Stablecoins just crossed a line that can’t be uncrossed: they now have a home in U.S. law. After years of gray zones, fragmented state regimes, and enforcement-first oversight, the GENIUS Act finally gave the industry a standalone statutory framework.

Whether you cheered or jeered, the reality is the same: the rules have changed. For the first time, crypto founders, banks, and platforms have a clear sense of what compliant issuance looks like — who can issue, how reserves must be held, and what standards apply. However, much is still unsettled; the law sets the framework, but how the implementing regulations are written will decide how it really works in practice.

GENIUS is narrowly focused: it regulates the issuance of payment stablecoins. That’s the scope of the law and the center of gravity for everything that follows.

A payment stablecoin is a digital asset designed for payment and settlement, issued by a centralized entity that makes two core promises: maintain a stable value (pegged, typically, to one U.S. dollar) and redeem tokens for cash on demand. If this is your model, you are squarely inside GENIUS and must comply. Other experiments — algorithmic models like Terra’s UST, synthetic constructions like USDe, or fully decentralized dollar substitutes — are outside the frame. GENIUS doesn’t outlaw them, but it doesn’t bless them either. For those, clarity should come later via market structure legislation or agency guidance.

GENIUS answers a foundational policy question: who can issue a fully collateralized fiat currency onchain?

There are two tracks. First, banks — from community lenders to national banks — are expressly permitted to issue stablecoins if they meet the reserve, custody, governance, and compliance requirements set forth in GENIUS. In practice, a bank can stand up a token fully backed by segregated reserves held one-for-one in cash and Treasuries, with robust controls around custody and redemption.

The second track is new: a federally recognized nonbank category. Nonbanks can issue and redeem stablecoins, manage reserves, and custody stablecoins and reserves. However, they don’t become depository institutions and cannot morph into full-spectrum banks. Nothing in GENIUS would allow nonbank issuers to branch into lending, deposit-taking, or other traditional activities enabled through a bank charter.

For founders, the meat of the statute is the operating standard for stablecoin issuance, which will drive product design, legal structure, and unit economics.

Redemption and convertibility. GENIUS is built around par convertibility and timely redemption. Issuers must honor redemptions at face value within a defined time window, publish clear redemption policies, and ensure operational capacity (and liquidity) to meet flows even under stress. The redemption promise is what separates a payment stablecoin from an investment product; Congress made it the north star.

Reserves and monthly assurance. Reserves must be safe and liquid — cash, central bank balances (if accessible), and short-dated U.S. Treasuries — and segregated from the issuer’s own assets. Issuers must publish monthly reserve reports with independent accountant assurance and undergo periodic financial statement audits. This moves the market from ad-hoc attestations to predictable, recurring transparency.

Capital and risk management. Beyond 1:1 backing, GENIUS requires a capital buffer sized to absorb operational and market risks (think: custody failures, operational incidents, hedging slippage on short bills). Supervisors will calibrate the exact formula in rulemaking, but the principle is fixed: you cannot run a zero-equity, “all-float” business in a critical payments role.

BSA/AML — you are now a financial institution. Issuers must stand up full Bank Secrecy Act programs: customer identification/KYC for account holders and high-value transactions, sanctions screening, ongoing monitoring, suspicious activity reporting, and independent testing. Treasury is directed to tailor expectations to an issuer’s size, complexity, and risk profile so a $500M local issuer isn’t forced into the same program as a $50B global one — but the duty is real, and it sits with the issuer, not just the exchange or wallet around it.

Lawful freeze order compliance. GENIUS requires that issuers have demonstrable technological capability to comply with lawful freeze orders (a practice already common among large issuers that the law simply codifies). This doesn’t mandate a single design (custodial vs. non-custodial, allow-lists vs. post-trade holds), but it does require that the issuer’s stack, contracts, and key-management procedures can execute a freeze without compromising the peg or harming unrelated holders. Expect supervisors to test this the way they test wire-block or debit-card fraud controls today.

