Guiding and Establishing National Innovation for U.S. Stablecoins (GENIUS) Act

In early February 2025, a bipartisan group of U.S. senators introduced the Guiding and Establishing National Innovation for U.S. Stablecoins (GENIUS) Act, aiming to create a comprehensive regulatory framework for stablecoin issuers. The legislation seeks to foster financial innovation, enhance consumer protection, and maintain the global prominence of the U.S. dollar.

Key provisions of the GENIUS Act include:

• Licensing and Oversight: The bill establishes clear procedures for institutions seeking licenses to issue stablecoins, implementing reserve requirements and tailored regulatory standards for both bank and non-bank issuers.
• Federal and State Roles: It offers a compromise on the allocation of state versus federal oversight, allowing non-bank issuers the option to be subject to state or federal registration and oversight, while granting the Federal Reserve rulemaking authority for state-qualified issuers.
• Definition of Payment Stablecoin: The legislation defines a payment stablecoin as a digital asset used for payment or settlement that is pegged to a fixed monetary value.
• Consumer Protection Measures: The act prohibits non-financial commercial companies, such as major technology firms, from owning a stablecoin issuer, thereby preserving the separation of banking and commerce.