Everything you need to know about the Genius Act

On June 17, the American Senate adopted the Genius Act, acronym of Guiding and Establishing National Innovation for Us Stablecoins Act, by a Bipartisan vote of 68 against 30. If the text is adopted by the House of Representatives and signed by the President, it would introduce the first full federal framework to regulate the stablecoins in the United States.

The impact of the bill fixes strict limits on which can issue stablecoins, what reservations they must hold, how they are regulated and what risks they are authorized to take. It also imposes new obligations on foreign issuers and Crypto service providers.

Here is an overview of what the bill and what it could mean for the future of stablecoins in the United States.

What is a “payment stable”?

According to the Genius Act, a payment stable is defined as a digital asset which:

1. Is designed to be used for payments or regulations
2. Is exchangeable for a fixed monetary value (and not another cryptocurrency)
3. Is supposed to maintain stable value compared to a currency issued by the government

This definition excludes traditional banking deposits, financial titles and central currencies.

Who can emit stablecoins?

THE Genius Act Prohibited for most companies from issuing payment stables, including large technological companies and foreign entities, unless they meet strict criteria. Authorized transmitters include:

• The subsidiaries of assured deposit institutions (e.g. banks and credit cooperatives)
• The issuers qualified at the federal level approved by the Office of the Comptroller of the Currency (OCS)
• Emitters approved in terms of a state, but only until they reach $ 10 billion in broadcasts, in which case they must go under federal supervision

Excluded issuers are public companies that are not mainly devoted to financial services and foreign companies without equivalent regulation.

What is required by issuers?

If you are an authorized transmitter, the Genius Act accompanies a long list of rules:

• Reserves 1: 1 must be held in ultra-sisters such as American liquidity, treasury bills for less than 93 days, or certain monetary funds
• Monthly reports and certifications signed by the CEO/CFO, as well as third -party audits
• Public disclosure of the quantity of stablecoins in circulation and the composition of reserves
• Prohibition to pay interests on stablecoins
• Prohibition of the rechypothèque (that is to say reuse) of reserve assets

Regulators will also impose capital and liquidity requirements, as well as compliance obligations in the fight against money laundering (AML) and sanctions, similar to those imposed on banks.

What does this mean for existing stablecoins?

If a stablecoin is not issued according to the rules of the Genius, it cannot be offered by crypto exchange platforms or depositaries based in the United States, even if it comes from a foreign transmitter.

However, the bill does not prohibit individuals from using non-regulated stablecoins for peer transactions or via self-guard portfolios. But these stablecoins will not be recognized as “cash equivalents” or accepted as guarantee on the financial markets.

When will it start?

If adopted, the Genius Act would come into force:

• 18 months after his signature by law, or
• 120 days after the finalization of the rules by regulators, according to the first possibility.

Digital asset service providers would have three years to comply before facing restrictions on non -compliant stablecoins.

Why is this important

The Genius Act represents a potential turning point in the way stablecoins are regulated in the United States, reflecting Trump's desire to accelerate the supervision of the crypto. It opens the way to an institutional adoption by offering regulatory clarity, but it also raises the level of requirement for entering the market. Only highly supervised entities will be allowed to issue stablecoins, thus excluding many current major players, unless they adapt.