US stablecoins regulated: the GENIUS Act brings clarity and opportunity

The GENIUS Act defines "payment stablecoins" as digital assets that:

• are designed to be used as a means of payment or to settle transactions,

• the issuer is obliged to redeem at a fixed monetary value,

• hold their value stably pegged to a fixed unit of currency,

• and are not central bank money, bank deposits or conventional securities.

CBDCs, government cryptocurrencies, bank balances and security instruments are expressly excluded.

Only so-called "permitted payment stablecoin issuers" may issue stablecoins in the US. They include:

• subsidiaries of insured US banks, once approved by their regulator,

• federal qualified issuers, meaning non-bank issuers with a special OCC license,

• state qualified issuers, meaning issuers licensed by a US state, provided that state's regulation has been certified as equivalent.

From July 2028, issuing a stablecoin in the US without approval will be prohibited: a milestone in crypto regulation.

All licensed issuers, whether at federal or state level, are subject to the same strict requirements:

Full reserve backing (1:1)

Every stablecoin must be fully backed by highly liquid reserves. Permitted are:

• US dollars in cash,

• demand deposits at insured banks,

• US Treasury bills with a maturity of less than 93 days,

• government-approved money market funds,

• overcollateralized overnight repos.

Rehypothecation is expressly prohibited. Reserves must be held separately and may not be used to fund the issuer.

Redemption guarantee and transparency

Customers have the right to redeem in fiat currency. The rules include:

• clearly published redemption terms,

• transparent fees, with 7 days' notice of any changes,

• monthly disclosure of the reserve composition,

• external audits and CEO/CFO certification.

Issuers with more than $50 billion in circulation must also produce audited annual financial statements under US GAAP.

Capital and liquidity requirements

The relevant regulators must set risk-based minimum capital and liquidity requirements, depending on the issuer's business model. In addition, federal issuers can be required to hold capital buffers.

Anti-money laundering & banking supervision

Stablecoin issuers count as "financial institutions" under the Bank Secrecy Act and must:

• implement a full AML program with a compliance officer,

• screen against sanctions lists,

• report suspicious activity,

• be able to block or "burn" transactions,

• identify and document their customers.

Limits on activities

A licensed issuer may only:

• issue and redeem stablecoins,

• manage reserve assets,

• offer custody services for coins, reserves and private keys.

Bundling add-on products ("tying") is prohibited.

Issuers with less than $10 billion in circulation can, under certain conditions, opt for a certified state regime.

Once that threshold is crossed, the issuer must move to federal supervision within 360 days or apply for a waiver. States that already had established crypto regulation before the law took effect have a good chance of a "presumptive waiver".

Non-US providers may only operate in the US market if they:

• are supervised by a comparable foreign regulator (as confirmed by the US Treasury),

• register with the OCC,

• hold their reserves at US financial institutions,

• must not come from a sanctioned country.

Any rejection must be issued within 210 days, otherwise the registration is deemed approved.

One especially innovative aspect is how insolvency is handled:

• The reserves held are not part of the insolvency estate,

• they may not be used to satisfy other creditors,

• if there is a shortfall, coin holders get a "super-priority claim", ranking ahead of administrative costs, wages and legal fees.

That is unique worldwide and a strong signal for consumer protection in crypto.

The GENIUS Act is also a deliberate rejection of central bank digital currencies (CBDCs). The US is betting on private innovation under clear rules, not surveillance through digital state currencies.

President Trump announced early on that there would be no digital dollar under his presidency. Instead, the US government emphasizes:

• citizens' right to private enterprise and freedom of payment,

• clear rules instead of centrally planned control,

• and the use of stablecoins to strengthen the US dollar.

Because the law allows stablecoins to be backed only by US dollars or short-term US Treasuries, demand for American debt rises. That reinforces the US dollar's role as the world's reserve currency, especially against the euro, the yuan and BRICS currencies.

Stablecoins become a vehicle of geopolitical strategy, and America becomes the rule-maker of the digital money system.

The US relies on transparency and enforcement rather than technical bans. Every issuer must:

• report suspicious transactions,

• be able to freeze or burn assets on order,

• cooperate with sanctions authorities,

• and implement enforceable AML and KYC procedures.

According to Trump, the GENIUS Act is meant to push "nefarious actors" out of the market while enabling innovation.

Despite all the requirements, the signal is clear: the US is opening its stablecoin market, but only to serious, compliant players.

It is not just backing for existing projects but an invitation to international innovators to enter the US market: under transparent oversight and with global reach.

"Digital Assets are the future, and our Nation is going to own it."
President Donald J. Trump

Mount Bonnell Advisors specializes in international tax and corporate structuring, not financial market regulation.

But: we work with renowned US firms that specialize in exactly these questions, including stablecoin issuance, OCC registration, compliance with the GENIUS Act and support through the recognition process for foreign issuers.

If you are planning a project in this space, we are happy to put you in touch with experienced attorneys who can guide you expertly.

For a critical look at the other side of the law, read our article on the GENIUS Act as Washington's debt machine; our overview of US crypto regulation covers the bigger picture. You will find more articles in our News.

Consultation & implementation

If you'd like to find out what this means for your own situation, the best step is to book a consultation.