Anti-tying and walled gardens. GENIUS bars coercive tying, which means conditioning access to a product or service on a customer’s agreement to hold or use a specific stablecoin. This is the anti-walled-garden clause. Loyalty programs, co-branding, and embedded incentives are allowed; locking users inside a closed loop by force is not. Practically: you can make your stablecoin attractive to hold, but you cannot make it the toll to enter the rest of your ecosystem. For founders exploring whitelabeled stablecoins, this distinction matters. You can design rewards or integrate a partner’s stablecoin into your app, but you can’t force users to transact exclusively in it. In other words, distribution strategies must rely on carrots, not sticks — your growth will come from building compelling reasons to hold or use a stablecoin, not from restricting user choice.

The final statute prohibits passing through yield “solely” for using or holding a payment stablecoin. This prohibition blocks deposit-like interest and bond-fund look-alikes, but leaves room for rewards tied to usage, loyalty, or broader program value through third-party arrangements. For builders, GENIUS preserves space for whitelabeled stablecoins and rewards-driven models, where merchants fund discounts or perks from the float rather than handing out interest pro rata to holders. 

Banks, however, are not happy with where this landed. This was one of the biggest issues they fought over. Expect them to keep pressing their case in rulemakings or to push for a fix in other crypto legislation moving through Congress.

GENIUS provides two pathways for issuer registration: You can (1) be a federal issuer supervised at the national level or (2) qualify under a state regime that meets federal equivalency standards. 

To avoid crushing smaller players, the law allows qualified state issuers to operate under state oversight as long as they have less than $10B in total outstanding issuance. Once Treasury approves a state-level regime as being substantially similar to the federal framework under GENIUS, state regulators can register and oversee issuers without further authorization from federal authorities. 

Crossing the $10B threshold pulls you into the more intensive federal program. This is the compromise that lets startup-scale issuers exist without forcing every project to immediately (or ever) pursue a federal charter — while still gating systemic-scale issuance into a single supervisory view.

Practically, this means the states matter. A handful are already updating their statutes and exam manuals to map to GENIUS. Nebraska is a good example: It has been building a stablecoin-specific regime that can plug into the national framework without forcing every Nebraska-based issuer to federalize on day one. New York’s regime has been a go-to, even before GENIUS’s passage. Regardless, expect a small cluster of “GENIUS-aligned states” to emerge, not a 50-state race.

GENIUS draws a bright line on the “where” for issuers: Only U.S.-formed entities can issue payment stablecoins. Congress wanted the capital, technology, and talent anchored onshore, but lawmakers also knew foreign-issued stablecoins are already central to global markets and issued by major buyers of U.S. Treasuries. 

To solve the dilemma of being both a “pro-crypto” and “America-first” framework, GENIUS drew another line on the offering and selling of stablecoins: U.S. digital asset service providers (DASPs) (essentially GENIUS’ classification for CeFi intermediaries) cannot list or distribute “foreign” stablecoins unless Treasury certifies their issuers as compliant. That requires (1) operating under a Treasury-approved regime, (2) registering with and submitting to OCC oversight, and (3) holding sufficient reserves with a U.S. financial institution. Even then, Treasury can revoke certifications, forcing DASPs to delist the stablecoin.

And even if approved, foreign issuers face a permanent ceiling: Only domestic stablecoins get an “exclusive basket of rights” — settlement-asset status, collateral eligibility, and cash-equivalent treatment for accounting purposes. Foreign stablecoins will never qualify for these privileges. Put differently, U.S.-issued stablecoins enjoy a legally mandated competitive advantage that no amount of product quality or partner distribution can overcome.

For builders, the calculus is clear: Domestic issuance is heavier up front but delivers certainty, durability, and access to the full suite of GENIUS rights. Foreign issuance could offer quicker entry if you’re already licensed in an approved jurisdiction, but delisting risks and permanent second-tier status under U.S. law will make it an unattractive pathway for most. Tether, the largest foreign issuer by far, decided to moot the entire issue by launching a separate U.S.-based stablecoin, USAT, to go alongside USDT.

We are, for the first time, in a new phase of crypto policy — the post-legislation, pre-rulemaking stage of a pro-crypto regulatory framework. GENIUS is law, but many of the details that will decide how stablecoins actually operate are still unsettled. 

For founders, this means two things: there’s a lot we don’t know yet (and won’t for a while), and there’s real opportunity for those close enough to policy to anticipate or even shape how the implementing rules are written. In that sense, GENIUS is the skeleton; agencies will add the muscle. And it’s through agency rulemakings that policy will shape the market you build into.

