President Donald J. Trump signed S. 1582 into law on July 18, 2025, after the Senate cleared the bill 68 to 30 on June 17, 2025, and the House of Representatives passed it 308 to 122 on July 17, 2025. Readers searching “sec stablecoin approval” expect SEC involvement; the statute routes approval through banking regulators instead.
The Act establishes a regulatory framework for the issuance of payment stablecoins in the United States, with three permitted issuer classes and reserve backing on at least a 1 to 1 basis with United States coins and currency, balances at Federal Reserve Banks, demand deposits at insured depository institutions, Treasury bills with a remaining maturity of 93 days or less, repurchase agreements collateralized by such Treasury bills, and qualifying money market funds. The state route is capped: a State qualified payment stablecoin issuer with greater than $10 billion of outstanding payment stablecoins is required to transition to the Federal regulatory framework within 360 days.
Key Takeaways
- The GENIUS Act became Public Law 119-27 on July 18, 2025, after the Senate passed it 68-30 and the House passed it 308-122.
- Permitted issuers fall into three classes: insured depository institution subsidiaries, OCC-chartered nonbanks, and state-qualified issuers capped at $10 billion outstanding.
- Reserve backing must run at 1 to 1 with US currency, demand deposits at insured depository institutions, 93-day or shorter Treasury bills, qualifying repos, or government money market funds.
- Monthly public disclosures of reserve composition are mandatory, with annual audits by registered public accounting firms.
- Payment stablecoins issued by permitted issuers are excluded from the Securities Act of 1933 and the Securities Exchange Act of 1934, removing the SEC from the approval chain.
- Federal agencies must complete 21 separate rulemakings, with most due by July 18, 2026.
- The OCC granted conditional national trust bank charters to Circle, Paxos, Ripple, and BitGo in December 2025.
SEC Stablecoin Approval: Why the SEC Is Not in Charge
The phrase “SEC stablecoin approval” is a popular search query, but the GENIUS Act creates a federal approval framework for US payment stablecoin issuers that runs through banking regulators and sets uniform reserve, redemption, and anti-money-laundering rules. The Congressional Research Service notes that payment stablecoins issued by permitted payment stablecoin issuers are explicitly excluded from the definition of a “security” under the Securities Act of 1933 and the Securities Exchange Act of 1934, and are not “commodities” under the Commodity Exchange Act. The Securities and Exchange Commission and the Commodity Futures Trading Commission do not have jurisdiction over payment stablecoins issued by permitted payment stablecoin issuers under the statute.
That carve-out is the part most readers searching for “SEC stablecoin approval” miss. President Donald J. Trump signed S. 1582 into law on July 18, 2025, after the Senate cleared the bill 68 to 30 on June 17, 2025, and the House passed it 308 to 122 on July 17, 2025. Federal banking regulators, not securities regulators, run the approval gates. The carve-out fits the broader pattern in SEC and CFTC crypto regulation data, where enforcement intensity rises after statutes draw clearer perimeters.
Why it matters: The Congressional Research Service notes that payment stablecoins issued by permitted payment stablecoin issuers are explicitly excluded from the definition of a “security” under the Securities Act of 1933 and the Securities Exchange Act of 1934, and are not “commodities” under the Commodity Exchange Act. That statutory exclusion ends years of jurisdictional ambiguity and shifts oversight to the federal banking regulators.
The Three Permitted Issuer Pathways
According to the Federal Reserve Bank of Richmond’s GENIUS Act explainer, the GENIUS Act creates three categories of permitted payment stablecoin issuers: subsidiaries of insured depository institutions, Federal qualified nonbank payment stablecoin issuers chartered by the Office of the Comptroller of the Currency, and State qualified payment stablecoin issuers operating under State regulatory regimes that have been certified as substantially similar to the Federal framework. The three pathways carry sharply different prudential profiles.
Each pathway carries its own approval mechanics. Under the FDIC’s April 10, 2026 notice of proposed rulemaking, an FDIC-supervised insured depository institution must obtain prior written approval from the FDIC before any subsidiary of the institution may issue a payment stablecoin, with approval requirements that include capital and liquidity requirements, an operational risk management framework, and recovery and resolution planning specific to the stablecoin activity. The OCC’s proposed rule would establish requirements for the issuance of payment stablecoins by national banks, federal savings associations, federal branches of foreign banks, and federally qualified nonbank payment stablecoin issuers.
