Join our next live session with Nacha on modern, programmable ACH on February 12th.Register here →
The GENIUS Act—short for Guiding and Establishing National Innovation for U.S. Stablecoins—is the United States’ first comprehensive federal law governing payment stablecoins. Signed into law in 2025, the GENIUS Act establishes clear rules for how regulated stablecoins are issued, backed, redeemed, and supervised.
Stablecoins are digital tokens designed to maintain a stable value, typically pegged 1:1 to the U.S. dollar. They are increasingly used for global payments, settlement, and treasury operations. Before the GENIUS Act, stablecoin oversight in the U.S. existed across a patchwork of state and federal guidance. GENIUS introduces a unified framework to support responsible innovation, protect consumers, and clarify regulatory boundaries.
What the GENIUS Act Does
At its core, the GENIUS Act defines what a “stablecoin” is and sets rules for which institutions are authorized to issue them. The law focuses on safety, transparency, and interoperability with the broader financial system.
Key components include:
1. Clear Issuer Licensing
Only permitted payment stablecoin issuers can create and redeem payment stablecoins for U.S. users. These include:
- Federally regulated banks and credit unions
- Nonbank firms that obtain a new federal license
This creates a predictable path for both traditional financial institutions and fintech platforms that want to issue stablecoins.
2. Strict Reserve Requirements
Stablecoins covered under the act must be backed 1:1 by high-quality liquid assets, such as:
- Cash
- Short-term U.S. Treasuries
Reserves cannot be lent out, reused, or rehypothecated. This ensures that holders can reliably redeem stablecoins for U.S. dollars at any time.
3. Consumer Protection and Oversight
The act includes provisions requiring:
- Regular reserve reporting
- Clear redemption rights
- Prohibition on paying interest directly on stablecoin balances
These rules reduce risk for users and help stablecoins function predictably as payment instruments rather than investment products.
4. AML/Sanctions Compliance
GENIUS treats issuers as financial institutions under the Bank Secrecy Act, obligating them to implement strong anti-money laundering and sanctions compliance programs.
5. Regulatory Clarity
GENIUS also clarifies what payment stablecoins are not. Under the act, compliant payment stablecoins are not treated as securities or commodities. Instead, they are supervised similarly to other money movement products under existing bank regulatory frameworks.
This separation provides clearer expectations for issuers and lowers uncertainty for companies building on stablecoin rails.
Why the GENIUS Act Matters
The GENIUS Act gives businesses and financial institutions a stronger foundation for adopting stablecoins in payments, treasury operations, and cross-border settlement.
More Trust and Transparency
By standardizing reserve rules and redemption rights, the GENIUS Act helps ensure stablecoins behave like safe, predictable digital dollars.
A Level Playing Field
Banks, credit unions, and licensed nonbank issuers operate under a consistent federal framework, which supports broader industry participation and competition.
Accelerated Innovation
Clear rules reduce ambiguity for fintechs and enterprises building products that rely on fast, programmable settlement—including wallets, payment APIs, B2B platforms, and global treasury systems.
Better Integration with the Financial System
With a defined regulatory perimeter, stablecoins are easier for corporate finance teams to evaluate and adopt alongside traditional rails like ACH, wires, and RTP.
How Companies Use GENIUS-Compliant Stablecoins
Businesses may benefit from the GENIUS Act through:
- More reliable cross-border payouts using regulated digital dollars
- Improved treasury mobility between domestic and international entities
- Embedded payments where stablecoins act as 24/7 settlement assets
- On-chain recordkeeping with auditability supported by consistent issuance rules
For finance and treasury teams, GENIUS provides the regulatory clarity needed to incorporate stablecoins into enterprise workflows with confidence.
The Bottom Line
The GENIUS Act creates the first national framework for U.S. payment stablecoins. By defining who can issue stablecoins, how they must be backed, and how they should operate, the law modernizes digital dollar oversight while supporting safe innovation.
As stablecoins continue to power instant, global, and programmable payments, the GENIUS Act establishes the regulatory foundation that will guide this infrastructure forward.
Glossary
Payment Stablecoin: A digital asset pegged to a reference value, such as USD, and used for payments and settlement.
Permitted Payment Stablecoin Issuer: A bank, credit union subsidiary, or federally licensed nonbank authorized to issue payment stablecoins in the U.S.
