President Donald J. Trump has signed into law the GENIUS Act (Guiding and Establishing National Innovation for U.S. Stablecoins of 2025 or the GENIUS Act of 2025), establishing the first comprehensive federal framework for fiat-backed stablecoins and digital asset payment systems. The legislation reflects a growing recognition that stablecoins are critical to U.S. competitiveness in financial technology and digital payments.

The new law provides long-sought regulatory clarity for market participants while reinforcing consumer protection, financial stability, and anti-money laundering safeguards. With federal licensing and oversight now in place, the GENIUS Act is expected to accelerate institutional adoption and catalyze innovation across the stablecoin ecosystem.

Key Provisions

Federal Chartering for Stablecoin Issuers

The Act creates a new qualified payment stablecoin issuer category under the oversight of the Office of the Comptroller of the Currency (OCC). Nonbank entities can now apply for a federal license without needing a traditional banking charter.

Reserves and Redemption Requirements

Issuers must maintain 1:1 backing with high-quality liquid assets — primarily U.S. dollars, Treasuries, and other approved instruments.

Supervision and Oversight

Qualified issuers will be subject to certain standards, including capital and liquidity requirements, risk management, annual audits, and supervision by the OCC, in coordination with the Federal Reserve and FinCEN.

State Preemption

The Act will preempt conflicting state-level money transmission laws, offering uniformity to federally licensed issuers, while grandfathering in certain state-regulated stablecoin programs on a transitional basis. The GENIUS Act permits smaller stablecoin issuers, those with a total market capitalization of $10 billion or less, to opt into a qualifying state-level regulatory regime in lieu of federal oversight, provided that the state regime is substantially similar to the federal framework established under the GENIUS Act.

Public Transparency and Reporting

Monthly disclosures of reserves, third-party attestations, and public reports are mandated to promote market discipline and investor confidence.

Implications

For the first time, sponsors, investors, and advisors have a predictable federal framework to structure stablecoin-backed products and services. Private equity funds and venture investors should anticipate increased valuations and deal activity in the digital payments and infrastructure space, particularly among issuers and tech providers capable of meeting federal licensing standards. Early movers able to meet the GENIUS Act’s licensing and reserve requirements may enjoy a competitive edge in banking partnerships and enterprise adoption.

With the GENIUS Act now signed into law, stablecoin issuers, investors, and financial intermediaries face a broad range of legal and regulatory obligations, including:

• Reviewing whether any existing or proposed stablecoins raise securities law, banking law, or commodities concerns, particularly if interest-bearing or bundled with yield features;
• Evaluating whether clients qualify as qualified payment stablecoin issuers under the GENIUS Act;
• Reassess applicability of state-level requirements (e.g., NY BitLicense, CA DBO licenses);
• Aligning AML/KYC programs with heightened standards required under OCC and FinCEN oversight;
• Updating transaction documentation to reflect GENIUS Act requirements, especially around issuer licensing, AML compliance, and reserve practices; and
• Managing disclosure obligations.

Next Steps

The GENIUS Act will go into effect on the earlier of 18 months after the date of its enactment or the date that is 120 days after the date on which the primary Federal payment stablecoin regulators issue any final implementing regulations. The implementing regulations are expected to be issued within 12 months.

Cozen O’Connor continues to monitor developments under the GENIUS Act and related legislation. We have published prior analyses on stablecoin regulation and digital asset compliance, which are available here. Contact Cozen O’Connor if you have any questions about the current regulatory framework or other compliance questions.