US Enacts GENIUS Act to Establish Federal Framework for Payment Stablecoins

The United States enacted Public Law 119-27, titled the "Guiding and Establishing National Innovation for U.S. Stablecoins Act" or the "GENIUS Act," establishing a federal statutory framework to regulate payment stablecoins ¹. Originating as Senate bill S. 1582, the legislation formally codified statutory definitions and supervisory lanes across federal banking agencies ¹.

Under Section 2 of the statute, a payment stablecoin is defined as a digital asset designed for payment or settlement that obligates the issuer to redeem or repurchase the asset for a fixed amount of monetary value ¹. The law specifies that permitted payment stablecoin issuers must be US-formed entities consisting of approved subsidiaries of insured depository institutions, Federal qualified payment stablecoin issuers approved by the Office of the Comptroller of the Currency (OCC), or State qualified payment stablecoin issuers ¹. Furthermore, the Act explicitly carves qualifying payment stablecoins issued by permitted entities out of the definition of securities under the Securities Act of 1933, the Securities Exchange Act of 1934, and the Investment Company Act of 1940 ¹.

Developer and Protocol Exemptions

The statute outlines strict boundaries for digital asset service providers while carving out core decentralized infrastructure ¹. Entities categorized as digital asset service providers include commercial intermediaries that exchange, transfer, custody, or assist in issuing digital assets ¹. However, the legislation specifically exempts distributed ledger protocols, smart contracts, transaction validators, peer-to-peer liquidity pool mechanisms, and developers of immutable, self-custodial software interfaces from this definition ¹.

The statutory definitions also govern enforcement actions, defining lawful orders as court- or agency-mandated directives requiring issuers to seize, freeze, burn, or block token transfers with particularity ¹. At the time of writing, major stablecoins such as $USDT traded flat near par, while wider digital asset markets registered modest pullbacks as institutions digest federal standards ¹.