On June 17, 2025, the U.S. Senate passed the GENIUS Act (Guiding and Establishing National Innovation for U.S. Stablecoins of 2025) with strong bipartisan support. The GENIUS Act still has a way to go before it is signed into law; the U.S. House of Representatives is expected to pass a similar measure in the coming weeks, with final legislation provided to President Donald Trump for signature later this summer. Nonetheless, the GENIUS Act is transformative legislation that signals a generational change in the relationship between digital assets and the mainstream financial system.
Background
The GENIUS Act sets out a regulatory framework that permits the issuance of payment stablecoins and allows for their integration into the U.S. financial system. The act broadly defines a payment stablecoin as a digital asset that can be used as a means of payment, redeemable for a fixed monetary value, and is designed to maintain a stable value over time. When fully adopted, payment stablecoins generally are expected to have a constant value of $1 and can be used by individuals and businesses for the same purposes as physical currency, checks, ACH, and debit and credit card transactions.
However, unlike many of these traditional forms of payment, payment stablecoin transactions will settle nearly instantaneously, can occur around-the-clock, do not require an intermediary between the payor and payee, and are limited in payment size only by the amount of stablecoins that the payor owns. For more information on the benefits and usage of stablecoins, click here.
Overview
To reduce the risks that payment stablecoins pose to the safety and soundness of the financial system, the GENIUS Act provides requirements that issuers of payment stablecoins must meet. Only those payment stablecoins that meet these requirements can be issued for use by U.S. persons. Among other requirements, a payment stablecoin issuer must:
- Be organized as a subsidiary of an insured depository institution, as a federal-qualified nonbank payment stablecoin issuer, or as a state-qualified payment stablecoin issuer.
- Be subject to either federal or state regulation by a regulator designated under the act.
- All issuers may choose federal regulation; however, only those that issue $10 billion or less in stablecoins may choose state regulation.
- Maintain an adequate level of reserves to meet a 100% minimum reserve requirement for the payment stablecoins.
- Reserves must be comprised of U.S. currency, short-term U.S. Treasury securities, or other similarly liquid assets. Issuers also are required to publicly disclose their redemption policy and publish details of their reserves on a monthly basis.
- The accuracy of reserves must be certified by the issuer’s CEO and CFO and be subject to examination by a registered public accounting firm.
- Meet specific requirements related to (1) limitations on the reuse of reserves; (2) the safekeeping services of stablecoins; and (3) regulatory supervision, examination, and enforcement.
- Meet capital, liquidity, and risk management requirements to be prescribed by the federal and state regulators.
- Apply the Bank Secrecy Act for anti-money laundering and related purposes.
In addition, payment stablecoin issuers are prohibited from paying any form of interest or yield on the stablecoin if such payments are solely in connection with the holding, use, or retention of the payment stablecoin. Further, the issuer is prohibited from tying and, as such, may not require the customer to obtain an additional paid product or service from the issuer or any of its subsidiaries, and may not prohibit the customer from obtaining additional products or services from a competitor.
Special Requirements for Nonbank Payment Stablecoin Issuers
If a firm that is not predominantly engaged in financial activities (nonbank) would like to issue payment stablecoins, the firm must receive unanimous approval from the Stablecoin Certification Review Committee established under the act. In addition to meeting the requirements discussed above, the nonbank would be required to demonstrate to the review committee that the nonbank:
- Would not pose a material risk to the safety and soundness of the banking system, the financial stability of the U.S., or the Deposit Insurance Fund.
- Will comply with data use limitations requiring customer consent before nonpublic personal information is used to target, personalize, or rank advertising or other content; sold to any third party; or shared with non-affiliates.
- Will comply with the tying prohibitions.
Risks Posed to Issuers
Many of the risks associated with payment stablecoins will be quite familiar to banks and other financial institutions—liquidity, interest rate, financial crimes, and cybersecurity. However, there are new facets to these risks that have yet to be fully explored as issuers will need to address these topics in a new digital asset sphere that seeks to operate around the clock, across borders, and with as much individual anonymity as possible.
Within this environment, issuers will need to adeptly manage liquidity and interest rate risk so that stablecoins constantly maintain their currency peg and holders can promptly redeem at all hours of the day. Since payment stablecoins settle in real time with minimal intermediation, payment stablecoin systems will be hot targets for fraudsters and cybercriminals. Managing the financial crimes and cybersecurity risks in such a dynamic and expansive environment will require strong systems and controls designed for the unique risks associated with payment stablecoins.
Risks Posed to Non-Issuer Banks & Financial Market Participants
As payment stablecoins gain popularity, they may replace a significant portion of the activity currently undertaken on traditional payment rails, diverting important sources of fee income away from non-issuer banks and financial institutions. Importantly, payment stablecoins could result in dramatic changes to non-issuer deposit franchises. For example, depository institutions could see profitable transaction accounts move to payment stablecoin issuers, leaving behind non-transactional deposits that are more sensitive to rates paid. Uninsured depositors may opt for the perceived safety associated with the 1:1 reserve requirement for payment stablecoins.
As payment stablecoin issuers come into the market, the concentration of the new reserve requirement around short-dated U.S. treasuries could result in dislocations in the fixed income marketplace as the liquidity management needs of issuers and traditional banks result in a combined demand for high-quality, short-dated fixed income securities that could pressure the short end of the interest rate curve. This could cause market participants to extend duration, increasing overall interest rate risk within the financial system.
Navigate the GENIUS Act With Confidence — Powered by Forvis Mazars
As the regulatory landscape evolves with the proposed GENIUS Act, financial institutions face new challenges—and opportunities—in stablecoin issuance, reserve management, and digital asset compliance. Forvis Mazars is here to help you stay ahead.
We work with financial institutions to create tailored road maps that align with GENIUS Act requirements, guiding you through licensing strategies, reserve structuring, and operational readiness. Beyond planning, we provide deep-dive evaluations of your BSA/AML programs, cybersecurity infrastructure, and liquidity controls to help ensure your institution is not only compliant—but resilient.
Whether you’re preparing for implementation or strengthening your post-launch controls, Forvis Mazars delivers the insight, structure, and assurance you need to lead with confidence in the digital asset space.
We are also uniquely positioned to support monthly examinations of reserve requirements. We offer independent attestation services that align with the GENIUS Act’s transparency and accountability mandates.
For more information, please reach out to a Forvis Mazars professional.