GENIUS Act

The Guiding and Establishing National Innovation for U.S. Stablecoins (GENIUS) Act was signed into law on July 18, 2025 and will take effect on January 18, 2027. It governs the issuance and use of stablecoins, which are digital assets pegged to the value of a reference asset, primarily the U.S. dollar.

These cryptocurrencies are increasingly used in payments, international transfers and other areas of business and finance. The GENIUS Act aims to provide regulated pathways and consumer protections to guide this expansion of the market.

The GENIUS Act includes a provision mandating that stablecoin issuers — the companies that mint stablecoins on the blockchain and hold the assets backing them — maintain reserves backing their products on a 1:1 basis. This means that every dollar's worth of stablecoins issued on the blockchain must be backed by a dollar in the company’s reserves, held in cash or dollar equivalents such as short-term Treasury securities.

GENIUS-compliant issuers are also required to disclose the composition of their reserves every month and ensure that their stablecoins can be directly redeemed for assets in those reserves at holders' request. Additional provisions require issuers to comply with anti-money laundering requirements. Circle’s USDC is the largest stablecoin to operate within this framework; its main competitor, Tether’s USDT, is not GENIUS-compliant and so does not operate in the United States. Tether instead launched a separate U.S. product, USAT, under the GENIUS Act’s framework.

Although this may increase operating costs for existing issuers, it also provides regulatory certainty and clear pathways for banks and other entities to deal in stablecoins or launch their own stablecoins. For this reason, some observers see the legislation as a necessary step for wider stablecoin adoption among major institutions.