GENIUS Act Explained: The US Stablecoin Law in 2026

The GENIUS Act is the US federal law for payment stablecoins. It was signed on 18 July 2025 and requires issuers to hold 1:1 reserves in cash and short-term Treasuries, to be licensed at federal or state level, to publish monthly reserve reports and to follow anti-money-laundering rules. It also bars issuers from paying interest to holders. It takes effect on the earlier of 18 January 2027 or 120 days after regulators finish their final rules, and as of 2 October 2026 most of those rules are still proposals.

This guide covers what the law requires, who can issue a stablecoin under it, where rulemaking stands, and how it fits with the CLARITY Act, the market structure bill that failed in the Senate in September 2026.

What is the GENIUS Act?

GENIUS stands for Guiding and Establishing National Innovation for U.S. Stablecoins. It was the first major federal crypto law in the US. The Senate passed it 68–30 on 17 June 2025, the House passed it 308–122 on 17 July 2025, and the President signed it the next day (Mayer Brown).

The law covers payment stablecoins: tokens designed to be used for payment or settlement and redeemable for a fixed amount of money, usually one US dollar. It does not cover bank deposits, tokenised securities or yield-bearing synthetic dollars that work differently. Compliant payment stablecoins are excluded from the federal definitions of "security" and "commodity", so neither the SEC nor the CFTC regulates them as such (Wikipedia, citing the Oxford Business Law Blog). For background on how stablecoins work, see stablecoins explained.

Who can issue a stablecoin under the law

Only a "permitted payment stablecoin issuer" may issue a payment stablecoin in the US. There are three routes, as summarised by Gibson Dunn:

• Bank subsidiaries. Subsidiaries of insured banks, approved by the parent bank's federal regulator.
• Federal qualified issuers. Non-bank companies, uninsured national banks and federal branches of foreign banks, approved by the Office of the Comptroller of the Currency (OCC).
• State qualified issuers. Issuers licensed by a state whose regime is certified as "substantially similar" to the federal one. This route is only open to issuers with less than $10 billion in stablecoins outstanding.

Above $10 billion, an issuer moves into the federal framework. Tether and Circle are both well above that line, so the biggest issuers are on the federal track (Forkast).

Foreign issuers can serve US users if their home regime is judged comparable, they register with the OCC, hold enough reserves in the US and can comply with US lawful orders. From 18 July 2028, three years after enactment, it will be unlawful for a digital asset service provider, such as an exchange, to offer or sell a payment stablecoin to people in the US unless it comes from a permitted issuer or qualifies under those foreign-issuer and safe-harbor rules (Treasury proposal, Federal Register).

Reserve, disclosure and redemption rules

The heart of the law is the reserve requirement. Issuers must hold at least 1:1 backing in a narrow list of assets (Troutman Pepper Locke, Gibson Dunn):

• US currency and demand deposits at insured banks;
• Treasury bills, notes and bonds with 93 days or less to maturity;
• short-term repurchase agreements backed by Treasuries;
• money market funds invested in the assets above.

Crypto assets and equities are not eligible, and reserves generally can't be rehypothecated.

On disclosure:

• issuers publish a monthly report of coins outstanding and reserve composition;
• a registered public accounting firm examines each month-end report;
• the chief executive and chief financial officer certify that it is accurate;
• issuers with more than $50 billion outstanding must also publish annual audited financial statements.

Issuers need published redemption policies and must give notice of fee changes. If an issuer becomes insolvent, the law gives holders' redemption claims priority over other creditors, according to Troutman Pepper Locke. Monthly attestations are not the same as a full audit. Our proof-of-reserves guide explains the difference.

The no-interest rule

Section 4(a)(11) of the law bars a permitted issuer from paying holders "any form of interest or yield (whether in cash, tokens, or other consideration) solely in connection with the holding, use, or retention" of a payment stablecoin (as quoted by Astraea Law).

The rule applies to issuers. It does not directly stop an exchange or wallet from sharing reserve income with its users as "rewards". Banks lobbied hard to close that gap, and it became Section 404 of the CLARITY Act, which would ban idle-balance rewards from platforms while allowing activity-based ones. That fight is covered in CLARITY Act stablecoin yield explained.

For people who want a return on stablecoins, the practical effect is that yield has to come from doing something with the coin, such as lending, providing liquidity or holding a separate yield-bearing product, rather than from the payment stablecoin itself. See how to earn yield on stablecoins.

KYC, AML and sanctions obligations for issuers

The GENIUS Act treats stablecoin issuers as financial institutions under the Bank Secrecy Act. That means an AML programme, customer identification, suspicious activity reporting and sanctions compliance. Issuers must also have the technical ability to comply with lawful orders to freeze, block or burn tokens (Troutman Pepper Locke).

