The US Congress is advancing legislation to establish a regulatory framework for stablecoins, with the US Senate’s GENIUS Act of 2025 at the forefront. The bill outlines requirements for permitted issuers, redemption practices, and federal-state regulatory coordination. If enacted, the law would impact all sectors of the global payment system navigating stablecoin issuance in the US market.
The landscape for digital assets is evolving at a rapid pace. US stablecoin legislation continues to move through the legislative process and has the potential to fundamentally remake the US payments system. The United States joins a growing group of jurisdictions, including the United Kingdom, the European Union, the United Arab Emirates, and Hong Kong, that have either implemented or are in the process of implementing regulatory frameworks for fiat-backed stablecoin.
Below we cover stablecoin basics, provide a snapshot of the major legislation under consideration by the US Congress, and identify key issues that will impact all sectors of the global economy.
The digital asset industry has been maturing for several years now. The current US administration’s focus and support of this market has expedited legislative, policy, and market activities to bring digital assets into mainstream commerce. We have tracked these developments from the outset of the new administration (here) and as the US Securities and Exchange Commission (SEC) leadership called for public input, including through its series of roundtables called Spring Sprint Toward Crypto Clarity (here and here). We can expect everyday use of some form of digital assets—such as the stablecoins that have been prioritized by the administration and the US Congress—by traditional financial institutions and companies that serve US consumers, growing over the next year or so.
A stablecoin is a digital asset pegged 1:1 to fiat currency, such as the US dollar. Dollar-backed stablecoins are a type of cryptoasset that could be used worldwide. To date, crypto issuers have been nonbanks. Efforts to pass US legislation to regulate stablecoins are leading a broad swath of sectors, including banks, retailers, and payment processors to consider or implement stablecoin use cases. Bringing stablecoins into circulation as an adopted payment method may lead to their regular use in traditional commerce, including retail.
The US House and Senate are advancing legislation to bring stablecoins into the US financial system. Both bills seek to create a regulatory framework for stablecoins and establish federal and state oversight, accounting requirements, and rulemaking and reporting obligations by federal agencies. The Senate bill, the GENIUS Act of 2025 (GENIUS Bill), has been identified by legislative leaders as the primary legislation. Informing the Senate debate is the House-approved companion bill, the Stablecoin Transparency and Accountability for a Better Ledger Economy (STABLE) Act of 2025. French Hill, the chairman of the House Financial Services Committee, described the bills as “substantially similar.”
Payment Stablecoin Defined
The GENIUS Bill defines payment stablecoin as a digital asset that can be used as payment and settlement, and the asset’s issuer is obligated to convert, redeem, or repurchase it for a fixed amount of monetary value. Importantly, the legislation states a payment stablecoin is not: a security or a commodity, a national currency, deposit, and does not offer a payment of yield of interest.
Permitted Payment Stablecoin Issuer
The bills would establish a regulatory and enforcement regime to authorize “permitted payment stablecoin issuers” (PPSIs) to act as an approved digital asset. An institution seeking to offer stablecoins may take the form as a subsidiary of a depository institution, a nonbank institution, or a state-regulated institution. An institution cannot issue payment stablecoin without registering as a PPSI with an appropriate regulatory agency.
Comprehensive Regulatory Structure
The bills set out comprehensive legal regimes governing payment stablecoin usage that include the following:
As the bills move into final legislation between the houses, we will continue to monitor for further changes in these areas.
Extensive Implementation Actions
If enacted, implementation milestones and timing will take center stage. As currently drafted, the most immediate deadline following enactment of the statute occurs 30 days after enactment (and for 60 days thereafter). At that stage, the secretary of the US Department of the Treasury shall seek public comment to identify innovative methods to detect illicit activity, such as money laundering, involving digital assets.
Financial institutions that are interested in becoming payment stablecoin issuers under the statute may want to be ready to submit comment with novel suggestions. These comments are required to be considered and incorporated into guidance or rulemaking issued by Treasury’s Financial Crimes Enforcement Network (FinCEN) within two years following enactment. FinCEN must incorporate in the rule research and public comments related to innovative methods to detect illicit activity, such as money laundering, involving digital assets.
Federal-State Oversight: State Stablecoin Regulatory Regimes May Take Longer Than Expected to Be Finalized and May Involve More Changes Than Anticipated
The current legislation requires—as part of initial required rulemaking due one year after enactment—that the Treasury secretary issues broad-based principles for determining whether any state-level regulatory regime is “substantially similar” to the federal framework as state regulations are required to be. This set of principles for similarity is due on the same date that the state regulatory regimes are due in final form, which means states that want to issue their own regulations on this issue will be drafting not only without knowing what will substantively be issued by federal rules, but also without even knowing what the principles of similarity are that they will be held to.
A key question is how state rules will be judged on substantial similarity. Under Sec. 4(c)(4), one year after the effective date (approximately 2.5 years after the enactment of the statute and approximately 1.5 years after the state regulations have been issued in final form), the state regulator must submit a certification of similarity of their rules to the Stablecoin Certification Review Committee (which is composed of the Treasury secretary, chairman of Federal Reserve Board of Governors, and the chair of Federal Deposit Insurance Corporation) based on the principles of similarity. Then, 30 days after certification, the committee must approve or deny the state’s certification. If the committee denies the certification, then the state has the opportunity to cure within 180 days from the denial.
In other words, states may issue regulations within one year of the enactment, but those regulations might not ultimately be final until at least three years after enactment, leaving significant time of uncertainty for state-regulated payment stablecoin issuers. However, for states that have implemented prudential regulatory regimes for supervision of digital assets or payment stablecoins, there may be a shortcut to final certification. If such states have implemented such a regime within 180 days of the enactment (in other words, approximately six months before final federal regulations are enacted), the Certification Review Committee is required to endeavor to provide certification for such regimes on an expedited timeline immediately following the statute’s effective date.
Institutions should watch out for the following:
We are uniquely positioned to guide clients in every segment of industry. Our lawyers also stand ready to help draft comment letters and consult on other emerging issues in the stablecoin market.
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