GENIUS Act Compliance for Stablecoin Companies

Introduction - GENIUS Act Compliance for Stablecoin Companies

The GENIUS Act establishes federal framework for payment stablecoin regulation in the United States. Stablecoin issuers, infrastructure providers, payment orchestration platforms, and digital asset service providers face comprehensive compliance obligations including licensing, reserve requirements, anti-money laundering programmes, and operational standards.

Buckingham Capital Consulting has offices in the UK and US, providing regulatory strategy and compliance programme development for stablecoin companies since 2013. We specialise in GENIUS Act implementation combining traditional financial regulation expertise with cryptocurrency operational understanding.

Understanding GENIUS Act Requirements

The GENIUS Act, signed July 2025, provides first comprehensive federal legislation governing payment stablecoins. The Act defines payment stablecoins as digital assets redeemable at fixed value used for payments or settlement. Existing stablecoins have three-year transition period ending July 2028. New issuance after regulatory implementation requires compliance with full GENIUS Act framework.

Federal regulators must issue implementing regulations within one year of enactment. Regulations covering capital requirements, liquidity standards, reserve management, custody arrangements, and anti-money laundering protocols are being developed currently. Final regulatory framework determines specific compliance obligations.

Operating environment is evolving. Regulatory clarity is emerging. Companies positioning for GENIUS Act compliance now gain first-mover advantage securing relationships with regulators, banking partners, and institutional counterparties.

Who GENIUS Act Applies To

Payment stablecoin issuers require federal or state licensing. Only permitted payment stablecoin issuers can issue stablecoins in United States. Permitted issuers include subsidiaries of federally insured banks or credit unions, federal qualified payment stablecoin issuers chartered by OCC, and state qualified payment stablecoin issuers licensed by states with substantially similar regimes.

Payment orchestration platforms facilitating stablecoin transactions face regulatory obligations. If you facilitate stablecoin transfers, provide liquidity management, or enable merchant settlement using stablecoins, you interact with GENIUS Act compliance framework even without directly issuing stablecoins.

Infrastructure providers supporting stablecoin operations face compliance requirements. If you provide custody services for stablecoin reserves, operate blockchain infrastructure underlying stablecoin transactions, or provide technical services enabling stablecoin issuance or redemption, you participate in regulated ecosystem requiring appropriate controls.

Digital asset service providers offering stablecoins to United States persons must ensure stablecoins come from permitted issuers. After three-year transition period, offering non-compliant stablecoins is unlawful. This affects exchanges, wallets, DeFi protocols, and any platform enabling stablecoin transactions.

Foreign stablecoin issuers serving United States market face specific requirements. Foreign issuers must be from comparable regulatory jurisdictions certified by Treasury Secretary, register with OCC, maintain reserves in United States financial institutions sufficient for United States customer liquidity, and demonstrate capability complying with United States lawful orders including asset freezes and sanctions.

Reserve Requirements and Management

Permitted issuers must maintain reserves backing stablecoins at minimum 1:1 ratio. Reserves must consist exclusively of permitted assets including United States coins and currency, deposits in FDIC-insured banks or NCUA-insured credit unions, short-dated Treasury bills and securities, repurchase agreements backed by Treasury securities, government money market funds, Federal Reserve deposits, and other similar government-issued assets approved by regulators.

Reserve assets cannot be used for lending, rehypothecation, or general business operations. Reserves must be segregated from issuer's other assets. In insolvency proceedings, stablecoin holders have priority claims on reserve assets ahead of general creditors.

Monthly attestation requirements are mandatory. Issuers must publish monthly reports disclosing outstanding stablecoin amounts, composition of reserves, and confirmation reserves meet requirements. Reports must be examined by registered public accounting firms. CEO and CFO must certify monthly reports accuracy.

Issuers with over $50 billion outstanding stablecoins must submit audited annual financial statements. All issuers face enhanced transparency requirements ensuring public can verify stablecoin backing.

