The US Genius Act sets strict, nationwide rules for payment stablecoin issuers. Issuers must hold 1-to-1 cash-like reserves, publish monthly audits, follow AML/KYC and Travel Rule standards, maintain a U.S. license and legal presence, and face penalties or federal oversight for violations.
- Obtain the necessary license as a permitted issuer.
- Maintain 1:1 reserves using eligible assets.
- Segregate reserves from firm funds and assets.
- Comply with AML, KYC, and Travel Rule requirements.
- Disclose redemption policy and monthly reserve composition.
- Ensure redemption at par with priority in insolvency.
- Maintain a legal presence in a U.S. state.
- Meet tailored capital requirements based on risk.
What are the Eligible Issuer Types for payment stablecoins under the US Genius Act?
Under the Act, eligible payment stablecoin issuers include certain approved non-bank entities, subsidiaries of insured depository institutions, and state-qualified entities. Only entities explicitly permitted under the Act may issue payment stablecoins in the United States.
- Permit subsidiaries of insured depository institutions approved under section 5 to issue payment stablecoins.
- Permit Federal qualified non-bank payment stablecoin issuers approved under section 5 to issue payment stablecoins.
- Permit State qualified payment stablecoin issuers to issue payment stablecoins.
- Require State qualified payment stablecoin issuers to comply with section 4.
- Limit legal issuance of payment stablecoins in the United States to permitted issuers.
- Receive, review, and approve applications from entities seeking to issue payment stablecoins via the primary Federal regulator.
- Establish the licensing and regulation process for certain entities via the primary Federal regulator.
What are the exchange-listing conditions for stablecoins under the US Genius Act?
The Act does not specify particular requirements for exchange-listing conditions or criteria for stablecoins and other digital assets.
What Supervisory Intervention Powers Apply to Stablecoin Issuers under the US Genius Act?
Regulators have broad powers to intervene in issuer operations. They may issue cease-and-desist orders, impose penalties, and require issuers to stop operations if market-cap thresholds are breached without completing regulatory transitions. They can also act against affiliated parties and seek judicial enforcement.
- Cease issuing new stablecoins if market cap exceeds $10 billion without regulatory transition.
- Prohibit issuance for material violations of the Act or agreements.
- Order cease-and-desist or require corrective actions.
- Remove or prohibit participation of institution-affiliated parties for violations.
- Seek judicial enforcement for effective notices and orders.
- Issue temporary cease-and-desist orders in exigent circumstances.
- Impose daily civil penalties for violations or unauthorized issuance.
What local-presence or domicile rules apply to payment stablecoin issuers under the US Genius Act?
Payment stablecoin issuers must have a legal presence in the United States and be established in the specific state where they are approved.
- Be legally established in the U.S. state of approval.
- Issue payment stablecoins only if classified as a permitted issuer.
- Maintain a U.S. presence under permitted-issuer categories.
What are the white-paper or prospectus requirements for stablecoin issuers under the US Genius Act?
Permitted issuers must publicly disclose their redemption policy and publish monthly website reports detailing reserve composition and the total number of outstanding stablecoins.
- Disclose redemption policy publicly.
- Publish monthly reserve reports on website.
- Detail reserve composition in reports.
- Include total outstanding tokens in reports.
- Report amount and composition of backing assets.
- Ensure policy and reports meet regulations.
- Undergo regulatory review for plans and management.
What are the Tokenized-Asset Reserve Segregation and Custody requirements under the US Genius Act?
The Act mandates segregation of reserves and customer assets supporting payment stablecoins, covering eligible-asset use, commingling bans, and priority in insolvency.
What custody safeguards and asset-segregation requirements apply to intermediaries under the US Genius Act?
Intermediaries holding stablecoins must be supervised and apply strict safeguards.
- Be supervised by Federal or State regulators.
- Comply with segregation requirements.
- Treat customer assets and keys as customer property.
- Protect customer assets from custodian creditors.
- Separately account for customer assets.
- Do not commingle customer assets with firm funds.
- Submit information on asset-protection processes to regulators.
What are the Attestation and Audit-Frequency requirements for payment stablecoin issuers under the US Genius Act?
Permitted issuers must have their monthly reserve reports examined by a registered public accounting firm.
- Have reserve reports examined monthly by a registered public accounting firm.
- Detail outstanding stablecoins and reserve composition in monthly reports.
What usage limits or systemic-risk triggers apply under the US Genius Act?
Exceeding a $10 billion market cap triggers a transition from state to federal regulation within 360 days or a halt to new issuance until compliant.
- Operate under state law if market cap ≤ $10 billion.
- Transition to federal regulation if market cap > $10 billion.
- Complete federal transition within 360 days of exceeding cap.
- Cease new issuance if transition incomplete after cap breach.
- Transition depository institutions to Board regulation when cap exceeded.
- Transition other issuers to Comptroller regulation when cap exceeded.
- Ensure state regime is substantially similar to federal framework.
What are the Issuer AML/KYC obligations for stablecoins under the US Genius Act?
- Establish risk‐management standards, including Bank Secrecy Act compliance.
- Comply with Bank Secrecy Act requirements as financial institutions.
