GENIUS Act

What this does

Creates the first federal regulatory framework for payment stablecoins, digital tokens whose issuer is obligated to redeem them for a fixed amount of money. Section 3 makes it unlawful for anyone but a 'permitted payment stablecoin issuer' to issue a payment stablecoin in the United States, with penalties up to $1,000,000 and five years in prison for knowing violations. Section 2 sets up three routes to become a permitted issuer: a subsidiary of an insured bank, a federally qualified issuer approved by the Comptroller of the Currency, or a state-qualified issuer. Section 4 requires issuers to hold reserves backing their coins at least one-to-one in cash, short-term Treasuries, and similar liquid assets, publish monthly reserve disclosures, and it prohibits paying holders any interest or yield. The same section treats issuers as financial institutions under the Bank Secrecy Act, with anti-money-laundering and sanctions duties. Issuers whose coin exceeds $10 billion outstanding generally transition to federal oversight, while smaller state issuers may stay under a certified state regime. Section 4 also bars marketing that implies government backing or federal deposit insurance. Section 11 gives stablecoin holders priority over other creditors in an issuer's insolvency, and section 17 clarifies that payment stablecoins from permitted issuers are not securities or commodities. Under section 20 the law takes effect on the earlier of 18 months after enactment or 120 days after final implementing regulations.