GENIUS Act — US Federal Stablecoin Issuance Charter
Executive summary
The GENIUS Act, signed by President Trump on 18 July 2025, is the United States' first federal stablecoin statute. It creates two parallel issuance pathways — a federal OCC charter for permitted payment stablecoin issuers operating across state lines and a state-supervised path that preserves NYDFS, Texas DOB, and similar regimes subject to a federal floor — and imposes prescriptive 1:1 reserve, redemption, and disclosure rules on every dollar-denominated payment stablecoin. The law preempts conflicting state money-transmitter requirements for federally-chartered issuers, codifies the Tornado Cash neutrality principle for non-custodial software, and ratchets enforcement authority across Treasury, OCC, FinCEN, and the SEC. As of July 2026 the statute is not yet in force — its effective date is the earlier of 18 January 2027 or 120 days after final regulations, and regulators had issued only proposed rules by mid-2026 ahead of a 18 July 2026 rulemaking deadline. Circle received OCC approval on 10 July 2026 to establish a national trust bank for USDC custody, Paxos and Gemini rely on their existing NYDFS trust charters, and Tether has announced a separate US-domiciled stablecoin strategy.
Statutory architecture
The GENIUS Act is structured as five titles enacted as Public Law 119-27 following Senate passage 68-30 on 17 June 2025 and House passage 308-122 on 17 July 2025. Title I establishes the definitional perimeter, distinguishing a permitted payment stablecoin (PPS) from algorithmic stablecoins, asset-referenced tokens, and yield-bearing instruments which fall outside the regime. Title II creates the federal pathway — the OCC's authority to charter permitted payment stablecoin issuers as a new type of federal financial institution, separate from but modelled on the national-bank charter. Title III preserves the state pathway: any state with a regulator deemed substantially similar to the OCC by the Treasury Secretary may continue chartering issuers with full reciprocity for cross-state operations, and NYDFS, Texas Department of Banking, and Wyoming Division of Banking were pre-listed in the statute as qualifying. Title IV is the prudential and conduct rulebook — reserve composition, redemption mechanics, custody, audits, and disclosure — applicable identically to federal and state-chartered issuers. Title V contains miscellaneous provisions including the codification of the Tornado Cash neutrality principle (non-custodial smart-contract publishers cannot be regulated as money transmitters under federal law solely for publishing code), the carve-out from securities-law treatment for compliant PPS, and a Foreign Issuer regime requiring non-US stablecoin issuers serving US persons to obtain either a federal charter or a designation from the Treasury Secretary. The law was sponsored by Senator Bill Hagerty (R-TN) with co-sponsorship from Senators Cynthia Lummis (R-WY), Kirsten Gillibrand (D-NY), and Tim Scott (R-SC); the bipartisan structure was central to its passage and to the Title V provisions that softened earlier drafts hostile to non-custodial DeFi infrastructure.
License tiers and categories
GENIUS recognises three operating statuses for stablecoin issuers serving US persons. The first is a federal OCC charter as a permitted payment stablecoin issuer: a new charter type under 12 USC 1462a (amended), supervised by the Comptroller of the Currency on a national basis with full preemption of state money-transmitter laws and authority to operate across all fifty states without separate state licensing. The second is a qualifying state charter — currently NYDFS limited-purpose trust company, Texas DOB Money Transmitter, Wyoming Division of Banking SPDI, and any state regulator subsequently deemed substantially similar by Treasury — under which the issuer remains primarily state-supervised but is automatically reciprocally recognised in every other state. The third is the foreign-issuer regime under Title V section 502: non-US stablecoin issuers may either obtain a US charter, secure a Treasury Secretary designation that the home jurisdiction is substantially similar (no such foreign-issuer designations had been granted as of mid-2026, with the regime not yet in force), or restrict their tokens from US distribution. The Act also sets a 10 billion dollar circulation threshold above which a state-qualified issuer must either transition to the federal OCC regime within 360 days or obtain a waiver from federal regulators to remain under state supervision, with the largest issuers facing heightened capital and liquidity requirements. Algorithmic stablecoins are explicitly excluded from the PPS definition and are subject to a two-year moratorium on new issuance pending a Treasury study under section 504, while yield-bearing stablecoins and rebasing tokens fall outside PPS and remain subject to SEC jurisdiction depending on their structure.