Here are three of the many areas we’re most actively thinking about:

• Treasury’s illicit-finance rulemaking. Treasury has to propose and finalize rules that (i) define AML/risk-program expectations for issuers and core intermediaries, (ii) tailor those expectations by size, complexity, and risk, and (iii) establish a process to recognize foreign jurisdictions as “comparable” for purposes of foreign issuance and cross-border distribution. This is where practical questions get answered: What does “reasonable” KYC look like when distribution is mediated by wallets and platforms? How are travel-rule and sanctions expectations implemented across L2s and bridges? What is the minimum monitoring footprint for a sub-$10B state issuer versus a $50B national one?

• Prudential calibration: capital, reserves, liquidity, redemption. The Fed/OCC/FDIC (and state banking supervisors) will set the numerics: minimum capital and liquidity buffers, haircuts/tenors for reserve assets, governance and audit cycles, and the exact timelines and contingency funding required to meet redemptions at par under stress. This is also where agencies may opine on pathways to master account access (direct vs. correspondent) for nonbank issuers and how they interface with the wholesale banking system.

• Defining “issuer” — and what that means for whitelabel models. The statute doesn’t give you a clean, global definition of “issuer.” Functionally, it anchors on the party that stands behind redemption and control (not custody) of the reserves — but there’s plenty of room for rulemaking to say whether a brand that “slaps its name on” a token is also an issuer, a co-issuer, or a program manager. That call is pivotal.

Beyond these three issues, GENIUS leaves dozens of details to regulatory discretion. From disclosure formats to custody standards to how stablecoins interact with the broader banking system, there’s a long tail of rulemakings still ahead. Builders should treat this as a moving frontier: staying close to the process is how you spot risks early and capture opportunities others will miss.

Stablecoin economics still start with the float: you collect reserves, invest in safe assets, and then your spread funds operations, compliance, and profit. GENIUS preserves that core business while shutting the door on deposit-like interest. Because the yield rule blocks paying holders “solely for holding,” the economic game shifts from raw pass-through to program value: loyalty, discounts, access, and embedded rewards funded indirectly by yield. This is why we will likely see a wave of merchant-branded stablecoins and “stablecoin-as-a-service” providers: GENIUS makes whitelabel issuance scalable by lowering legal uncertainty and by codifying what isn’t allowed (interest passthrough) while leaving room for what is (programmatic rewards).

Banks, for their part, will lean on compliance and distribution moats — and cheap, direct access to Treasury markets — to issue stablecoins that integrate natively with enterprise payments. Nonbanks will move faster and partner widely, especially with consumer platforms. Merchants and marketplaces will monetize “store-of-value within the ecosystem” without wading into deposit law. Foreign issuers will either build U.S.-compliant arms or focus on non-U.S. corridors — because DASPs won’t carry them if they can’t comply.

Right now, builders don’t have all the answers they need. GENIUS sets the framework, but many of the practical issues still must be decided. What we do know are the questions that regulators must answer, and we have a timeline for when those answers will come.

Regulators must finalize rules by July 18, 2026. In the run-up, regulators will signal what they’re thinking through notices of proposed rulemaking and will actively seek comments from the public. The law itself then takes effect on the earlier of January 18, 2027, or 120 days after rules are finalized (meaning if regulators can get rules out faster, then we could see GENIUS go live sometime in the latter half of 2026). And starting on July 18, 2028, DASPs will be prohibited from supporting stablecoins that aren’t issued by a registered domestic issuer or a compliant foreign equivalent.

Essentially, by mid-2026, builders will have more of an idea of what “GENIUS-compliant” stablecoins look like. By 2027 at the latest, issuers will be able to go in and register. And by mid-2028, issuers will have to be in full compliance with the laws and regulations if they want their tokens to circulate and trade on U.S. platforms.

The upshot for builders is simple: you don’t need to wait for every rule to be final to structure your product. The direction of travel is clear — safe reserves, real redemption, visible capital, AML programs scaled to your risk, technical freeze capacity, no coercive tying, and rewards (not interest) as your monetization lever. That is enough to design around today.

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