GENIUS Act Establishes New Rules for Stablecoins

The GENIUS Act, signed into law in July 2025, is the first federal law to regulate the payment of stablecoins. A payment stablecoin is a digital asset designed to keep a steady value, usually tied to the U.S. dollar and backed by cash or short-term Treasury securities. These assets are already widely used in payments, cross-border transfers, and cryptocurrency markets. The law defines who is allowed to issue stable coins, sets rules for reserves and reporting, and places oversight with federal and state regulators. Businesses that use or issue stablecoins will want to review the requirements and determine how to maintain compliance. To help clients, prospects, and others, Wilson Lewis has summarized the key details below. 

Overview of the GENIUS Act

Lawmakers designed the Guiding and Establishing National Innovation for U.S. Stablecoins Act, or GENIUS Act, to bring order to a market that has grown rapidly under uneven state rules. The goal is to protect consumers, reduce systemic risk, and provide a consistent framework as stablecoins become more common in payments and remittances.

Most provisions take effect 18 months after enactment or 120 days after regulators publish final rules. The rulemaking process will determine many of the details, including which assets qualify as reserves and how foreign entities can meet U.S. standards.  

What the Law Covers 

• Permitted issuers — Only certain types of entities may issue payment stablecoins. These include banks, federally and state qualified issuers that meet comparable standards. Approval is required before issuing stablecoins to U.S. persons.
• Reserves and redemption — Each stablecoin must be backed by an equal, one-to-one amount of safe and liquid assets. Cash and short-term Treasury securities are the main options. Issuers must also give holders the ability to redeem their coins at full face value, and the redemption policy has to be clear.
• Disclosure and transparency — Issuers are required to publish monthly reports that show the reserves on hand and how they are invested. An independent audit is required. Large issuers have an extra step. They need annual financial statements prepared under accounting standards and subject to audit.
• State and federal oversight — Supervision depends on the size of the issuer. Smaller firms can operate under state rules if those rules are approved by the Treasury. Large issuers, defined as those with more than $10 billion in circulation, come under federal supervision. Both state and federal regulators have the authority to examine records, demand reports, and enforce compliance.
• Foreign issuers — A foreign entity can issue payment stablecoins to U.S. users only if its home country has rules that the Treasury views as comparable to U.S. standards. The issuer must also hold enough reserves to cover redemption requests from U.S. holders. The Department of Treasury will publish which jurisdictions qualify.
• Bankruptcy protections — If a stablecoin issuer fails, the reserves that back the coins are separated from the company’s other assets. Those funds cannot be used to pay vendors, lenders, or other creditors. They are earmarked for customers instead. Holders of the stable coin move to the front of the line for repayment, which reduces the chance of loss if the issuer becomes insolvent.
• Exclusions — The law only applies to payment stablecoins. Other digital assets, such as more volatile types of cryptocurrencies, remain subject to separate laws. The law also stops issuers from paying interest on stable coins, which blocks the creation of yield-bearing products. Regulators are expected to issue additional guidance as implementation moves forward.

Potential Business Impact

While the GENIUS Act creates the first federal framework for stable coins, it leaves important questions to regulators. Agencies must decide which reserve assets are acceptable, how foreign regimes will be judged, and the boundaries of state versus federal supervision. Until rulemaking is complete, issuers and service providers face some uncertainty.

It is likely that stablecoin issuers will be most affected. They must apply for approval and keep reserves that match the coins issued. They also have to publish reports and allow redemptions at full value. In addition, the law requires anti-money laundering programs and risk assessments for digital asset activity. CPA firms can assist in setting up and monitoring these controls.

Exchanges and other service providers will need to review the coins they list. Once the Act takes effect, only stablecoins from permitted issuers can be offered to U.S. users. Banks and financial institutions may see a chance to issue their own coins or work with fintech partners. These opportunities, however, come with compliance costs and oversight. Businesses that accept stable coins may find transactions more reliable with a framework in place. Consumers benefit as well, since reserves must be set aside for them if an issuer fails.

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The GENIUS Act is a landmark development in U.S. digital asset regulation. It sets the first clear standards for payment stablecoins and puts responsibility on issuers and regulators. With rulemaking still ahead, businesses engaged in digital assets will want to begin preparing for compliance obligations that will soon follow. If you have questions about the information outlined above or need assistance with another tax or accounting issue, Wilson Lewis can help. For additional information call 770-476-1004 or click here to contact us. We look forward to speaking with you soon.