GENIUS Act of 2025

Asset Protection and Transparency: Issuers must maintain reserves on at least a 1 to 1 basis using highly liquid assets such as U.S. currency or Treasury bills to protect the value of the stablecoin (Section 4(a)(1)(A)). Additionally, they must publish monthly reports on their website showing the total number of outstanding stablecoins and the exact composition of their reserves (Section 4(a)(1)(D)).

Consumer Protections in Insolvency: If an issuer enters insolvency proceedings, the bill ensures that the claims of people holding payment stablecoins have priority over other creditors regarding the required reserves (Section 10(a)).

Redemption Rights: The bill requires that issuers establish specific procedures to ensure the timely redemption of outstanding payment stablecoins (Section 4(a)(1)(C)).

Prevention of Deception and Fraudulent Marketing: It is illegal to market a digital asset as a payment stablecoin unless it is issued according to this Act (Section 4(d)(3)). Furthermore, issuers are prohibited from using deceptive names that would lead a reasonable person to believe the digital asset is legal tender or guaranteed by the U.S. Government (Section 4(a)(9)).

Safeguarding Customer Property: For those using custodial services, the law requires that customer property, including private keys, be treated as belonging to the customer and not the property of the service provider (Section 9(b)(1)).

Strict Standards for Leadership: To maintain integrity, the bill prohibits individuals convicted of certain financial felonies, such as money laundering or embezzlement, from serving as officers or directors of stablecoin issuers (Section 4(e)(1)).

Criminal and Civil Penalties: Issuers or their officers who knowingly participate in the unlawful issuance of stablecoins face significant fines of up to $1,000,000 and potential imprisonment for up to 5 years (Section 3(c)(1)).

Restrictions on Unlicensed Assets: Any digital asset that is not a permitted payment stablecoin cannot be used as a settlement asset to facilitate wholesale payments between banking organizations, nor can it be treated as cash or used as collateral for certain financial transactions (Section 3(b)).

Limits on Financial Freedom via Lawful Orders: Issuers are required to have the technological capability to comply with lawful orders to seize, freeze, or burn digital assets, meaning Federal authorities can override a user's control over their assets (Section 4(a)(6)(B)).

Potential Loss of Access for Foreign Issuers: The Secretary of the Treasury has the power to prohibit digital asset service providers from facilitating the secondary trading of stablecoins issued by foreign entities that fail to comply with lawful orders (Section 8(c)(1)(B)).

Compliance Burdens for Issuers: Issuers are subject to heavy regulatory requirements, such as requiring monthly certifications by a CEO and CFO, as well as annual financial statement examinations by a registered public accounting firm (Section 4(a)(3)).