The GENIUS Act, formally the Guiding and Establishing National Innovation for US Stablecoins Act, is the first US federal law regulating payment stablecoins. Signed on 18 July 2025, it takes effect on 18 January 2027. From that date, issuing a payment stablecoin in the United States without a federal or state licence becomes illegal.
What the law requires
Five core obligations apply to anyone issuing a dollar stablecoin to US customers, and together they describe a regime considerably stricter than anything stablecoin issuers had previously operated under anywhere.
Full reserves. Every token must be backed one-to-one by cash, short-term Treasury bills, or similarly liquid assets. No fractional backing, no commercial paper, no crypto collateral.
Licensing. Issuers must be approved as either a federal qualified payment stablecoin issuer or a state qualified issuer, with federal regulators including the OCC, FDIC, and NCUA overseeing different categories.
Redemption at par. Holders must be able to redeem tokens for dollars at face value under clear, published procedures.
No interest to holders. Issuers may not pay yield or interest on the stablecoin itself. This provision was contested and remains one of the sticking points in the separate CLARITY Act negotiations.
Disclosure and audits. Monthly reserve reports, regular attestations, and anti-money laundering compliance.
Why it took until 2025
By June 2026, stablecoins had grown to a $316 billion market with no federal framework at all.
Under a patchwork of state money transmitter licences, offshore jurisdictions, and voluntary attestations, issuers operated. Two events demonstrated what could go wrong without reserve rules. In May 2022, TerraUSD collapsed, wiping roughly $40 billion in 72 hours. In March 2023, USDC fell to about $0.87 during the Silicon Valley Bank failure.
Several bills stalled in Congress between 2022 and 2024. In 2025, GENIUS passed with bipartisan support as the first piece of a broader crypto framework.
The timeline that matters
| Date | Event |
|---|---|
| 18 July 2025 | Signed into law |
| September 2025 | Treasury issues advance notice of proposed rulemaking |
| 25 February 2026 | OCC publishes its main implementing proposal, creating a new 12 CFR Part 15 |
| December 2025 to June 2026 | FDIC, NCUA, FinCEN, Treasury, and OFAC issue proposals |
| 18 July 2026 | Statutory deadline for most final rules. Regulators missed it |
| 18 January 2027 | Law takes effect. Unlicensed issuance in the US becomes prohibited |
| 18 July 2028 | Exchanges may no longer offer non-compliant stablecoins to US persons |
The effective date was set as the earlier of 18 months after enactment or 120 days after final rules. Because regulators missed the July 2026 rulemaking deadline, the 18-month trigger governs.
What changes for stablecoin holders
Three things, practically.
USDT's position in the US. Tether has historically held reserves in a mix that includes assets outside the permitted list. Whether it seeks a US licence, restructures, or is offered only through the foreign-issuer provisions determines its US availability after January 2027. The law does allow foreign issuers to serve US markets if they can comply with lawful orders and their home jurisdiction has a reciprocal arrangement.
USDC's position. Circle has positioned USDC for regulated frameworks and is widely expected to qualify.
Yield products. Because issuers cannot pay interest on the token, any yield on stablecoins has to come from somewhere else, such as lending the tokens out. That is a different product with different risks.
GENIUS and CLARITY
Two laws. Two problems. One market.
GENIUS regulates payment stablecoins and is finished, pending implementation. For every other digital asset, CLARITY addresses market structure, meaning which are securities, which are commodities, and which regulator oversees each. As of early September 2026, CLARITY had not passed the Senate.
Therefore the US has a complete stablecoin statute wrapped inside an incomplete market structure regime. Doing both at once, the European Union's MiCA framework also prohibits algorithmic stablecoins outright, which GENIUS effectively does too through its full-reserve requirement.
What the law does not do
- It does not insure stablecoins. No deposit guarantee scheme covers them. Full reserves reduce the risk of a shortfall. They do not eliminate issuer failure.
- It does not cover algorithmic or crypto-collateralised designs. Those fall outside the payment stablecoin definition and cannot be marketed as such.
- It does not settle yield. The interest prohibition applies to the issuer. Third-party lending of stablecoins is a separate question the CLARITY negotiations were still contesting.
- It is not yet in force. Between September 2026 and January 2027, the market operates under the old patchwork.
- It does not bind other jurisdictions. Dubai's VARA and the EU's MiCA run their own stablecoin regimes with different specifics.
Where mb.io fits
For most crypto trading, stablecoins are the base currency. Where you hold them is a counterparty decision, one the GENIUS Act's reserve and redemption rules are designed to make far less consequential than it has been.
mb.io is a regulated crypto spot exchange backed by MultiBank Group, a financial institution founded in 2005 that serves more than 2 million clients across 100+ countries.
- Regulated by VARA in the UAE and AUSTRAC in Australia
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- Fiat on and off ramps supporting Visa, Mastercard, SWIFT, and PIX
- Buy, sell, and swap in three steps, from sign-up to purchase
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Open your account and start trading on mb.io.
Frequently asked questions
What is the GENIUS Act?
The first US federal law regulating payment stablecoins. Signed on 18 July 2025, it requires full reserves, licensing, redemption at par, and reserve disclosure, and it prohibits issuers from paying interest to holders.
When does the GENIUS Act take effect?
18 January 2027. The effective date was the earlier of 18 months after enactment or 120 days after final rules, and regulators missed the July 2026 rulemaking deadline, so the 18-month trigger applies.
Does the GENIUS Act ban stablecoin yield?
On the stablecoin itself, issuers may not pay interest. Yield earned by lending stablecoins through a third party is a separate product, and its treatment was still being negotiated in the CLARITY Act.
What reserves does the GENIUS Act require?
One-to-one backing in cash, short-term Treasury bills, or similarly liquid assets. Commercial paper, crypto collateral, and fractional backing are not permitted.
Will USDT be legal in the US under the GENIUS Act?
That depends on whether Tether obtains a licence, restructures its reserves, or qualifies under the foreign-issuer provisions. Where they comply with lawful orders and a reciprocal arrangement exists with their home jurisdiction, the law allows foreign issuers.
What is the difference between the GENIUS Act and the CLARITY Act?
GENIUS regulates payment stablecoins specifically and became law in July 2025. CLARITY addresses market structure for all other digital assets and had not passed the Senate as of September 2026.
Are stablecoins insured under the GENIUS Act?
No. The law requires full reserves but does not create deposit insurance. Full backing reduces the chance of a shortfall without eliminating issuer risk.
Which agencies enforce the GENIUS Act?
The OCC, FDIC, and NCUA for different issuer categories, with Treasury, FinCEN, and OFAC handling anti-money laundering and sanctions provisions. Six agencies issued proposed rules between December 2025 and June 2026.
