The GENIUS Act, enacted in July 2025 but not yet in force, establishes a federal framework for payment stablecoins in the US. It mandates that every stablecoin touched by banks must be classified as either permitted (issued by a licensed entity under US law) or non-permitted. This distinction applies across four key scenarios: stablecoin issuance, custody, banking issuers, and customer activity involving stablecoins. Non-permitted stablecoins are not necessarily illicit but require banks to recognize and handle them correctly. The Act imposes obligations such as 1:1 reserve backing, no yield to holders, and BSA-style AML/CFT programs. Banks must adapt compliance systems to tag stablecoins by issuer status and maintain classification as assets move across wallets and blockchains. Regulators are drafting final rules, with full effect by January 2027 at the latest. Practical preparation steps include mapping exposure, extending AML/CFT programs, and preparing for dynamic classification challenges.

Key facts

• GENIUS Act requires banks to classify stablecoins as permitted or non-permitted.
• Classification applies to issuance, custody, banking issuers, and customer activity.
• Non-permitted stablecoins are not illicit but must be correctly handled.
• Obligations include 1:1 reserves, no yield, and BSA-style AML/CFT programs.
• Compliance systems must tag stablecoins and track status across transactions.