GENIUS Act One Year On: How America’s Stablecoin Law Is Reshaping the Market

The GENIUS Act, America’s first federal stablecoin framework, has now been operational for over a year since its July 2025 enactment. The legislation has fundamentally reshaped how payment stablecoins are issued, backed, and regulated in the United States.

The Framework

Under the GENIUS Act, only “Permitted Payment Stablecoin Issuers” (PPSIs) may legally issue payment stablecoins in the United States. Issuers must maintain:

. 100% reserve backing in qualifying assets

. Monthly public reserve attestations

. Anti-money-laundering compliance programmes

. Immediate redemption capabilities at par

The Office of the Comptroller of the Currency, Federal Reserve, and state banking regulators share oversight depending on the issuer’s charter type. Banks seeking to issue stablecoins must now obtain explicit approval under the Act’s framework.

Market Impact

Notably, the total stablecoin supply has contracted for the first time in four years-even as transaction volumes continue climbing. Analysts attribute this to the Act’s compliance requirements squeezing out smaller issuers and reducing fractional reserve practices.

Major issuers like Circle (USDC) and Tether have invested heavily in compliance infrastructure. Tether relocated key operations to address US regulatory concerns, while Circle achieved PPSI registration in early 2026.

Banking Integration

The Act opened the door for traditional banks to enter the stablecoin market. Several regional banks have filed applications with federal regulators, viewing stablecoins as a competitive necessity in payments.

Trade associations representing large banks submitted joint comments this week on proposed OCC implementing rules, seeking clarity on how existing bank examination standards apply to stablecoin operations.

What’s Still Pending

The Federal Reserve has yet to finalise its portion of implementing regulations, creating some uncertainty around bank-issued stablecoins. The interagency rulemaking process has moved more slowly than Congress intended, though final rules are expected before year-end.

International coordination remains an open question. The EU’s MiCAR framework takes a different approach to stablecoin regulation, raising questions about cross-border issuance and recognition.

If you have any queries relating to stablecoin regulation or cryptocurrency and blockchain taxation more generally, then please do not hesitate to get in touch. The content of this article is provided for educational and information purposes only. It is not intended, and should not be construed, as tax or legal advice. We recommend you seek formal tax and legal advice before taking, or refraining from, any action based on the contents of this article.