US Stablecoin Regulation Takes Shape with GENIUS Act

The GENIUS Act, a significant overhaul of US crypto regulation, has been signed into effect by President Biden. The law, which passed with bipartisan support, creates a federal licensing framework for stablecoin issuers and requires them to hold 1:1 reserves in high-quality liquid assets such as cash, bank deposits, or short-term US Treasury bills.

The GENIUS Act also mandates that issuers publish monthly reserve disclosures, not quarterly or annually. This increased transparency aims to prevent another situation where a stablecoin claims full backing but the market finds out months later that reserves were parked in commercial paper or other less liquid instruments.