Key Points
- On June 17, 2025, the U.S. Senate passed, with a 68-30 vote, legislation that would authorize and regulate the issuance of stablecoins. Referred to as the GENIUS Act, the bipartisan bill must be passed by the House before going to the president for his signature.
- Only U.S.-regulated banks and other authorized firms would be permitted to issue stablecoins under the law.
- Stablecoins would have to be backed 1:1 by U.S. dollars or other highly liquid assets, and issuers would be prohibited from paying interest on stablecoin holdings.
- Foreign issuers would be allowed to sell their stablecoins in the U.S. if the issuer complies with certain conditions, including responding to seizure orders.
Legislation regulating the issuance and distribution of stablecoins in the U.S. took a major step forward when the U.S. Senate passed the Guiding and Establishing National Innovation for U.S. Stablecoins Act, better known as the GENIUS Act (the Act). The Act, which cleared the Senate in a 68-30 vote on June 17, 2025, awaits House passage and could be signed into law by President Donald Trump later this summer.
We outline below some key points in the Senate bill.
Stablecoins, which are typically digital assets pegged directly to a fiat currency, are one of the most common instruments used for conversions between cryptoassets. Many proponents also envision a broader role for stablecoins in the payments system, including as a means to effectuate traditional payments and cross-border transactions.
Permitted issuers. The Act creates the concept of a “permitted payment stablecoin issuer,” which must be one of the following:
- A subsidiary of an insured depository institution that has been approved to issue stablecoins.
- A federal qualified payment stablecoin issuer that is regulated by the Office of the Comptroller of the Currency.
- A state qualified payment stablecoin issuer that has a $10 billion or less market capitalization and is operating under federal standards or regulated by a state banking agency.
Backing. Stablecoins must be fully backed on a 1:1 basis with U.S. dollars or other approved high-quality liquid assets such as Treasury bills. These reserves would need to be segregated from operational funds and only used to back the stablecoins. Issuers must also certify the sufficiency of their reserves on a monthly basis.
Foreign issuers. The rights of foreign stablecoin issuers has been a hotly debated topic. Under the Senate bill, foreign-issued stablecoins may be offered or sold in the U.S. if the foreign issuer has the technical capability to comply with lawful government orders (such as seizures) and is in compliance with any reciprocal arrangement between the U.S. and the issuer’s foreign jurisdiction. Whether the “and” should be an “or” is one of the key issues being debated.
Compliance obligations. Issuers will be treated as “financial institutions” under the Bank Secrecy Act and subject to compliance with requirements relating to economic sanctions, anti-money laundering, and customer identification and due diligence.
Nonfinancial institution issuers. Another hotly debated issue is whether public companies not predominantly engaged in one or more financial activities can be permitted to issue stablecoins. Although not prohibited in initial drafts of the bill, it seems likely such a prohibition will make it into the final draft, subject to exceptions.
Paying interest. The Act prohibits issuers from paying stablecoin holders any form of interest or yield solely in connection with the holding, use or retention of the issuer’s stablecoin.
Naming the assets. Issuers cannot use any combination of terms relating to the U.S. government when naming their payment stablecoins, nor can they use anything that would give the impression that these are legal tender, or issued or guaranteed by the U.S. government.
Given the considerable debate and advocacy regarding several key provisions of the GENIUS Act, issuers and potential issuers of stablecoins, as well as service providers that might offer these digital assets, should closely monitor how the legislation advances this summer.
(See also “The Proliferation of Cryptoasset Treasury Strategies in Public Markets” and “How Asset Managers Are Capitalizing on Hong Kong's Regulations Permitting Virtual Asset Funds.”)
This memorandum is provided by Skadden, Arps, Slate, Meagher & Flom LLP and its affiliates for educational and informational purposes only and is not intended and should not be construed as legal advice. This memorandum is considered advertising under applicable state laws.