Stablecoins are supposed to be the “boring” part of crypto: digital dollars that don’t do drama. Then the U.S. passed the GENIUS Act in July 2025, and suddenly stablecoins got something they’ve never had at the federal level—one clear rulebook (and yes, it comes with homework). Paul Hastings+1
Think of the GENIUS Act as turning stablecoin issuers from “internet money makers” into something closer to regulated cash managers. If a stablecoin wants to be sold to people in the U.S. through platforms and intermediaries, the law pushes it toward “permitted issuer” status—or it risks being treated like an unapproved product. Congress.gov+1
1) Compliance: who’s allowed to issue (and who isn’t)
Under the Act, issuing a “payment stablecoin” in the U.S. isn’t a free-for-all. The law restricts issuance to permitted payment stablecoin issuers, and it sets up federal/state supervision lanes (with limits). Congress.gov+1
At a high level, permitted issuers include:
- Subsidiaries of insured depository institutions (banks/credit-union related structures),
- Certain federally qualified nonbank issuers,
- Certain state-qualified issuers (with state supervision, but with constraints). Congress.gov+1
There’s also an international angle: foreign issuers can’t just “show up” and circulate a stablecoin in the U.S. without meeting conditions. The Act describes a framework that ties access to comparability/reciprocity and the ability to comply with lawful U.S. orders, plus U.S.-focused liquidity arrangements for U.S. customers in certain cases. Congress.gov+1
2) Reserve rules: the “no funny business” list
Here’s where the GENIUS Act gets very specific—and very serious.
The core idea is 1:1 backing: issuers must hold identifiable reserves for outstanding stablecoins on at least a one-to-one basis. Congress.gov+1
And the eligible reserve assets are not “whatever seems fine.” The Act lists categories that emphasize cash and short-dated U.S. government-linked liquidity, including:
- U.S. coins/currency and balances at a Federal Reserve Bank,
- Certain demand deposits/insured shares at insured depository institutions,
- U.S. Treasuries with short remaining maturities,
- Very short-term repo/reverse repo structures backed by Treasuries (with conditions),
- Government money market funds invested only in the permitted underlying assets,
- Plus a limited “similarly liquid” federal-government-issued bucket subject to approval,
- And in some cases, tokenized forms of certain reserves if compliant with law. Congress.gov+1
If that sounds picky, that’s the point. The law aims to make “one stablecoin = one dollar” less of a marketing promise and more of a verifiable inventory check.
3) Transparency: monthly “show your work,” not “trust me bro”
The GENIUS Act doesn’t just demand good reserves—it demands proof, on a schedule.
Issuers must:
- Publicly disclose their redemption policy (how you can cash out, fees, and timing),
- Post monthly reserve composition details (including amounts, composition, and even custody location details by category),
- Have monthly disclosures examined by a registered public accounting firm,
- Provide monthly CEO/CFO certifications about accuracy (with penalties for false certification). Congress.gov+1
Translation for normal humans: the issuer can’t just say, “We’re fully backed.” They’re expected to publish receipts and have professionals check them.
4) The “don’t touch the reserves” rule: limits on rehypothecation
In plain English: reserves are not supposed to become a casino chip.
The Act restricts reserves from being pledged, rehypothecated, or reused, with narrow exceptions tied to things like permitted reserve management mechanics and liquidity for redemptions under conditions. Congress.gov+1
This matters because one of the fastest ways a “stable” product becomes unstable is when the backing assets are quietly used as collateral for other bets.
5) Marketing rules: no “FDIC vibes,” no “government guarantee” cosplay
One of the most consumer-protection-forward parts is also the simplest:
- A payment stablecoin is not backed by the “full faith and credit” of the U.S.
- It is not FDIC-insured (and issuers can’t imply it is). Congress.gov+1
The law also makes it unlawful to market something as a payment stablecoin unless it’s issued under the Act’s framework. Congress.gov+1
So if your stablecoin ad tries to feel like a bank ad—without actually being a bank product—the GENIUS Act is basically saying: nice try.
6) Can stablecoins pay yield? The law leans “no,” and regulators care a lot
A big debate is whether payment stablecoins should behave like savings accounts. Guidance and analysis around GENIUS implementation highlight a prohibition on issuers paying interest/yield to holders, aimed at keeping these tokens focused on payments and reducing bank-deposit flight risk. Federal Reserve Bank of Richmond+1
That doesn’t automatically end “rewards” in the wider market (platforms can design incentives), but it puts a bright regulatory spotlight on anything that starts to look like “a deposit, but outside the bank.” CSBS+1
Global pushback: why other countries aren’t throwing a parade
Even if the U.S. rules are stricter, a regulated U.S. stablecoin market can still export something powerful: easy access to dollar-like instruments.
Some global critics warn this could accelerate “digital dollarization”—people abroad using dollar-pegged tokens in ways that can weaken local monetary control. A Reuters report captured concerns from major European voices (including an asset manager warning about global payments stability impacts, with broader worries echoed by officials and institutions). Reuters
Meanwhile, other jurisdictions are tightening their own approaches. In the UK, for example, proposals discussed publicly have included ownership caps for stablecoins to manage financial stability risks—an approach that crypto groups argue is too restrictive and hard to enforce. Financial Times
Europe is also watching closely. Analysis from European policy circles notes that clearer U.S. stablecoin rules can increase pressure on the EU to respond (including renewed attention to a digital euro debate). Stiftung Wissenschaft und Politik (SWP)
Bottom line: the GENIUS Act doesn’t just regulate a market—it potentially shifts how “dollars” move globally, and not everyone loves that.
What this means for everyday users
If you’re not issuing a stablecoin, here’s the practical takeaway:
- Ask “who’s the issuer?” Under GENIUS, the direction of travel is: permitted issuer + supervision + published reserves. Congress.gov+1
- Look for regular disclosures. Monthly reserve reporting and accounting-firm examination are core transparency mechanics. Congress.gov+1
- Don’t confuse stablecoins with insured bank money. The Act explicitly blocks “government-guarantee” style claims. Congress.gov+1
If you want a broader stablecoins primer (what they are, why they matter, and where regulation is heading), you can also read our post The Future of Stablecoins: Regulation, Innovation, and Global Impact
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