- Meet anti-money-laundering and customer-due-diligence obligations.
- Be subject to enforcement actions for BSA violations.
What is the Definition and Scope of Stablecoins under the US Genius Act?
The Act regulates “payment stablecoins” – digital assets meant for payments, redeemable at a fixed national-currency value, and marketed as stable. It separately defines and studies “endogenously collateralized” stablecoins.
- Define “payment stablecoin” as intended for payment or settlement.
- Require redeemability at fixed monetary value.
- Represent stable value relative to national currency.
- Exclude national currencies and certain securities.
- Define “endogenously collateralized stablecoin” as relying on another digital asset for stability.
- Exclude payment stablecoins issued by permitted issuers from certain securities laws.
What are the issuer capital-buffer and solvency requirements under the US Genius Act?
Regulators will tailor capital requirements to each permitted issuer’s risk profile. Custody providers need only cover operational risks.
- Issue capital requirements for permitted issuers.
- Limit requirements to necessary operational needs.
- Tailor buffers to capital structure, complexity, and size.
- No extra capital solely for custody; cover related operational risks.
What are the Redemption Rights and Deadlines for stablecoins under the US Genius Act?
Payment stablecoin issuers must allow redemption at par, publish redemption policies, and prioritize holder claims in insolvency.
- Publicly disclose redemption policy.
- Establish procedures for timely redemption.
- Maintain liquidity to meet redemptions.
- Permit redemption of stablecoins.
- Prioritize holder claims in insolvency.
What are the Travel-Rule requirements for payment-stablecoin transfers under the US Genius Act?
Issuers operate as financial institutions under the BSA. They must apply the Travel Rule by collecting and transmitting originator and beneficiary data for qualifying transfers.
- Comply with Bank Secrecy Act requirements.
- Adhere to the Travel Rule for qualifying transfers.
- Collect originator and beneficiary information.
- Integrate BSA compliance into risk-management standards.
Does the US Genius Act allow permissionless transfers for stablecoins?
Yes. The Act references public distributed-ledger technology and exempts self-custody tools, enabling peer-to-peer transfers where users control their assets.
- Reference distributed ledger as public digital ledger.
- Exempt self-custody hardware/software providers.
- Allow users direct control of assets.
- Enable peer-to-peer transfers on blockchain.
What are the Reserve-ratio and Eligible-asset rules for stablecoins under the US Genius Act?
Issuers must back stablecoins at least 1-to-1 with eligible reserves such as U.S. currency, demand deposits, short-term Treasuries, or certain money-market funds. Rehypothecation is generally banned.
- Maintain 1-to-1 reserves.
- Use U.S. coins, currency, or demand deposits.
- Hold short-term U.S. Treasury instruments.
- Include certain money-market funds.
- Generally prohibit pledging or rehypothecation.
- Allow Treasury-repurchase agreements in limited cases.
- Use liquidity from permitted pledges to meet redemptions.
What are the Public Reserve-Composition Disclosure requirements under the US Genius Act?
Permitted issuers must publish monthly reserve-composition reports on their websites, including token supply and reserve details.
- Publish monthly reserve composition online.
- Include total outstanding stablecoins.
- Detail amount and composition of reserves.
What are the Holder-identity and customer-identification requirements under the US Genius Act?
Issuers must follow BSA rules, including customer due diligence, sanctions screening, and AML obligations.
What is the Retail availability of stablecoins under the US Genius Act?
Payment stablecoins are intended for retail use, supported by state consumer-protection laws, custodial safeguards, and insolvency priority rules.
- Comply with state consumer-protection laws.
- Treat customer-held stablecoins as customer property.
- Grant priority to holders in insolvency.
What are the licensing and supervisory requirements for stablecoin issuers under the US Genius Act?
The Act assigns oversight to federal agencies (Board, Comptroller, FDIC, NCUA) or states, depending on issuer type.
- Submit monthly reserve certifications.
- Follow capital, liquidity, and risk standards.
- Transition to federal oversight when market cap exceeds $10 billion.
- Provide operational and asset-protection data to regulators.
- Undergo examinations by primary regulators.
- Face regulatory actions for violations.
- Obtain federal approval to issue stablecoins.
What is the Failure-and-resolution regime for payment stablecoin issuers under the US Genius Act?
In insolvency, claims from stablecoin holders receive first priority under the U.S. Bankruptcy Code or regulator-initiated proceedings. Non-depository issuers are expressly subject to the Code with these priority rules.
What unique or idiosyncratic details affect stablecoin issuers under the US Genius Act?
The Act includes reserve-use restrictions, scope-of-activity limits, oversight transitions tied to market cap, application timelines, and studies of endogenously collateralized stablecoins.
- Prohibit pledging or rehypothecating reserves, with limited Treasury-bill exceptions.
- Allow non-stablecoin activities if explicitly permitted by the regulator.
- Transition state-regulated issuers over $10 billion market cap to Federal oversight unless waived.
- Deem applications approved if no decision within 120 days.
- Apply Host State consumer-protection laws to out-of-state issuer activities.
- Clarify payment stablecoins are not securities under specified acts.
- Mandate a study on endogenously collateralized stablecoins within 365 days.