Stablecoins have carried a strange weight for a decade. They sit in roughly 7 to 8 percent of all on-chain value, moving trillions of dollars a quarter through markets, exchanges, and payment rails, yet most of them have operated in a regulatory fog that left U.S. users unsure whether the token in their wallet was a regulated product or just a database entry someone promised was good for a dollar. The GENIUS Act (Guiding and Establishing National Innovation for U.S. Stablecoins, a 2025 federal statute) is the first U.S. law aimed squarely at closing that fog, and it does so by writing a checklist of obligations directly onto anyone who wants to issue a stablecoin to Americans. The list is concrete: reserves, attestations, redemption, AML, sanctions, no yield, and a regulator you actually report to. This article walks through each item in plain English, flagging which rules are locked into statute today and which still depend on implementing rules that regulators have not finished writing.
1. Decide which licensing pathway fits the issuer
Before any other checklist item matters, the issuer has to pick a regulator. The GENIUS Act creates two parallel tracks: a federal pathway and a state pathway. The federal pathway means the issuer becomes an OCC-supervised (Office of the Comptroller of the Currency, the federal bank regulator) limited-purpose national trust bank, similar to how payment companies like Paxos have organized themselves, with explicit permission to issue stablecoins. The state pathway means the issuer is licensed under a state money transmitter or trust regime that the Treasury Secretary has deemed substantially similar to the federal requirements, and the state regulator acts as the primary supervisor.
For most issuers, the choice boils down to three questions. How big is the planned circulation? Most projections of the U.S. stablecoin market end up in the hundreds of billions of dollars, and once a stablecoin exceeds roughly $10 billion in circulation, the federal pathway is effectively mandatory, because the Act routes larger issuers away from state supervision. How distributed is the distribution? Federal preemption (the doctrine that lets federal licensees operate across all 50 states without separate state permits) is one of the strongest arguments for the OCC route: a federally licensed issuer does not need 50 separate state money transmitter licenses to onboard U.S. users. How much capital does the sponsor have? Federal applicants face higher statutory capital floors and a more extensive application queue.
What this means in practice: a small fintech piloting a payment token in two states will likely start in a state regime, while a large issuer such as Circle (the issuer of USDC) or Paxos (issuer of PYUSD) targeting nationwide distribution will move to the OCC once the implementing process stabilizes. Issuers already operating under New York DFS (Department of Financial Services) supervision get a partial head start because New York's regime predates the Act and has been cited as a likely benchmark for state-equivalent approval.
2. Hold 1:1 reserves in cash and short-dated Treasuries
This is the most quoted, and most misunderstood, line in the GENIUS Act. The statute requires that every licensed stablecoin be backed, dollar for dollar, by eligible assets, and it defines those eligible assets tightly. Permitted reserves are limited to U.S. currency (dollar balances at the Federal Reserve or at insured depository institutions), short-term Treasuries with a remaining maturity of 93 days or less, and overnight reverse repurchase agreements (very short-collateralized loans, typically one business day, where the issuer lends Treasuries out and takes them back the next morning) collateralized by Treasuries. Everything else is excluded. Commercial paper, corporate bonds, municipal debt, certificate of deposit ladders, money market funds that themselves hold non-eligible paper, and any kind of investment-grade private credit are out.
The 93-day cap is the part most people skim over, and it is genuinely important. A portfolio of 1-year, 2-year, or 5-year Treasuries might carry the same AAA rating, but if a run on the stablecoin forces the issuer to liquidate quickly in a stressed market, longer-dated paper can deliver lower than face value. By capping maturity at 93 days, the law ensures the portfolio can be turned into dollars within days at most, without a meaningful mark-to-market (a revaluation of assets based on current market prices rather than original purchase price) haircut even in a flight-to-quality event. It also means the issuer's yield is capped near the federal funds rate rather than the 10-year Treasury yield, which is one of the unspoken reasons the no-yield rule (item 5) matters: the issuer keeps the small interest earned on the reserves.
What this means in practice: the issuer cannot compose a 'reserves' portfolio the way a traditional money market fund does. The reserve manager's job becomes closer to a treasury cash desk than to a fixed-income asset manager. Issuers that historically held longer-dated paper, money market funds holding those papers, or any non-Treasury paper have had to rebalance their entire backing portfolio to avoid violating the statute, which is exactly what the Act aimed to force.
