GENIUS Act Signed into Law US Enacts Federal Stablecoin Legislation

Today, President Donald Trump signs into law the Guiding and Establishing National Innovation for US Stablecoins Act of 2025 (the “GENIUS Act”), establishing the first federal regulatory framework for stablecoins in the United States. The signing follows the US House of Representatives’ July 17, 2025, passage of the GENIUS Act by a bipartisan vote of 308–122. The GENIUS Act is, to date, the most significant of a series of reforms sought by the Trump administration to create a comprehensive regulatory framework for digital assets.

The Senate initially passed the GENIUS Act on June 17, 2025, by a bipartisan vote of 68–30. Seventeen Democratic senators joined 51 Republican senators in supporting the legislation. The House passed the GENIUS Act without adopting any amendments to the Senate’s version. However, during the full Senate’s consideration of the legislation, the version of the GENIUS Act approved by the Senate Banking Committee (summarized in our prior Legal Update) was amended in several material respects by the Hagerty substitute amendment (the “Hagerty Amendment”). A summary of the Hagerty Amendment is provided below.

Following the passage of the GENIUS Act, Congress wasted no time in turning to its next piece of digital asset legislation: the CLARITY Act, a bill that would clarify the respective authorities of the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) over digital assets. On the same day that the House passed the GENIUS Act, it also passed the CLARITY Act by a bipartisan vote of 294–134. The CLARITY Act now heads to the US Senate, which is expected to consider the legislation this fall.

Summary of Key Hagerty Amendment Changes

The Hagerty Amendment made the following important changes to the GENIUS Act:

• No changes to Fed master-account eligibility: The Hagerty Amendment refined language that now expressly provides that nothing in the GENIUS Act shall be “construed as expanding or contracting legal eligibility” for a Federal Reserve master account (Sec. 4(a)(13)).
• Does not cover interest- or yield-bearing stablecoins: The Hagerty Amendment clarified language to prohibit issuers of payment stablecoins from paying a holder “any form of interest or yield (whether in cash, tokens, or other consideration) solely in connection with the holding, use, or retention of the stablecoin” (Sec. 4(a)(11)).
• Foreign-bank participation: The Hagerty Amendment added uninsured national banks and federal branches of non-US banks to the list of entities that may become federal qualified payment stablecoin issuers, which previously covered only non-bank entities approved by the Office of the Comptroller of the Currency (OCC) (Sec. 2(11)).¹
• Exception for reciprocity: The foreign-issuer reciprocity regime in the Hagerty Amendment was rewritten: Treasury must publish any non-compliance finding, can ban US platforms from trading a non-compliant token, assess civil penalties up to $1 million per day, and later lift restrictions once the issuer cures. Treasury may also grant specific or general licenses (or national-security waivers) where blanket secondary-market bans would harm US interests (Sec. 18(a)(4), (b), (c)).
• State-chartered depository institutions: The Hagerty Amendment allowed a state-chartered bank that owns a permitted payment-stablecoin issuer to conduct money-transmission and custodial stablecoin activities nationwide without additional state licensing, so long as its home-state supervisor enforces ongoing liquidity and capital standards and confirms host-state exam authority for consumer-protection compliance (Sec. 16(d)). The Hagerty Amendment added a savings clause that “nothing in this subsection shall be construed to limit the authority of a State to charter, license, supervise, or examine” its own insured depository institutions and their subsidiaries (Sec. 5(h)).
• Certification Review Committee: The Hagerty Amendment refined the concept of a three-member Stablecoin Certification Review Committee (“SCRC”), comprised of the Secretary of the Treasury (chair), the Chair of the Board of Governors of the Federal Reserve System (or the Vice Chair for Supervision, if delegated), and the Chair of the Federal Deposit Insurance Corporation (FDIC) (Sec. 2(27)(A)).
• Certification of State Regulatory Regimes. Any state that elects to supervise payment-stablecoin issuers under its own prudential framework must first obtain certification from the SCRC (Sec. 4(c)(4)(A)). Treasury, working through notice-and-comment rulemaking and in consultation with the SCRC, sets the principles for deciding when a state’s payment-stablecoin framework is “substantially similar” to the federal regime, and the SCRC may unanimously approve or deny (or later withdraw) a state’s certification based on those principles (Sec. 4(c)(2)).
• Expedited State Certification Timeline. The SCRC must “take all necessary steps” so that states that already have prudential digital-asset or stablecoin rules in force receive certification on an expedited timeline (within 180 days of enactment) (Sec. 4(c)(7)).
• Non-financial services public companies: The Hagerty Amendment created a flat prohibition on any “non-financial services public company” (and any non-financial services foreign equivalent, regardless of public company status) acting as a payment-stablecoin issuer unless the SCRC grants unanimous approval. The GENIUS Act now also includes data-sharing and anti-tying restrictions for relevant payment-stablecoin issuers with narrow lawful-compliance carve-outs (Sec. 4(a)(12)).
• Bankruptcy priority and study of insolvency proceedings: The Hagerty Amendment clarified provisions amending the US Bankruptcy Code to grant payment stablecoin holders priority status in bankruptcy and to exclude required reserve assets from the debtor’s estate (Sec. 11). The Hagerty Amendment also tasks the “primary Federal payment-stablecoin regulators” with a study, due to Congress within 3 years, on how permitted issuers would be resolved in bankruptcy or other insolvency regimes, whether holders can be paid in full, and what new authorities might be needed to wind up an issuer in an orderly manner (Sec. 11(h)).

The Hagerty Amendment retains several foundational provisions from prior versions of the bill that are particularly important to the regulatory framework and worth highlighting, including:

• Dual supervision of non-bank issuers: The GENIUS Act establishes a $10 billion threshold for required federal regulation, with the OCC as the default regulator, and includes a transition period to move into the federal regulatory framework or seek a waiver (Secs. 4(d), 6).
• AML and foreign-issuer safeguards: The GENIUS Act:
• Treats stablecoin issuers as a “financial institution” under the Bank Secrecy Act, requiring a comprehensive, risk-based AML program (KYC/CIP, suspicious-activity monitoring and reporting, record-keeping, and sanctions screening) (Sec. 4(a)(5)(A)); and
• Authorizes the Treasury Secretary to designate non-compliant foreign issuers, publish the designation, bar US platforms from facilitating secondary trading of their tokens, and impose civil penalties of up to $1 million per day when minimum compliance and enforcement standards are not met (Secs. 8(a)(2)(A), 8(b)(1), 8(b)(4)(B)).
• Consumer protection and disclosures: The GENIUS Act prohibits names or marketing that imply affiliation with the US government, requires public and plain-English fee disclosures, and mandates a clear process for redemption (Secs. 4(a)(9), 4(a)(1)(B)).
• Reserve requirements: Demand deposits at insured depository institutions may include deposits held by an agent of an insured depository institution, such as a correspondent bank (Sec. 4(a)(1)(A)).
• Extraterritoriality: The GENIUS Act explicitly has extraterritorial effect if conduct involves the offer or sale of a payment stablecoin to a person located in the United States (Sec. 3(e)).

For additional information on the GENIUS Act, please contact the authors.

 

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