GENIUS Act - first US stablecoin law
The Guiding and Establishing National Innovation for U.S. Stablecoins Act, signed on 18 July 2025, brings 1:1 reserves, monthly reports and consumer protection. What does it mean for USDC, USDT and the European stablecoin market?
The GENIUS Act is the first US federal law regulating USD-backed stablecoins. Signed on 18 July 2025, it requires 1:1 reserves in safe assets (USD and T-bills), bans interest payments to holders, sets AML/KYC obligations and gives consumers priority in bankruptcy. In June 2026 US lawmakers reached a compromise on stablecoin yields that lifted Coinbase and Circle shares by 7% and 15% respectively. In this friendly explainer we walk through the key requirements, compare them with Europe's MiCA and show how the law affects Baltic and Nordic users.
What is the GENIUS Act?
The GENIUS Act is the first US federal law regulating stablecoins. The full name - Guiding and Establishing National Innovation for U.S. Stablecoins Act - was signed into law on 18 July 2025. It creates a unified framework for US dollar-backed payment stablecoins, requiring transparency, 1:1 reserves and safe integration into the US financial system.
The law is comparable to Europe's MiCA regulation - both try to bring clarity to the crypto market, but with different approaches. The GENIUS Act focuses specifically on stablecoins, whereas MiCA covers a wider range of crypto-assets.
Five core requirements
The GENIUS Act sets the following baseline requirements for stablecoin issuers:
1. 1:1 reserves in safe assets. Every issued stablecoin must be backed by US dollars or short-term Treasury bills (T-bills). These funds cannot be used for lending or speculation. A monthly reserves report must be published, and issuers with more than USD 50 billion in circulation are subject to annual independent audits.
2. No interest payments to holders. Issuers may not pay interest or yield directly to users for holding stablecoins. The law ensures stablecoins remain payment instruments rather than alternatives to bank deposits.
3. AML, sanctions and KYC compliance. All issuers - banks and non-banks - must follow Bank Secrecy Act rules. Issuers must have the technical ability to freeze, seize or burn tokens when ordered by a court or regulator.
4. Consumer protection in bankruptcy. If an issuer goes bankrupt, stablecoin holders receive a priority claim on the reserves ahead of other creditors. The law also bans issuers from marketing their coins as government-backed, federally insured or legal tender.
5. Federal and state oversight. Large issuers are supervised by federal regulators (Office of the Comptroller of the Currency, OCC), while smaller ones may be supervised at the state level. Coordination also takes place with the US Treasury, SEC and CFTC.
What is changing in practice in 2026?
The GENIUS Act was signed in July 2025, but implementation continues. By 18 July 2026, federal and state regulators must issue additional rules on issuer licensing, capital requirements, custody standards and AML procedures.
An important June 2026 development: US lawmakers reached a compromise on the contentious stablecoin yield question. The agreement allows crypto companies to offer stablecoin yields on condition that the reward is not "economically or functionally equivalent to interest paid on an interest-bearing bank deposit". Markets reacted positively - Coinbase and Circle (the USDC issuer) shares rose 7% and 15% respectively on the back of this compromise.
USDC and USDT - how does the law affect them?
Circle and USDC. Circle is a US-registered issuer and the GENIUS Act directly strengthens USDC's position as a regulated stablecoin. USDC already publishes audited monthly reserve reports and meets most of the law's requirements. That is a serious competitive advantage for Circle.
Tether and USDT. Tether is an international issuer (originally British Virgin Islands), and the GENIUS Act does not cover it directly. Offshore issuers may continue to operate in the US provided they can freeze transactions on lawful orders. This creates an uneven competitive landscape - US issuers face stricter requirements than offshore ones.
This imbalance is one of the law's main weaknesses, and debate around it continues.
Main weaknesses of the law
The GENIUS Act is not perfect. Three notable issues:
- Yield loophole. Although issuers are barred from paying interest directly, this restriction does not extend to exchanges or affiliated entities. They may still offer indirect yields.
- Offshore issuers. Tether and other foreign players are not fully regulated.
- Uneven regulation. US issuers may choose to relocate abroad to avoid the stricter requirements.
Comparison with Europe's MiCA
| Factor | GENIUS Act (US) | MiCA (EU) |
|---|---|---|
| In force | 18 July 2025 | 30 December 2024 (full force) |
| Scope | USD-backed payment stablecoins only | All crypto-asset categories |
| Reserve requirement | 1:1 in USD and T-bills | 1:1 in highly liquid assets |
| Interest payments | Prohibited to holders | Prohibited |
| Main supervisor | OCC (federal) | National regulators in EU member states |
| Offshore issuers | Unevenly covered | EU passport required for CASP status |
The EU's MiCA is a broader framework covering exchanges, custody and issuers. The GENIUS Act is narrower - only stablecoins. But the core principle is similar: transparent reserves, independent audits and consumer protection.
What does it mean for Baltic and Nordic users?
The GENIUS Act does not directly apply to Baltic or Nordic users - it is US law affecting US issuers and US users. But the indirect effect is real:
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USDC quality improves. If you use USDC on Coinbase EU or elsewhere, the GENIUS Act strengthens the underlying product - the same reserve and audit requirements apply to USDC regardless of where it is used.
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A global regulatory standard. GENIUS Act + MiCA together form an international stablecoin baseline that the UK, Singapore and other markets may copy.
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More institutional demand. Clearer rules let banks and fintechs (Stripe, PayPal) integrate stablecoins into payment flows. That expands use cases for Baltic users too.
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More demand for US T-bills. Because issuers must hold T-bill reserves, the GENIUS Act reinforces the US dollar's role as a global reserve currency.
For more daily market context on the impact of this compromise, see the 4 June crypto market briefing, which also describes the Coinbase and Circle share-price moves after this news.
Summary
The GENIUS Act is a serious step in normalising the US stablecoin market. It ensures that USD-backed stablecoins are genuinely backed 1:1, comply with AML/KYC, and provide bankruptcy protection to holders. It strengthens USDC and Circle's position globally.
However, the law has notable gaps - especially regarding Tether and other offshore issuers, which can still operate with lighter regulation. Lawmakers continue to debate this imbalance.
For Baltic and Nordic users, the GENIUS Act mainly means better product quality in the stablecoin market - particularly for USDC - and a clearer international foundation that, together with MiCA, defines the new regulated crypto environment of 2026.
Related
- Stablecoin guide for the Baltics and Nordics 2026
- MiCA explainer for the Baltics
- Coinbase and Coinbase Card EU deep dive
- Global crypto market briefing - 4 June
Sources
- What Is the GENIUS Act and Why Does It Matter for Stablecoin Users - Binance Academy
- Global crypto market briefing 2026-06-05 - NorriWire
This is not legal or financial advice. GENIUS Act implementation continues - regulators must issue further rules by 18 July 2026. Before making any stablecoin decisions, consult a specialist. Article prepared on 5 June 2026.