3. Publish monthly third-party reserve attestations
Even with 1:1 reserves, a stablecoin is only as trustworthy as the proof. The GENIUS Act requires licensed issuers to publish a reserve attestation (an independent accountant's report confirming the assets held match the tokens outstanding) at least once a month, prepared by a qualified third party, and to make the attestation publicly available within a defined window after the snapshot date. The snapshot itself is taken at month-end, the attestation work happens in the following weeks, and the public report is then posted on the issuer's website, generally before the next month ends.
The Act gives the Treasury Secretary and the OCC the authority to require additional attestations, possibly weekly, possibly at higher assurance levels. There is a real distinction in accounting between an 'attestation engagement' and a 'full audit.' An attestation confirms specific claims against defined criteria; a full audit (an examination under generally accepted auditing standards) covers the entire financial picture. Right now most issuers publish monthly attestations from a Big Four or similar firm against a customized reserve-report standard. The Act tells regulators they can push toward something stricter, and most industry observers expect the first round of implementing rules to tighten the assurance language rather than loosen it.
What this means in practice: the issuer has to engage an independent accounting firm under an ongoing relationship, not just for an annual visit. Operational teams need to produce monthly reconciliation files mapping every token in circulation to specific CUSIPs (the standardized 9-character identifier the industry uses to identify specific securities), reverse repurchase counterparty accounts, and bank balances. Several issuers have built or licensed dedicated reserve-reporting platforms for this, and the cost is non-trivial (usually reported in the low seven figures per year for a top-tier issuer), which is part of why the Act carves out a smaller-issuer path. Circulating supply is the denominator that has to be matched by the reserves, meaning the report has to walk token holders through how the issuer 'reconciles' on-chain supply against off-chain reserves.
4. Run mandatory AML, KYC, and OFAC sanctions screening
GENIUS requires licensed issuers to operate a full Bank Secrecy Act (BSA, the umbrella U.S. anti-money-laundering statute that governs banks, brokerages, and now stablecoin issuers) and Anti-Money Laundering (AML) program at the issuer level, not delegated to partners further down the distribution chain. That program has to include customer identification, transaction monitoring, suspicious activity reporting, and OFAC (Office of Foreign Assets Control, the Treasury division that administers U.S. sanctions) screening for every wallet counterparty the issuer knows about, including intermediary wallets where the token moves through an exchange or payment platform before reaching the end user.
The 'at the issuer level' phrase is doing serious work in this requirement. Most consumer-facing stablecoin transactions do not touch the issuer directly. A user swaps USDC on a DEX (decentralized exchange, a peer-to-peer crypto trading platform with no central operator),USDC moves through Coinbase, then settles into a merchant's wallet. Under the Act, the issuer's obligations extend only to the wallet address and customer directly onboarded by the issuer. But the Act also empowers the issuer to refuse minting or redemption from addresses it has screened against sanctions lists and the BSA's high-risk jurisdiction list, which means in practice the issuer's compliance perimeter reaches further than just its own onboarding form.
What this means in practice: the compliance team needs a sanctions-list pipeline with same-day updates from OFAC's SDN (Specially Designated Nationals) list and a risk-scoring engine that flags mint and redemption requests. Most issuers use a combination of off-the-shelf tools (Chainalysis, TRM Labs, Elliptic, or in-house equivalents) and chain analytics to score counterparty wallets. New York DFS licensed issuers already do much of this work; the Act codifies it for federally licensed issuers and uses the same vocabulary to avoid an issuer choosing the OCC simply to escape the BSA.
5. Comply with the no-yield rule
This is the item that often surprises newcomers. The GENIUS Act expressly prohibits licensed stablecoin issuers, and certain related parties, from paying any form of interest, staking reward, or other yield directly to holders of the stablecoin. The yield earned on the 1:1 Treasury portfolio stays with the issuer. This is the legal bright line that turns a stablecoin into a payment instrument rather than a savings product.
The reason matters as much as the rule. Without the no-yield rule, a stablecoin issuer could essentially run a money market fund that pays variable rates and settles on a blockchain, which the SEC (Securities and Exchange Commission) and prudential regulators have spent years saying would be a security. By banning yield, the Act makes sure that licensed tokens stay in the payment and settlement lane, and the Act gives the OCC and state regulators explicit civil penalty authority over violators, including the power to revoke the charter.