Reserve management requires sophisticated operational infrastructure. Issuers need treasury management systems tracking reserve composition in real-time, custody relationships with qualified financial institutions, accounting systems supporting monthly attestation requirements, and relationships with registered accounting firms capable of examining stablecoin reserves.

Licensing Pathways and Regulatory Choices

Federal pathway through OCC provides nationwide authorisation supervised by Office of Comptroller of Currency. OCC reviews applications based on ability to meet baseline requirements including reserve backing, redemption policies, disclosure obligations, anti-money laundering programmes, and operational resilience. Applications not acted upon within 120 days are deemed approved. Regulators must justify denials and permit appeals.

Bank subsidiary pathway enables federally insured banks or credit unions to issue stablecoins through dedicated subsidiaries. Subsidiaries require approval from parent institution's primary federal regulator. This pathway leverages existing banking relationships and regulatory infrastructure.

State pathway enables issuers with under $10 billion outstanding to operate under state regulatory regimes certified as substantially similar to federal framework by Stablecoin Certification Review Committee comprising Treasury Secretary, Federal Reserve Chair, and FDIC Chair. State pathway may offer regulatory flexibility for smaller issuers though transition to federal oversight is required when exceeding $10 billion threshold.

Selecting optimal pathway requires strategic evaluation. Federal pathway provides nationwide scope and regulatory certainty but involves OCC supervision requirements. Bank subsidiary pathway leverages existing banking infrastructure but requires parent institution approval and consolidated supervision. State pathway offers initial flexibility but involves transition obligations as business scales.

Non-financial companies face additional constraints. Publicly traded non-financial companies generally cannot issue payment stablecoins absent unanimous approval from Stablecoin Certification Review Committee. This reflects Congressional intent separating commerce from currency issuance. Private non-financial companies face heightened scrutiny ensuring activities do not present financial stability risks.

Anti-Money Laundering and Sanctions Compliance

Permitted issuers are financial institutions under Bank Secrecy Act. Comprehensive anti-money laundering and counter-terrorist financing programmes are mandatory. Issuers must implement customer identification programmes verifying customer identity through documentary or non-documentary methods, customer due diligence procedures understanding beneficial ownership and transaction purpose, ongoing monitoring detecting suspicious patterns, and suspicious activity reporting filing SARs with FinCEN for transactions involving potential money laundering or terrorist financing.

Transaction monitoring must be calibrated to stablecoin-specific risks. Traditional monitoring systems designed for fiat banking require adaptation for blockchain-based transactions. Issuers need blockchain analytics capabilities monitoring on-chain activity, wallet screening checking counterparty addresses against sanctions lists, Travel Rule compliance for transfers above thresholds sharing required information with counterparty VASPs, and geolocation controls blocking transactions from sanctioned jurisdictions.

Annual certification requirements are unique to GENIUS Act. Issuers must certify within 180 days of licensure and annually thereafter that anti-money laundering and sanctions compliance programmes are implemented and reasonably designed to prevent money laundering and terrorist financing. This formal attestation requirement elevates compliance burden beyond traditional BSA obligations.

FinCEN will issue tailored anti-money laundering rules for stablecoin issuers. Regulatory guidance is developing addressing unhosted wallet transactions, peer-to-peer transfers, Travel Rule implementation for cryptocurrency transfers, and standards for blockchain analytics and transaction monitoring.

Technical and Operational Requirements

Issuers must maintain technical capability to block, freeze, seize, or burn stablecoins pursuant to court orders or regulatory directives. This ensures law enforcement capabilities but requires sophisticated smart contract architecture enabling transaction controls whilst maintaining operational integrity.

Systems must support real-time transaction freezing responding to regulatory directives. Technical infrastructure cannot simply facilitate transfers. Infrastructure must enable intervention when required by law enforcement or regulators. This affects smart contract design, key management systems, and operational procedures.

