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The digital asset landscape is evolving rapidly, compelling financial institutions to adapt and stay competitive. The recent passage of the Guiding and Establishing National Innovation for U.S. Stablecoins Act of 2025 ("GENIUS Act" or "Act") signifies a pivotal moment in stablecoin regulation, providing clarity and a structured federal regulatory framework.1 Signed into law by President Donald Trump on July 18, 2025, the GENIUS Act paves the way for traditional financial institutions such as banks and credit unions to enter the expanding digital asset sector by offering a comprehensive framework for the issuance and regulation of payment stablecoins. This Act further legitimizes cryptocurrency, affirming its permanence and growing role in the modern digital economy.
GENIUS Act Requirements
The GENIUS Act defines stablecoins as digital assets maintaining a stable value relative to fiat currencies, primarily the U.S. dollar, and designed for payments and financial settlements. The Act mandates that stablecoin issuers must be licensed and approved, making it unlawful for unauthorized entities to issue stablecoins in the U.S. For non-financial institution public companies, a certification process through the Stablecoin Certification Review Committee (SCRC) will be established. Existing regulated financial institutions — such as banks, fintechs, and money services businesses (MSBs) — must obtain approval from their current primary federal or state regulator to become permitted payment stablecoin issuers, if total issuance is under $10 billion. State payment stablecoin regulators must certify with the SCRC to ensure alignment with federal standards. Additionally, the Act distinguishes stablecoins from securities and commodities, eliminating ambiguity regarding their classification under the Securities and Exchange Commission (SEC) or Commodity Futures Trading Commission (CFTC).
Permitted payment stablecoin issuers must maintain identifiable reserves backing outstanding payment stablecoins at a minimum 1:1 ratio. They must also publish the monthly composition of their reserves on their website, with these reserves examined by a registered public accounting firm. Permitted payment stablecoin issuers will be treated as financial institutions under the Bank Secrecy Act, requiring compliance programs related to economic sanctions, anti-money laundering, customer identification, and due diligence.
Implications for Banks and Credit Unions
For banks and credit unions, the GENIUS Act opens up a new world of opportunity in the digital asset space. It provides explicit permission for banks to issue their own stablecoins, further propelling cryptocurrency into mainstream usage. This shift enhances the capacity to offer innovative financial products and strengthens the role of stablecoins in global commerce, with U.S. dollar-denominated stablecoins poised to bolster the dollar's international dominance.
The legislation states that, upon approval from their primary regulator, banks and credit unions can:
- Accept or receive deposits or shares (for credit unions) and issue digital assets representing those deposits or shares.
- Utilize a distributed ledger for entity records and to effect intrabank transfers.
- Provide custodial services for payment stablecoins, private keys, or reserves backing payment stablecoins.
Federal regulators will develop new regulations for capital, liquidity, and risk management tailored to the stablecoin issuer's business model and risk profile. The GENIUS Act states that federal bank regulators should not require depository institutions to list digital assets in custody (not owned by the entity) as liabilities on financial statements, nor hold regulatory capital against digital assets and reserves, except to mitigate operational risks.
The GENIUS Act resolves longstanding regulatory ambiguities hindering institutional adoption in the traditional banking industry. By clarifying stablecoins' legal status and imposing robust reserve requirements and monthly audited reporting, the Act mitigates systemic risks associated with digital currencies. It also ensures compliance with anti-money laundering (AML) and know your customer (KYC) regulations, vital for institutions dealing with digital assets.
Impact on Existing Digital Asset Service Providers
Digital asset service providers in the U.S. typically require registration with the Financial Crimes Enforcement Network (FinCEN) and money service business licenses across various state regulatory agencies, with states like New York and California offering robust regimes. For MSBs and Fintechs in the stablecoin space, additional licensing and regulatory compliance controls must be considered, alongside existing frameworks. Enhancing technological standards may be necessary, as the GENIUS Act includes provisions for interoperability standards to ensure industry compatibility.
Preparing for Implementation
As financial institutions prepare to navigate the GENIUS Act's implications, several key priorities emerge. Institutions must evaluate their current digital asset offerings and assess alignment with new regulatory requirements, potentially restructuring products, developing compliance strategies, and investing in technology for enhanced reporting and security.
Institutions should anticipate increased scrutiny and collaboration with regulatory bodies to ensure compliance with the Act's provisions. The GENIUS Act promotes reciprocal arrangements with foreign jurisdictions, emphasizing interoperability and international regulatory cohesion, crucial for expanding digital asset services globally.
While the GENIUS Act provides clarity, it also demands adaptability. Financial institutions must prepare for ongoing changes as regulators refine and implement the framework, potentially influencing other digital asset ecosystem areas. Institutions should establish teams to monitor regulatory updates and ensure compliance with evolving standards. Regulations are to be promulgated within a year of enactment (July 18, 2025), with the Act taking effect 18 months post-enactment or 120 days after final regulations are issued.
Embracing the Future of Finance
The GENIUS Act represents a transformative step for digital assets within the financial sector, offering a clear path amidst uncertainty. For banks, MSBs, and other financial institutions, this legislation is an opportunity to innovate and lead in the digital finance era. By embracing changes and preparing diligently for compliance, institutions can position themselves at the forefront of financial innovation, leveraging stablecoins to drive growth and enhance customer offerings. Ankura, with its experience in cryptocurrency and digital assets, can guide institutions through the rapidly changing regulatory landscape.
Footnote
1 Guiding and Establishing National Innovation for U.S. Stablecoins Act, S.1582 — 119th Congress (2025-2026), https://www.congress.gov/bill/119th-congress/senate-bill/1582/text
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