Author: Paul Tierno, Congressional Research Service; Translator: AIMan@Golden Finance
After the setback on May 8, the U.S. Senate voted on May 19 to pass the cloture motion of S.1582 (the "Guiding and Establishing National Innovation for U.S. Stablecoins Act of 2025", referred to as the GENIUS Act). The GENIUS Act aims to establish a system for regulating stablecoins.
Requirements for Issuing Payment Stablecoins
S.1582 defines "payment stablecoins" as digital assets used for payment or settlement and redeemable at a predetermined fixed amount (such as $1).The issuer must hold at least $1 in compliant reserves for every $1 of stablecoin issued. The bill provides that compliant reserves are limited to coins and currencies, insured deposits at banks and credit unions, short-term Treasury bonds, repurchase agreements (repo) and reverse repos collateralized by Treasury bonds, government money market funds, central bank reserves, and other similar government-issued assets approved by regulators. Issuers may only use reserve assets for specific activities, including redemption of stablecoins, as collateral for repurchase and reverse repurchase agreements, etc. The bill requires federal and state regulators to establish specific capital, liquidity and risk management rules for federal and state stablecoin issuers, but stablecoin issuers do not need to comply with regulatory capital standards applicable to traditional banks.
Issuers must develop and disclose stablecoin redemption procedures and regularly publish reports on the number of stablecoins in circulation and the composition of reserves. The reports must be certified by senior executives and "reviewed" by registered public accounting firms. Issuers with more than $50 billion in stablecoins in circulation are required to submit audited annual financial statements.
Issuers must comply with the Bank Secrecy Act, and the Financial Crimes Enforcement Network (FinCEN) must develop specific anti-money laundering rules. S.1582 requires FinCEN to promote "new methods of detecting illegal activities involving digital assets." Issuers must certify that they have implemented anti-money laundering and sanctions compliance programs. The bill prohibits individuals who have been convicted of certain financial crimes from serving as executives or directors of issuers.
Stablecoins can be issued by banks and credit unions (through subsidiaries) or non-bank institutions (not limited to financial companies).All types of issuers must register with the appropriate federal regulator (the regulator will be one of the federal banking regulators, depending on the type of entity). The regulator will assess whether the issuer meets the baseline requirements (as described above). If the application is not processed within 120 days, it is automatically approved. The regulator must provide reasons for the rejection and allow the applicant to appeal.
For non-bank issuers with less than $10 billion in stablecoins in circulation, the bill allows them to choose a state regulatory system, but the Secretary of the Treasury, the Chairman of the Federal Reserve, and the Chairman of the Federal Deposit Insurance Corporation must determine that the state regulatory system is "substantially similar" to the federal system.
Federal supervision and enforcement system:
Banks or non-bank issuers that choose the federal regulatory system or have more than $10 billion in stablecoins in circulation will be supervised by the regulators of their banks or credit unions (non-bank issuers are supervised by the Office of the Comptroller of the Currency, OCC), and the regulators will assess the issuer's financial condition, risks to the safety and soundness of the institution and the financial system, and risk management systems.
All stablecoin issuers under the federal regulatory system are required to submit reports to their primary federal regulators and may be subject to inspections by regulators.
If the regulator determines that the issuer has violated the requirements of the Act or any written conditions set by the regulator, it has the right to prevent the issuer from continuing to issue stablecoins or take other enforcement actions.
State regulatory system
Non-bank issuers with less than $10 billion in stablecoins in circulation can choose the state regulatory system. If its size exceeds this threshold, it must switch to a federal regulatory system jointly managed by federal and state regulators, unless it obtains an exemption from the federal regulator.
Supervision and Enforcement
State regulators have “supervision, inspection, and enforcement authority” over all state issuers, but the bill allows state regulators to cede those powers to the Fed. The bill also allows the Fed or the OCC to take enforcement action against state issuers in “unusual exigencies.”
Foreign Issuers
The bill requires that the “issuance and sale” of stablecoins into the United States be limited to compliant U.S. issuers for three years after the bill takes effect.The Treasury Department may, in consultation with federal stablecoin regulators, enter into “reciprocal” agreements with jurisdictions that are deemed to be “comparable” to the United States in regulation. Stablecoins from eligible jurisdictions that have the technical ability to freeze transactions and comply with lawful directives, are registered with the OCC and subject to ongoing supervision, and U.S. financial institutions hold sufficient reserves to meet redemption needs in the United States, may be traded in the United States, interoperate with U.S. dollar stablecoins, and be used for international transactions. The bill authorizes the Secretary of the Treasury and other agencies to exempt foreign issuers and digital asset providers that sell stablecoins from various requirements.
Other Provisions
The bill establishes rules for custodians of stablecoin assets and reserves, which can be issuers or non-issuers, but are subject to regulation by federal or state banking regulators, the Securities and Exchange Commission, or the Commodity Futures Trading Commission. The bill prohibits custodians from commingling their own funds with customer funds (except in special circumstances). The bill allows banks to custody stablecoins and reserves, use blockchain technology, and issue tokenized deposits.
This bill gives stablecoin holders priority over all other claims when the issuer goes bankrupt and amends bankruptcy law.
This bill clarifies that payment stablecoins are not securities or commodities and are not federally insured.
A provision of S.1582 states that current ethics laws and regulations prohibit senior executive officials from issuing stablecoins.
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