119-27 sets civil money penalties of up to $100,000 for each day a material violation continues, with an additional $100,000 per day where an issuer or affiliated party knowingly participates, and separate criminal exposure for a knowingly false monthly certification.
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Fig 2. The cadence stacks: monthly attestations are the most frequent public output; quarterly reports are the deepest supervisory channel.
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Public disclosure obligations
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Beyond the monthly report, the statute imposes a redemption disclosure regime. Section 4(a)(1)(B) of the enrolled text of Public Law 119-27 requires issuers to publicly disclose a redemption policy that establishes clear and conspicuous procedures for timely redemption, and to disclose in plain language all fees associated with purchasing or redeeming the stablecoin, with fee changes requiring at least 7 days' prior notice. The statute sets no fixed settlement deadline; discretionary limits on timely redemption may only be imposed by the relevant regulator.
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Issuers must also handle marketing claims with care. Section 4(e) of the enrolled text of Public Law 119-27 states that payment stablecoins are not backed by the full faith and credit of the United States, not guaranteed by the U.S. Government, and not FDIC or NCUA insured, and makes it unlawful to represent otherwise. The provision parallels the FDIC's 2023 enforcement against Voyager and FTX US for misleading representations of deposit insurance. Issuers must include conspicuous disclosures on customer-facing materials stating that stablecoins are not insured deposits.
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The statute does not prescribe a smart-contract disclosure schedule. What it does require, in Section 4(a)(6)(B) of the enrolled text of Public Law 119-27, is that an issuer have the technological capability to seize, freeze, or burn payment stablecoins when legally required, and comply with lawful orders. Verifying those controls onchain is left to the reader, using tools like Etherscan's contract verification interface and DeFiLlama's stablecoin transparency dashboard already host much of this data, and final rules will likely codify a standard JSON disclosure format.
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AML/KYC and sanctions screening
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Section 4(a)(5) of the GENIUS Act provides that a permitted payment stablecoin issuer is treated as a financial institution for Bank Secrecy Act purposes and is subject to the federal sanctions, anti-money-laundering, customer identification, and due diligence laws that follow from that, per the enrolled text of Public Law 119-27. Issuers must implement a written AML program, designate a BSA compliance officer, conduct independent testing, train staff, and apply customer identification procedures. The same provision applies the Office of Foreign Assets Control (OFAC) sanctions regime, requiring real-time screening of transfers against the Specially Designated Nationals list.
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Customer Identification Program (CIP) requirements apply to direct-mint and direct-redemption customers. The statute does not impose CIP at the wallet-to-wallet transfer level, mirroring the FinCEN approach to fiat: banks identify their depositors, not the parties to every wire. Issuers must KYC the wholesale customers , typically exchanges, market makers, custodians, and corporate treasury clients , that mint and burn directly with the issuer. Secondary market transfers between independent wallets do not trigger issuer-level KYC under the statute.
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Sanctions screening sits closer to the chain. Section 4(a)(5) of the enrolled text of Public Law 119-27 requires technical capabilities, policies, and procedures to block, freeze, and reject impermissible transactions, and an effective economic sanctions compliance program. Section 4(a)(6)(B) conditions issuance on the technological capability to comply with any lawful order, defined in Section 2 as an order requiring a person to seize, freeze, burn, or prevent the transfer of its stablecoins. The statute does not mandate a screening provider or a testing cadence, and issuers should not assume one until the rulemaking lands.
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Suspicious Activity Reports follow the standard FinCEN cadence. Issuers must file a SAR within 30 calendar days of detecting potentially suspicious activity, with a 60-day extension for additional investigation. The reporting threshold is $5,000 for known or suspected violations and $25,000 for unknown subjects, matching the bank-side rule at 31 CFR 1020.320. The Currency Transaction Report obligation does not directly apply to onchain transfers, but FinCEN's 2024 proposed rule on convertible virtual currency reporting, if finalized, would extend a $10,000 reporting threshold to certain stablecoin transactions through covered financial institutions.
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Operational risk and recovery planning
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Operational risk management is delegated, not specified. Section 4(a)(4) of the enrolled text of Public Law 119-27 directs the regulators to issue risk-management standards, and Section 13 gives them one year from enactment to promulgate the rules that carry the Act out. Until those rules exist, the specific program, board-approval, and testing obligations are not fixed by statute, and this guide does not invent them.
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Customer claims in insolvency receive a priority structure unique to the GENIUS Act. Section 11 of the enrolled text of Public Law 119-27 gives holders of a permitted issuer's payment stablecoins priority over claims of the issuer and of every other claimant with respect to required reserves, ratably among themselves, in any federal or state insolvency proceeding. The practical effect: token holders should recover from segregated reserves before any general creditor, even if the issuer enters bankruptcy. This addresses one of the biggest legal questions left unresolved by the 2022 stablecoin runs (TerraUSD, USDC's brief depeg during the Silicon Valley Bank failure in March 2023).
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Cross-chain operational risk warrants its own discussion. Most major stablecoins are now multichain , USDC circulates on 23 chains per Circle's developer docs, USDT on 14 , and each new chain expands the attack surface. Issuers should map their circulating supply by chain, monitor bridge custody (where canonical-versus-bridged versions exist), and set per-chain freeze procedures. Eco Routes, which orchestrates stablecoin transfers across 15 chains including Ethereum, Solana, Base, and Arbitrum, gives issuers and treasury teams a single execution layer for multichain flows that intersects with reserve and redemption operations. The operational-risk program should document how onchain orchestration relationships are governed and tested.
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Frequently asked questions
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The statutory effective date is the earlier of January 18, 2027 or 120 days after the joint federal rules are finalized. Joint rulemaking by the OCC, Federal Reserve, FDIC, and FinCEN is due by July 18, 2026. The Federal Register OCC docket is the official source for proposed and final rule notices.
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Not directly. The GENIUS Act does not prohibit algorithmic stablecoins. Section 14 of the enrolled text of Public Law 119-27 directs Treasury to study non-payment stablecoins, including endogenously collateralized ones, and report within 365 days of enactment. What does bite is Section 3: only a permitted payment stablecoin issuer may issue a payment stablecoin in the United States, and from three years after enactment digital asset service providers may not offer or sell one that is not.
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Partial preemption only. Federally chartered issuers operate exclusively under federal supervision. A state qualified issuer with not more than $10,000,000,000 in consolidated total outstanding issuance may remain under state supervision where Treasury's Stablecoin Certification Review Committee certifies the state regime as substantially similar. Section 4(d) of the enrolled text of Public Law 119-27 gives an issuer that crosses the threshold 360 days to move to the federal framework, or it must stop issuing new stablecoins until it drops back below; a regulator may grant a waiver on stated criteria.
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Yes, indirectly. Section 3(b) of the enrolled text of Public Law 119-27 makes it unlawful, beginning three years after enactment, for a digital asset service provider to offer or sell a payment stablecoin to a person in the United States unless it was issued by a permitted payment stablecoin issuer. Venues must verify issuer status ahead of that date.
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The AICPA stablecoin reporting criteria are the criteria issuers use in practice; the statute itself names only the registered public accounting firm. Issuers already publishing monthly attestations under these criteria , Circle, Paxos, First Digital, PayPal , will need format adjustments for the executive certification and the granular custodian-level breakdown but not a wholesale process change.
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