What is the GENIUS Act?

GENIUS stands for "Guiding and Establishing National Innovation for U.S. Stablecoins." It's a US law that sets the rules for payment stablecoins, which are tokens designed to stay worth a fixed amount, usually $1, and to be used for payments.

Before this law, stablecoin companies in the US mostly answered to a patchwork of state rules. The GENIUS Act creates one federal framework. In simple terms, it says:

• Only approved issuers. Payment stablecoins in the US have to be issued by companies that are approved under the law and supervised by regulators.
• Full reserves. Every token has to be backed one-for-one by safe assets like US dollars and short-term US Treasury bills.
• Monthly reports. Issuers have to publish what's in their reserves every month.
• Holders come first. If an issuer fails, stablecoin holders get paid before most other creditors.
• No interest. Issuers can't pay holders interest just for holding the stablecoin.
• No false insurance claims. Issuers can't say their tokens are government-insured.

The law doesn't take full effect all at once. It kicks in either 18 months after it was signed (January 18, 2027) or 120 days after regulators finish their rules, whichever comes first.

People also search "GENIUS Act and CLARITY Act." The CLARITY Act is a separate measure about the wider crypto market. Check Congress.gov for where it stands today.

This page teaches the basics. It isn't legal advice, and it doesn't cover every detail. Read the full text of the law, S.1582, on Congress.gov.