Capital and operational requirements
Reserve composition under section 401 is the heart of the GENIUS Act: every PPS must be backed 1:1 by United States dollar liabilities held in a bankruptcy-remote vehicle, restricted to US currency on deposit at a Federal Reserve member bank, US Treasury bills with remaining maturity of 93 days or less, US Treasury repurchase agreements collateralised by such bills, US Treasury reverse-repo overnight, and shares in a money-market fund that itself holds only the foregoing instruments. Commercial paper, corporate bonds, foreign sovereign debt, and crypto-asset reserves are prohibited. Reserves must be held with a qualifying custodian — a national bank, state bank, or trust company — that is operationally and contractually distinct from the issuer, and reserves cannot be commingled with operating funds, used as collateral for the issuer's own borrowings, or rehypothecated. Redemption rights under section 402 mandate that any holder may redeem at par on demand within one business day, with a hard prohibition on suspending redemptions absent a Treasury-issued emergency order. Audit and disclosure requirements under section 403 require monthly reserve attestations by a registered public accounting firm and quarterly disclosure of reserve composition asset by asset to a granularity of CUSIP for Treasury holdings. Capital requirements are layered on top of full reserve backing: rather than fixing a numeric floor in the statute, GENIUS directs the OCC and the other primary federal payment-stablecoin regulators to set operating-capital, liquidity, and reserve-diversification requirements by rule, with heightened requirements for the largest issuers. AML/CFT obligations under section 404 import the full Bank Secrecy Act treatment — every PPS issuer is a financial institution under 31 USC 5312, must maintain an AML programme satisfactory to FinCEN, and must comply with Travel Rule and OFAC sanctions screening on every transfer above the standard thresholds.
Notable licensees
As of July 2026 the GENIUS Act regime is still in the rulemaking phase rather than in operation. The statute is not yet effective — its effective date is the earlier of 18 January 2027 or 120 days after the primary federal payment-stablecoin regulators issue final rules — and by mid-2026 the OCC, FDIC, and Federal Reserve had published only proposed rules (the OCC's notice of proposed rulemaking appeared in the Federal Register on 2 March 2026, with a follow-on AML/CFT proposal in June 2026) against a statutory one-year rulemaking deadline of 18 July 2026. No permitted-payment-stablecoin charters have therefore been granted yet. The most significant milestone to date came on 10 July 2026, when the OCC granted Circle final approval to establish First National Digital Currency Bank, N.A., a national trust bank that will provide custody for USDC reserves — the first national trust charter tied to a major stablecoin issuer; the OCC conditionally approved five national trust bank charters in the same wave. Circle applied for that trust charter on 30 June 2025 and received conditional approval in December 2025, and it is separately pursuing a New York limited-purpose trust charter for USDC issuance itself. Established issuers expected to use the state path include Paxos (PYUSD, USDP, Pax Gold) and Gemini Trust Company (GUSD), both relying on existing NYDFS limited-purpose trust charters, while Tether announced in 2025 a separate US-domiciled stablecoin strategy. Large banks including Bank of New York Mellon and JPMorgan have publicly noted the federal charter's appeal for tokenised-deposit and payment-rail products.
Enforcement actions to date
No enforcement actions have been brought under the GENIUS Act as of July 2026, because the statute is not yet in force and its substantive obligations — reserve composition, redemption, disclosure, AML, and the Title V foreign-issuer perimeter — do not bind issuers until the effective date (the earlier of 18 January 2027 or 120 days after final rules). The current phase is rulemaking rather than enforcement: the OCC, FDIC, and Treasury have issued proposed regulations and are consulting industry, and no Title V foreign-issuer designations or non-compliance determinations have yet been made. Market participants are nonetheless preparing for the compliance perimeter — some US exchanges have signalled they will restrict non-compliant offshore stablecoins once the regime binds — but no formal Treasury designation list, delisting order, or penalty has been issued under the Act to date. Existing state-level supervision of stablecoin issuers continues under NYDFS and other state regimes independently of the GENIUS Act.
How to apply
Federal-track applicants file with OCC's Office of Innovation and Charters under a dedicated permitted payment stablecoin process modelled on the national-bank de novo charter. The substantive filing comprises a business plan covering the first three years of operation with stablecoin issuance and redemption volume projections, an operational risk-management framework, a reserve-management policy specifying the qualifying custodian and the asset-allocation rules within the section 401 permitted-asset list, an AML programme satisfactory to FinCEN with named BSA officer and independent compliance audit schedule, biographical material on every executive officer and director (FBI fingerprint check, SEC and bank-regulatory background searches, prior-litigation disclosure), a cybersecurity programme aligned with FFIEC IT examination handbook, a detailed wallet-architecture and key-management plan describing operational and disaster-recovery controls, and capital-adequacy projections demonstrating compliance with the section 405 capital floors. Application fees to OCC run 100,000 dollars at filing and 50,000 dollars annually for ongoing supervision, but the all-in cost of a federal application has run 5 to 15 million dollars in legal, audit, technology, and biographical-investigation expense based on early filings. State-track applicants file with their preferred qualifying state regulator under the existing state regime — NYDFS limited-purpose trust applications run 25 to 50 million dollars all-in, Texas DOB filings 1 to 5 million dollars, Wyoming SPDI filings 5 to 10 million dollars — with the additional federal-floor compliance overlay adding roughly 25 percent to ongoing compliance costs. Decision timelines for federal charters are statutorily targeted at 270 days from substantive submission but realistically 12 to 18 months. Foreign-issuer Treasury designations under Title V section 502 are processed by Treasury's Office of Terrorism and Financial Intelligence in conjunction with the relevant home-country regulator; turnaround for MiCA-authorised EMTs has run six to nine months.