What this means in practice: issuers cannot offer 'earn' products on their own stablecoins inside their own wallets, and they cannot structure kickbacks through affiliated programs that approximate yield. They also cannot bundle the stablecoin with a staking wrapper as part of a single promotional offering. Independent third-party platforms can still lend against stablecoins or build yield products on top of them, because they are not the issuer, but the issuer itself cannot pay holders. This single rule is the one most likely to be tested in court, because some fintechs have built business models around paying or implying yield on stablecoin balances.
6. Guarantee audited redemption rights within a defined window
A stablecoin is a promise to redeem. The Act makes that promise enforceable. Holders of a licensed stablecoin have a statutory right to redeem their tokens for the equivalent U.S. dollar amount, and the issuer has to honor that redemption within a defined window under normal circumstances. The rule is structured so redemption works even if the issuer is winding down or being resolved, with a statutorily protected trust or bankruptcy-remote structure (a legal arrangement that places reserve assets beyond the reach of an issuer's other creditors if the issuer goes bankrupt) sitting between the holder claims and the issuer's general creditors.
This is the area where the implementing rules still matter most. The statute pins down the right and the bankruptcy-remote wrapper, but the precise operational timeline for redemption in normal operating mode (24 hours, 48 hours, or longer), the cut-off times during banking days, the protocol for redemptions above a defined threshold, and the treatment of stuck or sanctioned wallet redemptions are still subject to rulemaking. Industry comment letters through 2025 and early 2026 have asked for clearer text on these operational details, and the OCC has signaled it will address them in a forthcoming rule rather than leave them to ad hoc interpretations.
What this means in practice: the issuer must maintain redemption rails during all U.S. business hours and staffing capable of handling large redemption requests without delay. The redemption has to be available on-chain to any wallet that passes sanctions screening and KYC, not just to large institutional partners. For a token like USDC or PYUSD, that translates into redemption infrastructure that runs seven days a week and relationships with banking partners that can move large dollar sums on short notice. Smaller issuers get the same legal obligation but may operate with narrower service windows; the Act's implementing rules have not yet fully clarified the floors.
7. Risks and unresolved questions readers should know
Even with the checklist in place, the Act leaves meaningful risks open. The first risk is rule incompleteness. The statute was written at framework level, and implementing rules on redemption timing, weekly versus monthly attestations, segregation of customer funds, and the treatment of foreign issuers are still subject to ongoing OCC and Treasury rulemaking. Compliance teams in mid-2026 must build their programs around the statute text but expect the rules to change.
The second risk is the foreign issuer registration backstop. The Act requires non-U.S. issuers serving the U.S. market to register with the OCC and meet substantively equivalent reserve and attestation standards, but the equivalence criteria are still being defined. Foreign issuers such as Tether have so far declined to seek U.S. registration, which means their continued reach into American users depends on how the backstop rule is enforced. Reading news on the topic without sentiment scoring can give a misleading picture, since registration headlines sometimes omit that the foreign-issuer path is still mostly aspirational.
The third risk is depegging (the loss of a stablecoin's intended 1:1 dollar peg, when the market price drifts away from $1). Even with strict 1:1 reserves and monthly attestations, a stablecoin can briefly depeg if holders try to redeem faster than the issuer can liquidate short-dated Treasuries. USDC depegged briefly in March 2023 when Silicon Valley Bank failed and a meaningful share of its reserves was stuck at a single bank. The Act's stricter diversification rules reduce that probability but do not eliminate it. Holders should understand that 'fully reserved' is a snapshot claim, and in a multi-day bank holiday, even Treasuries can take a few days to convert.
The fourth risk is the no-yield arbitrage. Because licensed stablecoins cannot pay holders yield but unlicensed offshore ones often can, a yield gap opens that licensed issuers fear will pull users off-platform. The Act gives regulators enforcement teeth, but a parallel offshore market exists at the edges. The chart of regulatory action in this space changes month to month, which is one reason we recommend tracking the news actively rather than treating any single checklist as permanent.
How to follow stablecoin regulation the smart way
Stablecoin regulation moves fast, and so does the news around it. Implementing rules from the OCC and Treasury, court challenges to the no-yield clause, foreign-issuer registration decisions, and individual enforcement actions all shift the live checklist. Tracking these manually means reading dozens of legal sources a week. Zippfeed surfaces the stablecoin headlines that matter with sentiment scoring and an importance rating, so you can see whether a story is bullish for a given issuer, neutral, or bearish, and which ones are noise. If you want a steady read on how stablecoin regulation actually lands day to day, this is a good place to start.
TheBlock
CoinDesk
CoinTelegraph
