The GENIUS Act became law on July 18, 2025, establishing the first federal rulebook for dollar-backed stablecoins in the United States. The legislation sets out who can issue payment stablecoins, what assets must back them, how users can redeem tokens, and which regulators oversee the entire system.
For years, stablecoin issuance operated in a patchwork of state charter rules and informal Federal Reserve guidance. Issuers faced uncertainty about whether they needed banking licenses, how much cash or Treasuries they had to hold on reserve, and whether they could be shut down without warning. The GENIUS Act closes that gap by installing a single federal standard.
Who issues stablecoins under the new rules
The law permits insured depository institutions (banks) and nonbank firms with Federal Reserve approval to issue payment stablecoins. A bank can use its existing charter. A nonbank issuer must apply for a "stablecoin issuer" license from the Fed, which has discretion to approve or deny based on safety and soundness. State regulators retain limited authority over state-chartered banks, but federal oversight dominates.
Backing and redemption
Every stablecoin must be backed dollar-for-dollar by eligible assets: U.S. currency, Treasury securities, or other instruments the Fed deems safe. Holders have a legal right to redeem tokens for U.S. dollars at any time at par value. No discount for liquidity or timing. That right is absolute and cannot be contractually waived. The law also prohibits issuers from lending out reserve assets or investing them for yield, a structural constraint that eliminates the temptation to gamble with backing.
Regulatory oversight and enforcement
The Federal Reserve and the Office of the Comptroller of the Currency share supervisory authority. The Fed sets reserve rules, audit standards, and redemption procedures. The OCC handles bank-issued stablecoins. The law grants regulators power to revoke licenses, levy fines, and impose capital or reserve surcharges if an issuer breaches safety requirements. Issuers must submit to examination without warning. Failure to maintain backing or honor redemptions is grounds for immediate revocation.
The law also restricts what stablecoins can be used for. They are pegged to the dollar and designed for payments. Issuers cannot market them as investment vehicles or promise appreciation. Marketing materials must disclose that stablecoins carry issuer risk—if the company fails, tokens may lose value despite the backing requirement.
Next steps
The Federal Reserve and OCC have until late 2025 and into 2026 to finalize rules on capital, reserve composition, audit frequency, and the nonbank application process. Until those rules drop, banks can issue stablecoins under the statute's plain text, but nonbanks cannot apply. The licensing window for nonbanks opens once the Fed publishes its standards. Industry observers expect the first nonbank applications by mid-2026.
The law does not prohibit existing stablecoins from operating, but it effectively grandfathers them. USDC, USDT, and other major tokens issued before the law can continue trading. Their issuers—Coinbase, Tether—will face a choice: apply for federal licenses or wind down U.S. operations. Coinbase has signaled willingness to pursue a license. Tether's intentions remain opaque.