Treasury, through FinCEN and OFAC, proposed the AML and sanctions rule for issuers on 8 April 2026 (Treasury). On 22 June 2026 the Federal Reserve, FinCEN, OCC, FDIC and NCUA proposed a joint customer identification rule requiring issuers to "verify primary-market customers and maintain related records" (The Block).

In practice, issuers and the exchanges that distribute their coins meet these duties with identity-verification and screening vendors such as iDenfy, which provide KYC, KYB and AML screening at onboarding. Our guides to KYC and KYB software for crypto exchanges and sanctions screening for crypto exchanges explain how these checks work.

Implementation and rulemaking timeline

The law gave regulators one year, until 18 July 2026, to write final rules. They missed that deadline: agencies had published around ten proposals but no final rules by that date (The Block). Missing it does not delay the effective date.

Sources: Federal Register (ANPRM), OCC proposal, Treasury state-regime proposal, FDIC proposal, Treasury interim final rule.

The 30 September 2026 interim final rule was the first binding, in-force GENIUS Act regulation. It sets out how the Stablecoin Certification Review Committee will review state regimes, though states can't file certifications until the forms receive Paperwork Reduction Act approval (Federal Register). The main issuer rule is the OCC's. Comptroller Jonathan Gould said in August 2026 that the OCC would publish a final rule by November so it could start processing applications in the new year (PYMNTS).

How the GENIUS Act relates to the CLARITY Act

The two are often mentioned together, but they do different jobs:

• GENIUS is law. It regulates stablecoin issuers: licensing, reserves, disclosure, AML and the issuer interest ban.
• CLARITY is a bill. It would regulate the wider crypto market: whether tokens are securities or commodities, exchanges and brokers, DeFi and developers. Its Section 404 would extend the no-interest idea to platforms that distribute stablecoins.

The CLARITY Act failed a Senate cloture vote 49–50 on 15 September 2026 and is stalled. The GENIUS Act will take effect regardless. JPMorgan analysts noted that the GENIUS Act also failed its first procedural vote before it became law (The Block). Full details are in the CLARITY Act explained.

Outside the US, the closest equivalent is the EU's MiCA regime, covered in MiCA-compliant stablecoins.

What it means for stablecoin users

• More transparency. Monthly, examined reserve reports from every US-regulated issuer.
• Stronger claims in insolvency. Holders' redemption claims get priority.
• Freezable tokens. Compliant issuers must be able to freeze or burn tokens on lawful order.
• No yield from the issuer. Any return on a payment stablecoin has to come from what you do with it.
• A narrower menu on US exchanges from July 2028. Stablecoins without a permitted or qualifying issuer may be delisted for US users.

None of this removes depeg, smart-contract or counterparty risk. See stablecoin depegs explained. JewelSwap, a non-custodial protocol on MultiversX, Sui and Radix, doesn't issue a stablecoin, so the law affects it indirectly, through the stablecoins its users hold.

Frequently asked questions

When does the GENIUS Act take effect?

On the earlier of 18 January 2027 or 120 days after the primary regulators issue final implementing rules. Regulators missed the 18 July 2026 rulemaking deadline, but that doesn't change the January 2027 backstop.

What does the GENIUS Act require stablecoin issuers to hold?

At least 1:1 reserves in US currency, demand deposits at insured banks, Treasuries with 93 days or less to maturity, short-term Treasury-backed repo, and money market funds holding those assets. Monthly reserve reports must be examined by a registered accounting firm.

Can stablecoins pay interest under the GENIUS Act?

Issuers can't. The law bars permitted issuers from paying any interest or yield solely for holding, using or retaining a payment stablecoin. It doesn't directly cover rewards paid by exchanges, which is what the CLARITY Act's Section 404 would address.

Is the GENIUS Act the same as the CLARITY Act?

No. The GENIUS Act is law and regulates stablecoin issuers. The CLARITY Act is a broader market structure bill that failed a Senate cloture vote on 15 September 2026 and is not law.

Have GENIUS Act rules been finalised?

Mostly not, as of 2 October 2026. Treasury issued an interim final rule on state certification procedures on 30 September 2026. The main OCC, FDIC, NCUA and AML rules are still proposals, and the OCC has said it aims to finalise its rule by November 2026.

Can a state regulate a stablecoin issuer?

Yes, for issuers with less than $10 billion outstanding, if the state's regime is certified as substantially similar to the federal framework. Larger issuers must move to federal oversight.

Keep reading

• The CLARITY Act explained
• CLARITY Act stablecoin yield explained
• Stablecoins explained
• MiCA-compliant stablecoins in 2026
• Proof of reserves explained
• JewelSwap crypto glossary

This article is educational and isn't legal or financial advice. Rulemaking status is as of 2 October 2026 and changes often. Sources are linked inline, including the Federal Register, Treasury, The Block, Mayer Brown, Gibson Dunn, Troutman Pepper Locke and PYMNTS.