President Donald Trump signed legislation intended to establish a federal regulatory framework for U.S. dollar-backed stablecoins. The Guiding and Establishing National Innovation for U.S. Stablecoins (GENIUS) Act, S. 1582, defines “payment stablecoins” and the types of entities permitted to issue them.
“I pledged that we would bring back American liberty and leadership and make the United States the crypto capital of the world, and that’s what we’ve done,” Trump said in a statement. “The GENIUS Act creates a clear and simple regulatory framework to establish and unleash the immense promise of dollar-backed stablecoins.”
The legislation defines “payment stablecoins” as digital assets tied to the fixed value of the U.S. dollar or similarly liquid assets in terms of worth and intended to be used as a form of payment or settlement. They are only to be issued by “permitted payment stablecoin issuers,” which are required to maintain one-to-one reserves in U.S. dollars or other highly liquid assets and comply with federal anti-money laundering rules and regulations.
The bill establishes three categories of permitted payment stablecoin issuers:
- Subsidiaries of insured depository institutions (IDIs), which would be subject to approval by the primary federal regulator of the IDI;
- Federal qualified payment stablecoin issuers, which include nonbank entities (other than a state qualified payment stablecoin issuer), uninsured national banks chartered by the Office of the Comptroller of the Currency (OCC) and federal branches approved by the OCC; and
- State-qualified payment stablecoin issuers, subject to approval by a state payment stablecoin regulator.
An issuer’s federal regulator would be dependent on their issuer category and market capitalization. Those with more than $10 billion would be subject to federal oversight by the OCC, Federal Reserve, Federal Deposit Insurance Corp. or National Credit Union Administration. Each of these federal agencies would have one year following the bill’s enactment to promulgate implementing regulations through the appropriate notice and comment process.
Independent Community Bankers of America (ICBA) President and CEO Rebeca Romero Rainey issued a statement noting her association’s intent to remain engaged with lawmakers on the subject of digital assets in the banking ecosystem.
“Make no mistake, ICBA has worked closely with policymakers throughout the stablecoin debate, and continuously through four different Congresses, and we will continue to be engaged on all fronts in the weeks, months, and years ahead,” Romero Rainey said.
The legislation underwent a key revision before being passed by the Senate, 68-30, after the financial services industry expressed concerns about a provision applying the “Durbin-Marshall Credit Card Mandate” to large credit card-issuing financial institutions. This would have required such institutions to provide at least two credit card networks for processing transactions. Trade advocates feared this provision would increase fraud risks, as well as credit costs.