The GENIUS Act of 2025, signed into law on July 18, creates the first comprehensive federal framework for regulating payment stablecoins in the United States. By establishing a clear set of rules, the Act aims to promote trust in digital assets, ensure regulatory oversight, and protect consumers in the rapidly evolving world of digital finance.
One of its most significant provisions is that it explicitly excludes payment stablecoins from being classified as securities or commodities, helping define their role as a distinct financial product.
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Key Provisions of the 2025 GENIUS Act
The GENIUS Act introduces new oversight and compliance obligations for stablecoin issuers, while narrowing the field to permitted entities under federal supervision.
Regulated Issuers and Prohibited Entities
Under the Act, only federally approved entities may issue payment stablecoins in the United States. These include:
- Insured depository institutions and federally licensed nonbank entities, supervised by the Office of the Comptroller of the Currency (OCC) and the Federal Reserve
- Certain compliant foreign issuers, provided they meet U.S. transparency and redemption standards
All other issuers are prohibited from offering payment stablecoins in the U.S., with limited exceptions. This aims to eliminate unregulated or deceptive offerings that have plagued the market in recent years.
Reserve and Reporting Requirements
To ensure stability and transparency, permitted issuers must meet strict requirements, including:
- Maintaining reserves on a one-to-one basis, ensuring each stablecoin is fully backed by liquid assets
- Monthly public disclosure of reserve holdings to build trust and market integrity
- No interest or yield offered to holders, reducing speculative risk and reinforcing the purpose of stablecoins as payment tools
These measures are intended to protect users from hidden risks and provide assurance that redemption is always possible at full value.
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Compliance Standards and Oversight Mechanisms
In addition to reserve requirements, the GENIUS Act introduces a detailed compliance and certification framework.
Stablecoin Certification Review Committee
Public companies that are not primarily engaged in financial activities cannot issue payment stablecoins unless approved by the newly formed Stablecoin Certification Review Committee. This committee:
- Reviews issuer applications for compliance and risk
- Helps prevent conflicts of interest for companies entering the financial services space from unrelated sectors
This requirement ensures that only entities with proper infrastructure and financial expertise can offer payment stablecoins to the public.
Enforcement and Market Accountability
The GENIUS Act empowers federal regulators to enforce compliance and penalize violations. This framework:
- Brings stability to a previously unregulated segment of the digital asset market
- Aligns stablecoin issuance with existing standards in the banking and financial industries
By making issuers publicly accountable, the Act enhances the safety of using stablecoins for payment and settlement purposes.
Future Implications for Digital Asset Markets
The GENIUS Act marks a significant milestone in the integration of digital assets into the broader financial system.
Encouraging Institutional Adoption
By clarifying how payment stablecoins are treated under U.S. law, the Act paves the way for their adoption by major institutions and financial infrastructure providers.
- Stablecoins defined as non-securities simplifies how banks and fintechs integrate them into existing systems
- The transparency and redemption requirements build confidence for both retail and institutional users
As payment stablecoins gain acceptance, they may become a central part of modern finance, reducing friction in payments and cross-border transactions.
Remaining Concerns and Investor Implications
While the GENIUS Act offers clarity, it also raises questions:
- The exclusion of stablecoins from securities and commodities definitions limits certain investor protections, such as disclosures and antifraud remedies under the SEC and CFTC
- Stakeholders should remain alert to future legislation that could reshape enforcement, investor rights, or issuer responsibilities
The legal framework is still evolving, and while this law provides structure, gaps remain in oversight when stablecoin misuse or fraud occurs.
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How Meyer Wilson Werning Supports Investors in the Digital Asset Space
At Meyer Wilson Werning, we help investors navigate the fast-changing landscape of digital finance. Whether you’re a retail investor concerned about the safety of stablecoin products, or a client who has been misled about the risks of digital assets, we’re here to help you understand your legal rights.
We closely monitor developments like the GENIUS Act and advise individuals and institutions on how new laws may impact their investments, responsibilities, and recovery options. If you have concerns about a digital asset offering or a financial advisor’s recommendations, reach out to explore your options with a team that understands both traditional finance and blockchain-based innovations.
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Frequently Asked Questions
What is the GENIUS Act of 2025?
The GENIUS Act is a 2025 federal law that establishes a regulatory framework for payment stablecoins in the U.S. It sets oversight rules for issuers, reserve requirements, and excludes stablecoins from being classified as securities or commodities.
Who is allowed to issue payment stablecoins under the GENIUS Act?
Only federally licensed depository institutions and nonbank entities, or certain compliant foreign issuers, can legally issue payment stablecoins in the U.S. All other issuers are prohibited.
Are stablecoins considered securities or commodities under this law?
No. The GENIUS Act explicitly excludes payment stablecoins from being treated as securities or commodities, which helps streamline their use in payment systems but limits SEC and CFTC oversight.
What protections are in place for stablecoin holders?
Permitted issuers must maintain one-to-one reserves, publicly disclose holdings monthly, and avoid offering interest or yield—measures designed to ensure stability and minimize risk to users.
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