Regulation explainer

The GENIUS Act, Explained

The U.S. law for payment stablecoins: what it requires, who it applies to, and what changes when it takes effect on January 18, 2027.

Updated October 28, 2026

Law, effective Jan 18, 2027As of October 28, 2026

The GENIUS Act was signed on July 18, 2025. Regulators are now finalizing the rules: the OCC issued its final rule on October 21, 2026, and the law takes effect on January 18, 2027.

What the GENIUS Act is

The Guiding and Establishing National Innovation for U.S. Stablecoins Act is the first federal law for stablecoins in the United States. It defines a "payment stablecoin" as a token designed to be redeemed for a fixed amount of money, and makes it unlawful for anyone other than a permitted issuer to issue one in the U.S.

It gives stablecoins a regulated wrapper similar to narrow banking: full reserves in cash and short-term Treasuries, monthly public disclosures, redemption at par, and no interest paid by the issuer. It does not cover the broader crypto market, which is the subject of the pending CLARITY Act.

Key provisions

What the law requires

Who can issue

Only permitted payment stablecoin issuers: subsidiaries of insured banks, nonbanks approved by the OCC, and state-qualified issuers. A state regime is allowed for issuers with up to $10 billion outstanding if it is certified as substantially similar.

1:1 reserves

At least $1 of reserves per token, limited to cash, demand deposits, Treasury bills and other Treasuries maturing within 93 days, short repos backed by them, government money market funds, central bank reserves, and tokenized versions of these.

Monthly disclosure

Issuers publish their reserve composition every month, examined by a registered public accounting firm, with the CEO and CFO certifying. Issuers above $50 billion must also publish annual audited financial statements.

No interest

Issuers cannot pay holders any interest or yield solely for holding, using or retaining a stablecoin. The OCC's final rule judges third-party rewards case by case.

Holder protection

Stablecoin holders get priority over other creditors on reserves if an issuer fails. Issuers cannot market tokens as backed by the U.S. government or as federally insured.

Legal status

Payment stablecoins issued under the law are not securities or commodities. Issuers are treated as financial institutions under the Bank Secrecy Act for anti-money laundering purposes.

Foreign issuers

Offshore issuers can serve U.S. users only if Treasury finds their home regime comparable and they register with the OCC. From July 18, 2028, U.S. platforms can only offer stablecoins from permitted or compliant foreign issuers.

Big Tech limit

A public company not predominantly engaged in financial activities can only issue a payment stablecoin with unanimous approval from the Stablecoin Certification Review Committee.

Timeline

Implementation timeline

  1. Jul 18, 2025President signs the GENIUS Act (S. 1582, Public Law 119-27).
  2. Dec 12, 2025The OCC conditionally approves national trust bank charters for Circle and Ripple, and conversions for BitGo, Fidelity Digital Assets and Paxos.
  3. Mar 2, 2026The OCC proposes its GENIUS Act implementing rule.
  4. Sep 29, 2026The Federal Reserve publishes its rule implementing its GENIUS Act responsibilities.
  5. Sep 30, 2026Treasury issues an interim final rule for certifying state stablecoin regimes.
  6. Oct 21, 2026The OCC issues its final rule on issuance, reserves, redemption, capital and custody, effective January 18, 2027.
  7. Jan 18, 2027The GENIUS Act takes effect: payment stablecoins in the U.S. must come from permitted issuers.
  8. Jul 18, 2028U.S. platforms may only offer stablecoins from permitted or compliant foreign issuers.

What it is already changing

Issuers have been repositioning ahead of the effective date. Tether launchedUSDT's U.S. counterpart, USAT, through Anchorage Digital Bank in January 2026. Banks have started issuing their own tokens: Fidelity launched FIDD and SoFi made SoFiUSD available to its members in 2026. World Liberty Financial'sUSD1 is issued by BitGo Bank & Trust, one of the trust banks that received conditional OCC approval in December 2025.

The reserve rules have also created new products. ProShares launched a money market ETF (IQMM) in February 2026 that holds only GENIUS-eligible reserves with a 93-day maturity cap, aimed at issuers managing their backing.

For holders, the practical effect is more standardized protection: clear reserve rules, monthly reports and priority on reserves in an insolvency. Issuers cannot pay interest, but platforms can still pay rewards; see stablecoin rewards vs yield. Stablecoins are still not bank deposits and are not FDIC insured. See which companies and banks now have a stablecoin, or compare the full list of stablecoins.

FAQ

The GENIUS Act, answered

What is the GENIUS Act?

The Guiding and Establishing National Innovation for U.S. Stablecoins Act (GENIUS Act) is the U.S. federal law that regulates payment stablecoins. Signed on July 18, 2025, it sets who can issue dollar stablecoins, requires 1:1 reserves in cash and short-term Treasuries, mandates monthly reserve disclosures, and bans issuers from paying interest to holders.

When does the GENIUS Act take effect?

January 18, 2027, the earlier of 18 months after enactment or 120 days after final regulations. The OCC's final implementing rule, issued October 21, 2026, is also effective January 18, 2027. A separate ban on platforms offering non-compliant stablecoins starts July 18, 2028.

Did the GENIUS Act pass?

Yes. The GENIUS Act passed both chambers of Congress and was signed into law on July 18, 2025. It is Public Law 119-27. It is often confused with the CLARITY Act, a broader crypto market structure bill that has not passed the Senate.

Can stablecoins pay interest under the GENIUS Act?

Issuers cannot. The law prohibits permitted issuers from paying holders any interest or yield solely for holding, using or retaining a payment stablecoin. Whether exchanges and other platforms can pay rewards is addressed in the pending CLARITY Act.

What does the GENIUS Act mean for USDT?

Tether's offshore USDT would need to qualify as a compliant foreign stablecoin to stay available on U.S. platforms after July 18, 2028. Tether launched USAT in January 2026, a separate U.S. stablecoin issued by Anchorage Digital Bank under the federal framework.

What reserves does the GENIUS Act allow?

Cash, demand deposits at insured banks, Treasury bills, notes or bonds with 93 days or less to maturity, short repurchase agreements backed by those Treasuries, government money market funds investing in them, central bank reserves, and tokenized forms of these assets.

What is the difference between the GENIUS Act and the CLARITY Act?

GENIUS is law and covers stablecoin issuers. CLARITY is a pending bill that would set rules for the wider crypto market, splitting oversight between the CFTC and SEC, and would limit how platforms pay rewards on stablecoins.

Sources: Public Law 119-27 (govinfo.gov); Congress.gov S. 1582 summary; OCC Bulletin 2026-50 and Federal Register final rule (October 2026); Federal Register, Federal Reserve rule (September 29, 2026) and Treasury interim final rule (September 30, 2026); OCC News Release 2025-125. Not legal advice.

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