#StablecoinLaw
The GENIUS Act, signed into law by President Donald Trump on July 19, 2025, establishes a federal regulatory framework for stablecoins in the United States. This law aims to provide clarity and stability to the $180 billion stablecoin market. Here are the key provisions:
- *Reserve Requirements*: Stablecoin issuers must maintain 1:1 reserves backing their payment stablecoins with high-quality liquid assets, such as short-dated U.S. Treasuries or FDIC-insured deposits.
- *Federal Licensing*: All issuers must obtain a license from the Department of the Treasury, with smaller issuers (market cap < $10 billion) having the option to opt for state oversight if aligned with federal standards.
- *Anti-Money Laundering (AML) and Sanctions Compliance*: The framework includes robust AML requirements and sanctions compliance measures, with issuers required to implement comprehensive risk-based AML programs.
- *Consumer Protection*: The law mandates public and plain-English fee disclosures, a clear process for redemption, and prohibits names or marketing that imply affiliation with the U.S. government.
- *International Transactions*: The GENIUS Act establishes reciprocal arrangements with countries with similar regulatory frameworks to improve cross-border transactions and interoperability with U.S. dollar-denominated stablecoins.
- *Effective Date*: Enforcement is expected to begin in Q3 2026, with licensing applications opening around the same time.
The GENIUS Act's passage is seen as a significant step in regulating the stablecoin market, providing clarity for businesses and investors. However, compliance costs are estimated to be $2-5 million annually for mid-sized issuers, posing challenges for startups and DeFi protocols.