Business continuity and operational resilience are mandatory. Issuers need disaster recovery capabilities ensuring operations continue through disruptions, cybersecurity measures protecting reserve assets and customer data, incident response procedures addressing security breaches or operational failures, and redundancy in critical systems preventing single points of failure.

Information technology risk management follows principles-based standards. Regulators will issue requirements covering governance structures for technology risk, operational controls protecting critical systems, compliance monitoring ensuring ongoing regulatory adherence, and regular assessment of technology infrastructure adequacy.

Record-keeping requirements are comprehensive. Issuers must maintain customer due diligence records, transaction histories with sufficient detail for regulatory review, compliance programme documentation demonstrating adherence to requirements, and audit trails supporting monthly attestations and annual financial statements.

Redemption Policies and Consumer Protection

Issuers must establish and publicly disclose redemption procedures. Redemption policies must enable stablecoin holders to redeem at par value without unreasonable delays or burdensome conditions. Policies must specify redemption timeframes, any fees charged for redemption, minimum redemption amounts, and procedures for redemption requests.

Stablecoins cannot pay interest or yield. This prohibition levels competitive dynamics between bank and non-bank issuers whilst distinguishing stablecoins from deposit products and investment securities.

Consumer protection measures are embedded throughout framework. Monthly disclosure requirements enable public verification of reserve backing. Priority claims in insolvency protect stablecoin holders. Prohibition on misleading statements about deposit insurance prevents consumer confusion.

Regulatory supervision ensures ongoing compliance. Federal and state regulators conduct examinations assessing issuer financial condition, adequacy of reserve management, effectiveness of anti-money laundering programmes, and operational resilience. Regulators can issue enforcement actions including suspension of stablecoin issuance, restrictions on activities, or license revocation for violations.

Infrastructure Provider Implications

Custody providers holding stablecoin reserves face stringent requirements. Reserves must be segregated from custodian's other assets. Custody protocols must prevent commingling or rehypothecation. Custodians need systems tracking reserve holdings, providing real-time reporting to issuers, and supporting monthly attestation processes.

Payment orchestration platforms facilitating stablecoin transactions require compliance infrastructure. If you enable merchants to accept stablecoins, provide cross-border payment services using stablecoins, or aggregate stablecoin liquidity across sources, you participate in regulated ecosystem. Infrastructure must support transaction monitoring, sanctions screening, and reporting obligations.

Blockchain infrastructure providers face evolving regulatory expectations. Node operators, validator networks, and infrastructure enabling stablecoin transactions may face obligations ensuring systems support regulatory compliance including transaction freezing capabilities, data availability for regulatory investigations, and operational resilience protecting network integrity.

Technical service providers supporting issuers or infrastructure companies need appropriate risk management. Service level agreements should address regulatory compliance obligations, data security protecting sensitive information, disaster recovery ensuring service continuity, and change management preventing disruption to regulated activities.

Foreign Issuer Comparability Framework

Treasury Secretary determines which foreign regulatory regimes are comparable to GENIUS Act framework. Comparability assessment evaluates whether foreign regime provides equivalent consumer protection, financial stability safeguards, anti-money laundering enforcement, and regulatory supervision capability.

Foreign issuers from comparable jurisdictions must register with OCC. Registration requires demonstrating capability complying with United States lawful orders, maintaining sufficient reserves in United States financial institutions, and implementing systems enabling cooperation with United States regulators and law enforcement.

International coordination is developing. GENIUS Act directs Federal Reserve and Treasury to pursue reciprocal agreements with foreign jurisdictions. This indicates Congressional intent to harmonise global stablecoin standards. Foreign issuers should monitor comparability determinations and reciprocal agreement negotiations.

European MiCA framework is potential candidate for comparability determination given comprehensive regulatory approach to crypto-asset service providers. Other jurisdictions including Hong Kong, Singapore, and United Kingdom implementing stablecoin frameworks may seek comparability recognition.

