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This article, authored by attorney Jake Fair, appeared in the July 24, 2025, issue of the WLJ Banking Law newsletter. To sign up, click here.
You have likely heard that the Guiding and Establishing National Innovation for U.S. Stablecoins (GENIUS) Act was signed into law by President Trump. What exactly does the Act do? At a fundamental level, the Act provides precise definitions and regulatory framework for stablecoins. A “digital asset” is defined as “any digital representation of value that is recorded on a cryptographically secured distributed ledger.” A “payment stablecoin” is defined as a type of digital currency designed for means of payment or settlement.
The Act also addresses anti-money laundering (AML) and provides consumer protections. Stablecoin issuers are classified as financial institutions under the Bank Secrecy Act. The Act strengthens consumer protections by ensuring bankruptcy redemption rights for stablecoin holders, granting super priority status in insolvency cases. The Act’s dual regulatory pathway balances state flexibility with federal oversight to prevent regulatory arbitrage. Certain banking entities fall under federal regulation while certain other issuers are primarily supervised by state regulators. The Act’s framework includes financial condition reporting, compliance monitoring, and potential enforcement actions.
What is the impact to you? The GENUIS Act provides clarity that may attract established financial institutions. It also includes consumer and financial system protections, which may help relieve money laundering concerns.