As the stablecoin market continues to evolve at lightning speed, regulation of these innovative financial products has strived to keep apace. While the GENIUS Act in the United States has created a robust regulatory framework, there remains fragmentation due to the regulatory approaches taken by different states. However, several recent federal legislative actions provide some clarity and predictability to this rapidly changing space—but it is still unclear how successful these efforts will be.
A key feature of the GENIUS Act is its approach to harmonizing federal and state stablecoin[1] regulatory frameworks, particularly through the establishment of the Stablecoin Certification Review Committee (SCRC), which will be chaired by the secretary of the US Department of the Treasury and include the chair of the Federal Reserve and chair of the Federal Deposit Insurance Corporation.[2]
In sum, the GENIUS Act provides a regulatory framework for payment stablecoins in the United States and provides for the SCRC to be responsible for determining whether a particular state’s stablecoin regulatory framework is “substantially similar” to the required federal framework.
Accordingly, the SCRC will wield considerable influence over state-level stablecoin regulatory regimes and in doing so will seek to provide private stablecoin issuers with consistent standards designed to prevent fraud and ensure consumer protection throughout the US market. However, with state-issued stablecoins exempt, questions remain as to the extent to which the GENIUS Act can successfully create regulatory consistency.[3]
The GENIUS Act delineates a clear federal framework for the regulation of private payment stablecoins while also allowing states to promulgate their own state-level private payment stablecoin regulatory regimes.[4]
Under the GENIUS Act, state-qualified payment stablecoin issuers with a consolidated total outstanding issuance of not more than $10 billion may elect to be regulated under a state-level regime provided that the state stablecoin regime is substantially similar to the federal framework.[5] This provision aims to streamline the regulatory landscape for privately issued stablecoins and reduce the complexity of navigating disparate state regulations.
The SCRC will play a deciding role in this process by determining whether state regulatory frameworks are “substantially similar” to the federal regime. SCRC decisions to approve state stablecoin regulatory frameworks must be unanimous,[6] which effectively ensures that each state’s regulation of privately issued stablecoins will align closely with federal standards, promoting consistency across jurisdictions and preventing states from creating a stablecoin regulatory framework that is either too stringent or too permissive.
Nevertheless, the SCRC’s role will be limited to the oversight of a state’s regulation of privately issued stablecoins and will not extend to state-issued stablecoins themselves.
The SCRC will be responsible for reviewing and certifying state regulatory regimes to ensure they meet the standards set forth in the GENIUS Act. This process will involve an initial certification by state regulators, to be submitted to the SCRC by July 18, 2026, which will then be followed by a review and potential recertification by the SCRC.[7] The SCRC’s role will extend beyond the initial certification and involve ongoing oversight and the ability to deny or revoke a certification if a state’s stablecoin regulatory regime fails to maintain required standards.[8]
This oversight function will be crucial in maintaining the integrity and safety of the stablecoin overall market in the United States, effectively ensuring that all private stablecoin issuers operate under similar regulatory frameworks. While each state’s regulatory regime for privately issued stablecoins must be substantially similar to the federal standards, the SCRC’s authority does not extend to state-issued stablecoins, which are not covered by the GENIUS Act.
The exemption from the GENIUS Act for state-issued stablecoins has not gone unnoticed by several states. Wyoming has emerged as an early mover in the state-issued stablecoin arena, launching the Frontier Stable Token (FRNT) on August 20, which is backed by US dollars and short-term Treasuries. Since 2016, Wyoming has passed more than 45 pieces of crypto-linked legislation, and the state’s special purpose depository institution banking charter further provides a framework for custody services and other crypto-related products.
The rapid launch of the FRNT after the passage of the GENIUS Act is part of Wyoming’s push to attract digital asset businesses and promote digital asset innovation in the state. Its neighbor to the east, Nebraska, has also obtained legislative approval for a state-issued stablecoin and will likely follow in Wyoming’s footsteps. More states are expected to follow.
The present parallel systems between state-issued stablecoins and privately issued stablecoins present both opportunities and challenges for private stablecoin issuers, particularly as more states explore the potential of state-issued stablecoins. Federalism disputes could arise as regulators seek to balance federally mandated consistency for private issuers with a state’s ability to launch and operate stablecoins under its own standards, without federal preemption or approval.
The federal government is left with only indirect levers, such as Financial Stability Oversight Council designations, if a state’s stablecoin scheme threatened the monetary system or violated federal law. Accordingly, stakeholders should remain engaged with regulatory developments to ensure compliance and capitalize on opportunities presented by an evolving landscape.
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[1] In general, stablecoins are a subset of cryptocurrency (digital currency transactions that are recorded in a decentralized system) whose value is tied to a stable asset, typically by being backed in a 1:1 relationship by a fiat currency such as the US dollar. The idea behind stablecoins is that they will have less price volatility than other cryptocurrencies, such as Bitcoin, and allow for quicker and often less expensive settlement than fiat currencies, especially for cross-border payments.
[2] Text - S.1582 - 119th Congress (2025-2026): GENIUS Act, S.1582, 119th Cong. (2025), § 2 (27).
[3] State governments are presently excluded from the GENIUS Act’s definition of a “person” on account of the state government not being a “business entity” under that definition. As a result, federal requirements for permitted payment stablecoin issuers do not apply to stablecoins issued by state governments. GENIUS Act, S.1582. § 2 (24).
[4] Id. at § 4 (c)(1).
[5] Id.
[6] Id. at § 2 (27)(A).
[7] GENIUS Act, S.1582. § 4 (c)(4)-(5).
[8] Id. at § 4 (c)(5)(B)-(D).