U.S. Federal Regulation for Payment Stablecoins Established by GENIUS Act of 2025
The GENIUS Act of 2025 has established U.S. federal regulation for payment stablecoins, officially recognizing them as functional cash equivalents. This legislation mandates that stablecoin issuers hold reserves at least 1:1 against every token outstanding, with these reserves consisting of cash and short-term Treasury bills, generally 93 days or less. Issuers are also required to publish monthly reports detailing their reserve holdings and are prohibited from paying interest or yield to holders. This regulatory framework aims to provide clarity and stability to the stablecoin market. In the absence of comprehensive market-structure legislation, both market regulators, the SEC and CFTC, have utilized their rulemaking powers. The SEC released an Innovation Exemption, allowing tokenized securities venues to operate without registering as an exchange for five years, and liquidity providers without registering as dealers. The CFTC issued a no-action letter for passive software providers, permitting wallets and...