Reserves: Assets like cash or Treasuries held 1:1 to back outstanding stablecoins.
Redemption: The process of exchanging a stablecoin for its underlying asset (e.g., $1 USD per token).
Rehypothecation: The reuse of collateral for other purposes; the GENIUS Act prohibits this for stablecoin reserves.
Learn
Explore stablecoin content.
The GENIUS Act, signed into law in 2025, is the first federal framework governing how U.S. payment stablecoins are issued, backed, and supervised. For stablecoin issuers, the GENIUS Act creates clear standards for licensing, reserves, consumer protections, and ongoing oversight. These rules reshape how stablecoin issuers operate and bring payment stablecoins closer to traditional money movement systems in terms of safety and reliability.
Stablecoins maintain price stability through two main models: collateralized and algorithmic. These models differ in backing, risk, and complexity—and understanding them is essential for evaluating which stablecoins are appropriate for enterprise use.
Stablecoin reserves are the financial assets that back a stablecoin’s value. They ensure that each token can be redeemed for its underlying asset—typically $1 USD. For businesses evaluating stablecoins, reserves are one of the most important indicators of stability and risk. Reserves vary by issuer but must reliably cover outstanding stablecoin supply.
Blockchain treasury management refers to the systems and processes companies use to hold, move, and reconcile digital assets—such as stablecoins—across blockchain networks. As businesses adopt stablecoins for faster settlement and global operations, treasury teams must manage these assets with the same rigor as traditional money movement.
Stablecoin “mint and burn” refers to how stablecoins enter and exit circulation. These processes maintain price stability and ensure the number of tokens matches the value held in reserve. Understanding minting and burning helps businesses evaluate how stablecoin supply is created, monitored, and controlled.
A Stablecoin API lets companies send, receive, and manage stablecoins through simple API calls rather than operating blockchain infrastructure directly. Instead of handling private keys, running nodes, or writing smart-contract code, businesses can integrate stablecoin payments through a developer-friendly interface. This makes it easier to embed blockchain-based payments into products, platforms, and financial operations.
A stablecoin smart contract is the on-chain program that defines how a stablecoin works. It controls functions like minting, burning, transferring tokens, and applying compliance rules. Stablecoin smart contracts are central to how value moves on blockchain networks. These contracts provide predictable, programmable behavior—similar to how card networks or treasury management systems encode specific transaction rules.
The GENIUS Act—short for Guiding and Establishing National Innovation for U.S. Stablecoins—is the United States’ first comprehensive federal law governing payment stablecoins. Signed into law in 2025, the GENIUS Act establishes clear rules for how regulated stablecoins are issued, backed, redeemed, and supervised. Stablecoins are digital tokens designed to maintain a stable value, typically pegged 1:1 to the U.S. dollar. They are increasingly used for global payments, settlement, and treasury operations. Before the GENIUS Act, stablecoin oversight in the U.S. existed across a patchwork of state and federal guidance. GENIUS introduces a unified framework to support responsible innovation, protect consumers, and clarify regulatory boundaries.
Cross-border stablecoin payments let companies move money across countries using digital dollars. Instead of routing through banks and correspondent networks, funds move directly on blockchain rails for instant settlement.
Stablecoin on-ramps and off-ramps connect stablecoins to the financial system by turning fiat money into stablecoins and vice-versa.
A stablecoin is a form of cryptocurrency created to maintain a consistent value by being linked to a reserve asset, such as a fiat currency (e.g., USD, EUR), a commodity (e.g., gold), or other digital currencies.
USDC and USDT are two of the most popular stablecoins pegged to the U.S. dollar. Both aim to bring stability to digital transactions, but they differ in how they’re backed, who issues them, and how they’re used.
Stablecoins have grown into a core component of modern financial infrastructure, powering everything from global payments to on-chain treasury management. Behind each stablecoin is an issuer—an organization responsible for creating, managing, and redeeming the digital asset. Stablecoin issuers maintain the reserves, smart contracts, compliance frameworks, and operational processes that keep a stablecoin trustworthy. While dozens of stablecoins exist, market activity is dominated by a handful of well-established issuers that prioritize regulatory oversight, asset backing, and liquidity.