What Is the GENIUS Act? The US Stablecoin Law Explained for Businesses

• The GENIUS Act, signed July 18, 2025, is the first US federal law to regulate stablecoins. It requires issuers to register as a Permitted Payment Stablecoin Issuer and hold 1:1 reserves in dollars or Treasury bills.

• Banks, non-bank US entities, and foreign issuers each follow a different licensing track. Platforms that distribute non-compliant stablecoins to US users are also in violation, regardless of where they are incorporated.

• USDC meets the law's requirements as written. USDT needs a Treasury reciprocity determination for Tether's El Salvador incorporation before it can legally serve the US market. That determination hasn't been issued as of June 2026.

• Implementing rules were due July 18, 2026. Enforcement starts January 18, 2027. Businesses relying on USDT for US users need a contingency in place before that date.

The law creates a new legal category, the Permitted Payment Stablecoin Issuer or PPSI, which any company must hold to mint dollar-pegged tokens for US users. Qualifying requires either a federal charter or a state-level program Treasury certifies as equivalent. Issuing without it is a federal violation. Five requirements come with the designation.

• 1:1 reserve backing. Every token in circulation must be backed dollar-for-dollar by US dollars, Treasury bills, or other high-quality liquid assets. Think of it like a currency exchange counter required by law to keep a dollar in the drawer for every dollar token it hands out. It can't lend that dollar, invest it, or use it for anything else.

• Yield ban. PPSIs are prohibited from paying interest or returns to stablecoin holders. Before the GENIUS Act, some issuers operated like a savings account, earning yield on reserves and passing some back to attract users. The law closes that model to prevent a run on redemptions the issuer can't honor.

• AML and sanctions compliance. A joint rule from FinCEN and OFAC classifies PPSIs as financial institutions under the Bank Secrecy Act, the 1970 federal law requiring banks to monitor and report suspicious transactions. That means ongoing AML programs, a designated compliance officer, and the technical ability to freeze holdings at sanctioned addresses on-chain.

• Annual audits for large issuers. Any issuer with more than $50 billion in outstanding supply faces mandatory annual third-party audits. Smaller issuers fall under lighter state-level oversight, provided their home state passes Treasury's equivalence review.

• Transparency and redemption rights. PPSIs must publish monthly reserve disclosures and honor redemption requests at face value. A holder who wants their dollar back must be able to redeem at par.

Three types of entities can become PPSIs, each assigned a different regulatory track based on whether it's a bank, a domestic non-bank, or a foreign company.

A reciprocity determination is the Treasury's formal certification that a foreign country's stablecoin rules meet US standards, the prerequisite for any foreign issuer to legally reach US users.

As of June 2026, no foreign jurisdiction has received that certification, including El Salvador, where Tether is incorporated.

The law also reaches platforms that distribute stablecoins. On-ramps, wallets, and payment processors can't offer a payment stablecoin to a US user unless the underlying issuer qualifies as a PPSI or an approved foreign issuer.

Distributing a non-compliant stablecoin to a US customer is a violation, no matter where the platform is domiciled.

USDC and USDT held roughly 93% of the total stablecoin market cap in 2025, according to TRM Labs. Their compliance status is the question the rest of the market is watching.

USDC, issued by Circle, a financial technology company that specializes in dollar-backed digital currency, is one of the issuers best positioned for compliance under the GENIUS Act. Circle's reserves sit in US dollars and short-dated Treasury bills, custody at BNY Mellon and managed by BlackRock.

Monthly reserve attestations are published by Deloitte & Touche LLP and are publicly available on Circle's transparency page.

In most respects, the GENIUS Act formalized what Circle was already doing.

USDT's position is different. Issued by Tether, it's the largest stablecoin in the world, with a market cap that surpassed $160 billion at signing in July 2025, representing roughly 58-60% of total stablecoin supply.

Tether is incorporated in El Salvador, which is why it needs that certification before it can legally serve the US market.

The company says it intends to comply. Bo Hines, the White House's digital assets coordinator, said in September 2025 that he expected the US to extend reciprocity to Tether. It hadn't happened as of June 2026.

The gap between Tether's intentions and Treasury's action is what compliance teams need to account for right now. USDC has the most defined legal path available. USDT is a regulatory open question, and for any US-facing business that relies on it, that uncertainty has a deadline.

Two dates define the timeline:

One regulator remains absent. The Federal Reserve's jurisdiction covers stablecoin issuance by subsidiaries of state member banks and certain holding companies.

Under US administrative law, agencies must publish a proposal, collect public feedback, and respond before finalizing any rule, a process that takes months. The Fed hasn't started that clock.

The GENIUS Act will become enforceable on January 18, 2027, or 120 days after all primary regulators issue final rules, whichever comes first.

If that rule lands in the fall, entities under Fed jurisdiction will have less time to reach compliance than those supervised by the OCC or FDIC.

The GENIUS Act reaches payment platforms through the stablecoins they carry. Offer one token from an unqualified issuer to a US user, and the platform is in violation. Where it's registered doesn't change that.

The first thing to resolve is the issuer's status. Each payment stablecoin in an active product catalog needs a clear answer on whether its issuer qualifies as a PPSI or an approved foreign issuer.

Under the OCC's proposed rule, listing a token from an issuer outside the PPSI framework in a US-facing product is a direct violation. Regulators can issue cease-and-desist orders and civil money penalties of up to $200,000 per day for knowing violations

Platforms processing significant USDT volume need a contingency by Q4 2026, either a confirmed reciprocity path for Tether or a migration plan toward a qualified issuer.

Enforcement starts in January with or without that clarity in place.

AML obligations change too. The FinCEN-OFAC rule classifies PPSIs as financial institutions, which means customer ID programs, suspicious activity reports, and the technical ability to freeze tokens at sanctioned addresses.

On-ramps that currently treat stablecoin transactions as pass-through will need to confirm all of that with each issuer before go-live.

For platforms already built on USDC, the compliance picture is more settled. USDC is issued by Circle, whose reserves and disclosure practices align closely with what the GENIUS Act now requires. The window before enforcement is narrower than it looks. Businesses that do their compliance homework now will be in a much stronger position when enforcement begins.

For more analysis on how the GENIUS Act and other regulatory developments affect payment infrastructure, visit Mercuryo's resource hub.

The GENIUS Act is the first US federal law governing stablecoin issuance. It requires dollar-for-dollar reserves, registration with federal regulators, and full anti-money laundering compliance.

As of June 2026, no. Tether is domiciled in El Salvador, making it a foreign issuer under the GENIUS Act. It needs a Treasury reciprocity determination to legally serve the US market, and that determination hasn't been issued.

Any platform that offers stablecoins to US users must verify that the underlying issuer qualifies under the law. Distributing a non-compliant stablecoin to a US customer is a direct violation, and the platform country of registration offers no cover.