Investment and Resource Requirements

Capital requirements are being developed by regulators. GENIUS Act requires regulators to issue tailored capital, liquidity, and risk management standards within regulatory implementation period. Capital levels will vary based on business model, reserve asset composition, and risk profile.

Compliance programme costs are substantial. Budget for anti-money laundering systems including blockchain analytics platforms, transaction monitoring systems, customer due diligence tools, and Travel Rule compliance solutions. Budget for accounting and audit relationships including monthly reserve attestations and annual financial audits. Budget for technology infrastructure supporting operational requirements, business continuity, and cybersecurity. Budget for compliance staff including chief compliance officer, anti-money laundering specialists, and operational compliance team.

Ongoing operational costs include regulatory supervision fees, annual certification processes, continuous monitoring and system maintenance, and staff training ensuring team maintains compliance expertise.

Timeline for implementation requires immediate action. Regulations expected by July 2026. Three-year transition period for existing stablecoins ends July 2028. Companies beginning compliance work now position for regulatory approval and market advantage. Delayed preparation means compressed implementation timelines and increased costs.

Strategic Considerations for Different Company Types

Stablecoin issuers must determine optimal licensing pathway evaluating federal versus state routes, bank subsidiary versus non-bank structures, and scale projections affecting regulatory transitions. Issuers need comprehensive compliance infrastructure before licensure. Building in-house capability requires 12-18 months. Partnering with established compliance providers accelerates timeline.

Payment orchestration platforms should evaluate whether business model requires direct stablecoin issuance or whether partnering with licensed issuers suits operational objectives. Platforms need transaction monitoring and sanctions screening regardless. Building compliance infrastructure now prevents disruption when regulations finalise.

Infrastructure providers must assess regulatory obligations based on specific services provided. Custody providers face direct regulatory requirements. Technical infrastructure providers face evolving expectations. Service agreements should allocate compliance responsibilities appropriately.

Foreign issuers targeting United States market should monitor comparability determinations and prepare for OCC registration requirements. Building relationships with United States financial institutions for reserve custody and establishing United States operational presence positions for market entry.

How Buckingham Capital Consulting Supports GENIUS Act Compliance

We provide end-to-end regulatory strategy and compliance programme development from our UK and US offices.

Strategic assessment begins with evaluating your business model against GENIUS Act requirements. We determine optimal licensing pathway considering your corporate structure, target scale, and operational objectives. We identify regulatory obligations specific to your services whether direct issuance, infrastructure provision, or payment facilitation.

Licensing strategy includes preparing applications for federal or state pathways, developing required documentation including business plans and operational procedures, coordinating with OCC or state regulators throughout review process, and managing fitness and propriety assessments for ownership and management.

Reserve management framework development addresses permitted reserve asset selection, custody arrangement structuring with qualified financial institutions, policies ensuring segregation and preventing inappropriate use, and systems supporting monthly attestation requirements and public disclosure.

Anti-money laundering programme development provides written policies and procedures addressing stablecoin-specific risks, customer identification programme design appropriate to your business model, transaction monitoring system implementation calibrated to blockchain transactions, blockchain analytics and wallet screening capability establishment, Travel Rule compliance procedures for cryptocurrency transfers, suspicious activity reporting frameworks, and staff training programmes ensuring team understands stablecoin money laundering risks.

Technical and operational compliance includes operational resilience assessment evaluating business continuity and disaster recovery capabilities, cybersecurity framework implementation protecting reserves and customer data, transaction control mechanisms enabling regulatory freezing capabilities, information technology risk management systems, and record-keeping procedures supporting regulatory reporting.

Regulatory liaison provides ongoing relationship management with OCC or state regulators, examination preparation ensuring readiness for regulatory reviews, regulatory reporting support including annual certifications, and updates as implementing regulations are issued and compliance obligations evolve.

For foreign issuers targeting United States market, we manage comparability assessment strategy, OCC registration preparation, United States reserve custody arrangements, and United States operational infrastructure establishment.

