GENIUS Act: A Defining Moment for Stablecoin Regulation

Payment stablecoins enter regulated space under the Guiding and Establishing National Innovation for U.S. Stablecoins Act of 2025 (GENIUS Act).

On July 18, 2025, President Donald Trump signed the GENIUS Act into law, marking a landmark step in establishing a federal regulatory framework for payment stablecoins. This is the most comprehensive legislation to date governing how digital dollar instruments will operate within the U.S. financial system.

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What the law does

The GENIUS Act creates a unified approach to regulating payment stablecoins – those digital assets pegged to the U.S. dollar and used for everyday payments. Among its key provisions, the act:

• Establishes a dual charter system in which stablecoin issuers are supervised under “substantially similar” regimes
• Authorizes certain entities to issue stablecoins, including federally insured depository institutions, nonbank entities, and state-chartered banks
• Requires stablecoins to be backed on a 1-to-1 basis with high-quality, liquid assets
• Requires issuers to engage an accounting firm registered with the Public Company Accounting Oversight Board (PCAOB) to provide monthly attestation reports and in certain circumstances publish annual financial statements
• Requires issuers to establish compliance regimes for anti-money laundering (AML), sanctions, and customer identification
• Establishes consumer and market protections, including giving first priority to claims of consumers holding payment stablecoins in the event of insolvency
• Provides clarity that stablecoins are not securities or commodities, allowing the primary regulator to be the Federal Reserve, the Office of the Comptroller of the Currency, or a state banking regulator

Note: Full implementation details will unfold in the coming months as regulators issue formal guidance.

Next steps: What to expect

The law directs federal and state banking agencies to begin joint rulemaking and oversight coordination, with final rules to be published within one year after the law goes into effect. This process will require public input via the traditional notice-and-comment mechanism as draft rules are proposed. In addition, the final law instructs the secretary of the treasury, in consultation with the federal banking agencies, to conduct a study of nonpayment stablecoins, including crypto-collateralized stablecoins.

Early regulator focus likely will include:

• Liquidity standards and independent reserve verification
• Illicit finance safeguards, including expectations for AML/KYC protocols
• Cybersecurity and operational risk controls
• Third-party risk management expectations

Why this matters to financial institutions

For financial institutions, passage of this law is a clear signal to move from monitoring to strategizing. The GENIUS Act brings stablecoins into the mainstream of financial services regulation, and banks must decide where they stand.

Key strategic questions include:

• How has the institution preserved its franchise value through prior waves of financial innovation?
• What is the institution’s long-term view of stablecoins and tokenized payments?
• Where do customers’ needs for faster, digital-native payments intersect with the institution’s current offerings?
• How does the institution want to position itself among traditional banks, fintech competitors, and emerging consortia?
• Is the institution prepared to manage the evolving regulatory, technological, and compliance risks that come with participation in the stablecoin space?
• What enhancements are needed for current risk management and compliance frameworks to confirm they are commensurate with the institution’s strategic plans involving payment stablecoins?

The bottom line

The GENIUS Act is more than a compliance requirement; it’s a strategic opportunity. Whether an institution is preparing to enter the market or simply assessing exposure and options, we’d welcome a conversation. Crowe has helped banks, credit unions, and fintechs think critically about digital asset strategies in times of change.

We are available to:

• Facilitate executive workshops on stablecoin strategy and positioning
• Model impact scenarios based on evolving regulatory assumptions
• Assist with regulatory interpretation, compliance design, and risk controls
• Support innovation planning tied to digital payments and blockchain-based settlement models

As an alternative, we provide audit and attestation services for stablecoin-related activities and are PCAOB registered.