The U.S. House of Representatives has passed the GENIUS Act, a landmark piece of legislation establishing a regulatory framework for stablecoins—digital assets pegged to traditional currencies like the U.S. dollar. The bill now awaits President Donald Trump's signature to become law.
The GENIUS Act mandates that only permitted issuers, such as subsidiaries of insured depository institutions or qualified nonbank payment stablecoin issuers, can issue payment stablecoins for U.S. persons. These issuers must maintain reserves backing the stablecoins on a one-to-one basis using U.S. currency or other similarly liquid assets. Additionally, they are required to publicly disclose their redemption policies and publish monthly details of their reserves.
Under the act, permitted payment stablecoins are not considered securities under securities law. However, permitted issuers are subject to the Bank Secrecy Act for anti-money laundering and related purposes. The legislation also prohibits stablecoin issuers from paying interest or yield to holders, bans deceptive naming that could imply government backing, and restricts the use of consumer data for advertising or profiling without consent.
The passage of the GENIUS Act represents a significant step toward integrating digital assets into mainstream finance, providing a clear regulatory framework that aims to protect consumers and ensure market stability. The bill's enactment is anticipated to foster innovation in the financial sector by offering a structured environment for the development and adoption of stablecoins.