What Is the GENIUS Act?

The GENIUS Act Explained

The GENIUS Act (officially titled the Guiding and Establishing National Innovation for U.S. Stablecoins Act) is the first federal legislation to establish a structured legal framework for payment stablecoins—cryptocurrencies like USDT and USDC, which are pegged to the U.S. dollar.  

The act uses a dual system of oversight: stablecoin issuers with under $10 billion in stablecoin issuance may remain under state regulation, while larger issuers must choose federal supervision. The stablecoins sold through CoinFlip ATMs fall under federal supervision.  

Stablecoin Compliance Requirements and Key Provisions 

1. Issuer Requirements & Licensing 
   Only permitted entities, like subsidiaries of insured banks or federally authorized non-bank payment stablecoin issuers, can issue stablecoins in the U.S. 

2. Reserve Backing & Transparency 
   Issuers must maintain one-to-one reserve backing with U.S. dollars, short-term Treasuries, or similarly liquid assets. This is intended to ensure that if a stablecoin holder demands exchange, the issuer will be able to fulfil their obligation quickly.  Large issuers (over $50 billion cap) must undergo annual audits, and all must publish monthly reserve disclosures. 

3. Consumer Protection & Marketing Rules 
   The Act prohibits misleading claims that stablecoins are backed by the U.S. government, legal tender, or FDIC insured assets. It mandates accurate marketing and clarity for consumers on redemption policies and asset backing. 

4. AML Compliance & Enforcement 
   Stablecoin issuers must adhere to anti-money laundering and Bank Secrecy Act standards. The Act outlines supervisory, examination, and enforcement authorities for federal issuers. Note that while the Act does not specifically regulate Bitcoin ATMs, CoinFlip still employs a robust compliance program and customer support, who can help explain compliance rules.  

Why Does Stablecoin Regulation Matter? 

This legislation marks the first federal recognition of stablecoins as legitimate payment instruments. Coupled with Bitcoin’s recognition as an exchange-tradable product in January of 2024, the GENIUS Act shows the growing trend towards mainstream legitimacy for cryptocurrency. Banks, fintech firms, and payment platforms can now issue compliant stablecoins, integrating them into financial systems with clarity and oversight to fill gaps in consumer demand. Consumers will now have more options for activities like sending money across borders or purchasing things online while limiting the personally identifiable information shared. It’s a boon for institutions as well because they can use stablecoins to settle transactions between other institutions and agencies more quickly than through other means. As CoinFlip CEO Ben Weiss told Payments Dive, “The customer might not even necessarily need to know that they’re using stablecoins for the settlement on the back end.” 

The Act also shows the U.S. is capable of legislating and leading in the digital payment industry at a time when the government has had problems enacting meaningful regulations around finance and technology. Between the GENIUS Act and the EU’s MiCA legislation, the crypto industry now has a clear framework in some of the largest financial markets.  

Image: CoinFlip CEO Ben Weiss at the signing of the GENIUS ACT

GENIUS Act Concerns & Criticism 

Critics like Sen. Elizabeth Warren argue the Act allows tech giants too much access with insufficient oversight, raising consumer risk and national security concerns, since the issuer’s blockchain protocol and code updates are still unregulated. It may also concentrate too much power in the hands of large financial institutions and government-approved entities while making it hard for new technologies to get into the market. A core tenet of the cryptocurrency philosophy is permissionless access to financial tools, and this legislation creates a permission system that can exclude certain people.  

The legislation covers asset-backing, but it does not address the underlying technology. A poorly designed blockchain can be compromised.  CoinFlip reviews every coin and token we offer, and the stablecoins sold at CoinFlip ATMs follow ERC-20 rules and have demonstrated reliability over millions of transactions on the well-regarded Ethereum blockchain. 

As to conflicts of interest, the Act bans lawmakers from profiting off stablecoin issuance, which makes sense to reduce the likelihood or corruption, tampering, or compromised thinking. It does not, however, block current or future presidents or their family from profiting off stablecoin issuance.  

Where Stablecoin Legislation Stands in the U.S. 

The GENIUS Act is a historic milestone in U.S. crypto legislation. It establishes the first federal rules for stablecoin issuance, reserve management, consumer protection, and issuer eligibility. By providing greater clarity and regulatory guardrails, the Act aims to integrate stablecoins into the financial system responsibly. While there are valid concerns about corporate access and decentralization, the law positions the U.S. as a leader in digital currency policy and payment innovation.