For infrastructure providers and orchestration platforms, we provide compliance risk assessment specific to your services, transaction monitoring and sanctions screening implementation, service agreement review ensuring appropriate compliance allocation, and regulatory change monitoring as GENIUS Act implementation develops.

Why GENIUS Act Compliance Demands Specialised Expertise

GENIUS Act sits at intersection of traditional banking regulation and cryptocurrency operational realities. Compliance requires understanding both financial institution regulatory frameworks and blockchain technology characteristics. Reserve requirements mirror banking capital rules but apply to decentralised infrastructure. Anti-money laundering obligations follow BSA principles but require blockchain analytics capabilities.

Regulatory implementation is ongoing. Treasury, Federal Reserve, FDIC, OCC, FinCEN, and state regulators are developing implementing regulations. Monitoring regulatory developments and interpreting emerging guidance determines compliance strategy success.

Operational complexity is substantial. Monthly attestation requirements, real-time transaction controls, reserve segregation, and blockchain-specific monitoring create compliance burden exceeding traditional payment businesses. Building compliant operations from scratch without financial regulation expertise risks inadequate systems and regulatory enforcement.

Getting compliance right enables market participation. Licensed issuers access banking relationships necessary for reserve custody and fiat on-ramps. Compliant platforms attract institutional customers and strategic partners. Non-compliant operations face enforcement action, loss of banking access, and market exclusion after transition periods expire.

Frequently Asked Questions

When must stablecoin companies comply with GENIUS Act?

GENIUS Act takes effect earlier of 18 months after enactment (January 2027) or 120 days after any implementing regulations are issued. Existing stablecoins have three-year transition period ending July 2028. New issuance after regulatory implementation requires immediate compliance.

What is difference between federal and state licensing pathways?

Federal pathway through OCC provides nationwide authorisation with OCC supervision. State pathway enables issuers under $10 billion to operate under state regimes certified as substantially similar with state supervision. Federal pathway offers regulatory certainty and unlimited scale. State pathway may offer flexibility for smaller issuers.

Do all stablecoin companies need licensing?

Direct issuers require licensing. Infrastructure providers and platforms face obligations based on services provided. Payment orchestration platforms facilitating transactions need compliance infrastructure for monitoring and screening. Custody providers for reserves face regulatory requirements. Digital asset service providers must ensure offered stablecoins come from permitted issuers.

What reserve assets are permitted?

Cash, FDIC-insured bank deposits, NCUA-insured credit union deposits, short-dated Treasury securities, repos backed by Treasuries, government money market funds, Federal Reserve deposits, and other similar government assets approved by regulators. Reserves cannot include corporate bonds, equities, or alternative investments.

What anti-money laundering requirements apply?

Comprehensive BSA programmes including customer identification, customer due diligence, transaction monitoring, suspicious activity reporting, and sanctions screening. Issuers must implement blockchain analytics, wallet screening, Travel Rule compliance, and annual certification of programme effectiveness.

Can foreign stablecoin issuers serve United States market?

Foreign issuers from comparable regulatory jurisdictions certified by Treasury can serve United States market after OCC registration and maintaining United States reserves. Comparability determinations are developing. Foreign issuers should monitor Treasury guidance.

What timeline should companies plan for compliance?

Begin immediately. Regulations expected July 2026. Building compliance infrastructure requires 12-18 months. Existing stablecoins must comply by July 2028. Companies delaying face compressed timelines, higher costs, and risk missing market opportunities.

What penalties apply for non-compliance?

Civil penalties for violations, potential criminal prosecution for unlicensed issuance, regulatory enforcement including suspension of activities, loss of banking relationships necessary for operations, and market exclusion after transition periods.

Contact Buckingham Capital Consulting

Buckingham Capital Consulting provides GENIUS Act regulatory strategy, licensing support, and compliance programme development for stablecoin issuers, infrastructure providers, and payment orchestration platforms. Contact us to discuss your GENIUS Act compliance requirements and United States market strategy.