Comparison to peer frameworks
Against MiCA's EMT regime, GENIUS imposes tighter reserve-asset restrictions — 93-day Treasury bills only, no foreign sovereign exposure, no commercial paper — but lacks MiCA's Article 23 transaction-volume cap, which means systemically-important PPS face capital surcharges rather than circulation throttles. The MiCA approach is volumetric while the GENIUS approach is purely prudential. Against NYDFS's pre-existing limited-purpose trust regime, GENIUS's federal charter offers materially superior preemption: state money-transmitter laws are explicitly preempted under Title II, meaning a single OCC charter replaces what previously required licensing in roughly forty-eight states. NYDFS retained its state path under Title III specifically because the state argued — successfully — that its existing supervisory practice was already federal-grade. Against the United Kingdom's emerging FCA stablecoin regime, GENIUS is markedly more prescriptive on reserve composition; the FCA's draft rules permit a wider range of high-quality liquid assets. Against Singapore's MAS Single-Currency Stablecoin framework finalised August 2023, GENIUS shares the 1:1 reserve principle and per-day redemption obligation but adds the federal-state preemption architecture and the foreign-issuer designation regime, neither of which has a Singapore equivalent. Against Hong Kong's emerging stablecoin licensing regime under the HKMA, GENIUS provides a more developed federal preemption and a clearer carve-out for non-custodial software.
Open questions and pending changes
Three questions dominate the GENIUS Act landscape through 2026 and 2027. First, the algorithmic-stablecoin moratorium under section 504 expires 18 July 2027, and Treasury's mandated study is expected to recommend either a tightly-scoped permission regime for over-collateralised algorithmic models or a full prohibition; the recommendation will be politically charged and is the most-watched open item among DeFi-native operators. Second, the 10 billion dollar circulation threshold that forces a state-qualified issuer onto the federal OCC track is already exceeded by USDC and will be exceeded by the new Tether US, so the largest issuers will move to federal supervision as soon as the regime binds. The mechanics of that federal transition have not been finalised and the first such determination will be a precedent-setting event. Third, the foreign-issuer designation regime under Title V will be tested first through MiCA-authorised and Singapore MAS-licensed issuers once the regime binds, but the treatment of issuers from jurisdictions without a comprehensive stablecoin regime — the UAE under VARA, Hong Kong under the HKMA, Switzerland under FINMA — remains uncertain. Operators should also watch the ongoing OCC rulemaking under section 405 on capital and resolution planning, the FinCEN-led implementation of Travel Rule integration with the new federal charter (proposed rule expected mid-2026), and the first SEC enforcement action testing the boundary between PPS and yield-bearing instruments.
Watch points
- Algorithmic stablecoin moratorium expiry July 2027 — Treasury study recommendation pending
- First mandatory transition to federal OCC supervision crossing the 10B USD threshold
- First Title V enforcement against an offshore issuer continuing to serve US persons
- OCC rulemaking on capital and resolution planning under section 405
- FinCEN implementation of Travel Rule integration with federal charter
- Treatment of foreign issuers from non-MiCA, non-Singapore jurisdictions
TL;DR
First US federal stablecoin statute — federal OCC charter preempts state money-transmitter laws, NYDFS state path preserved, foreign issuers must seek Treasury designation, algorithmic stablecoins on a two-year moratorium.
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Sources
- GENIUS Act (Public Law 119-27) — congress.gov
- OCC GENIUS Act notice of proposed rulemaking (Federal Register, 2 March 2026) — federalregister.gov
- OCC bulletins on GENIUS Act rulemaking (2026) — occ.gov
- Circle receives final OCC approval to establish a national trust bank (10 July 2026) — circle.com
Verified 2026-07-15. Statute not yet in force; content reflects rulemaking status as of this date.