On July 18, 2025, President Trump signed the Guiding and Establishing National Innovation for U.S. Stablecoins Act (the GENIUS Act) into law. The GENIUS Act erects a new regulatory framework for payment stablecoins that will impact the financial services sector in a variety of ways. In this article, we outline the new regulatory framework and identify some initial policy risks for bankers to consider. Stablecoins are blockchain-based cryptocurrencies. Blockchain is digital ledger technology that allows for transactions to be recorded in an encrypted, shared ledger in accordance with established network policies. But unlike bitcoin and other untethered investment cryptocurrencies that use blockchain technology, stablecoins are asset-backed tokens intended to hold a stable dollar value on a 1:1 basis with maintained reserves of cash, short-term Treasuries and other permitted assets. The GENIUS Act governs payment stablecoins, which are stablecoins that are intended to be used for payment while maintaining a fixed value and a right to redemption. Stablecoins are intended to facilitate 24/7 transaction settlement, permitting parties to instantly move money anywhere in the world at any time for very little cost. They are used in connection with merchant payments, business-to-business payments and cross-border transfers. Time will tell how readily the consumer and business communities in our region will adopt these assets. The ramifications for the financial services sector could be transformational, with potentially significant downward pressures on income-deriving activities like extending credit. The following discusses the key rules set out in the GENIUS Act. First, payment stablecoin issuers must qualify as one of the following kinds of entities: (i) a non-bank licensee of the Office of the Comptroller of the Currency (the OCC) who is authorized to issue stablecoins; (ii) a subsidiary of an insured depository institution or insured credit union that is supervised by a primary federal regulator (i.e., the Federal Reserve, the FDIC and the OCC); or (iii) a state qualified issuer approved by a state payment stablecoin regulator that complies with federal requirements. Issuers must comply with the provisions of the Bank Secrecy Act, even if the issuer is a nonbank entity. Second, all stablecoin issuers must maintain an asset reserve that equates to the value of the stablecoins issued. This is referred to as 1:1 reserve backing. The reserve assets may consist of U.S. dollars, federal reserve notes, funds held at certain insured or regulated depository institutions, certain short-term Treasuries and Treasury-backed reverse repurchase agreements, and money market funds. Each issuer must provide monthly public reporting on its website as to the composition of its reserve portfolios. Third, stablecoin issuers are required to offer redemption or repurchase of their issued stablecoins for a fixed amount of monetary value. Redemption policies must be publicly disclosed and provide clear procedures for the timely redemption of outstanding stablecoins. Any fees associated with purchasing or redeeming stablecoins must also be disclosed clearly. Furthermore, stablecoin issuers cannot pledge the reserved assets that underpin the payment stablecoins, unless the pledges are for the purpose of creating liquidity to satisfy reasonable 9 WEST VIRGINIA BANKER
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