State approval is the most novel of the three. On April 3, 2026, the Department of the Treasury proposed broad-based principles for determining whether a State-level regulatory regime is substantially similar to the Federal regulatory framework, authorizing States to license and regulate State qualified payment stablecoin issuers provided that the State-level regulatory regime is certified as substantially similar to the Federal regulatory framework. State-chartered issuers can operate under that pathway up to a defined ceiling, after which they shift to federal supervision.
| Pathway | Primary Regulator | Key Constraint |
| Insured depository institution subsidiary | OCC, FDIC, or Federal Reserve (per parent charter) | Prior written approval; capital, liquidity, recovery planning |
| Federal qualified nonbank | OCC | National trust bank charter; uninsured; quarterly call-style report |
| State qualified | Certified state regulator | Issuance capped at $10 billion outstanding |
Source: OCC Bulletin 2026-3, FDIC NPRM (April 10, 2026), Treasury State Pathway NPRM (April 3, 2026)
Reserve Requirements: 1 to 1 in High-Quality Liquid Assets
Per Public Law 119-27, Public Law 119-27 requires permitted payment stablecoin issuers to maintain identifiable reserves backing the outstanding payment stablecoins on at least a 1 to 1 basis with United States coins and currency, balances at Federal Reserve Banks, demand deposits at insured depository institutions, Treasury bills with a remaining maturity of 93 days or less, repurchase agreements collateralized by such Treasury bills, and qualifying money market funds. The statute also requires issuers to publish on a monthly basis a public disclosure of the composition of the reserves backing the outstanding payment stablecoins of the issuer.
The OCC’s proposed rule narrows the asset list further for OCC-supervised issuers. The OCC notice of proposed rulemaking requires permitted payment stablecoin issuers to maintain identifiable, segregated reserves that always have a fair value at least equal to the outstanding issuance value of the payment stablecoins, with permissible reserve assets limited to U.S. currency and Federal Reserve balances; demand deposits or insured shares at insured depository institutions; short-dated U.S. Treasury securities with 93 days or less remaining to maturity; overnight repurchase and reverse repurchase agreements that meet specified collateral, counterparty, clearing, and overcollateralization terms; qualifying government money market funds; and other similarly liquid Federal Government assets approved by the OCC. Each payment stablecoin issuer would also be required to make a weekly confidential report to the OCC and a quarterly public filing similar to a bank Call Report.
Audit and attestation rules layer on top of the reserve composition rules. The FDIC’s proposed rule would require an annual audit by a registered public accounting firm and monthly attestations regarding the composition of reserves.
By the numbers: Reserves run 1 to 1, Treasury holdings sit at 93 days or less remaining maturity, public reserve disclosures arrive monthly, OCC issuers file weekly confidential reports plus a quarterly call-style filing, and FDIC issuers face an annual independent audit. The compliance load looks closer to a regulated bank than to a software company. Compare that bar against the historical data in our stablecoin reserves transparency analysis.
AML, Sanctions, and the Freeze-Seize Capability
Permitted issuers fall under the Bank Secrecy Act. The Treasury’s proposed rule would treat permitted payment stablecoin issuers as financial institutions for purposes of the Bank Secrecy Act, requiring them to establish and maintain an anti-money laundering and countering the financing of terrorism program, retain appropriate records of transactions, monitor and report suspicious activity, have the technological capability and internal processes in place to block, freeze, and reject illicit transactions, maintain an effective customer identification program for initial holders of their permitted payment stablecoin, and comply with U.S. economic sanctions administered by the Office of Foreign Assets Control.
The freeze-and-seize obligation is more granular than most prior US digital-asset rules. The Federal Reserve Bank of Richmond’s explainer states that issuers must comply with the Bank Secrecy Act and have the technical capability to seize, freeze, or burn stablecoins when legally required. The White House fact sheet adds that the GENIUS Act subjects stablecoin issuers to the Bank Secrecy Act, obligating them to establish effective anti-money laundering and sanctions compliance programs.
The freeze-seize-burn requirement is what separates GENIUS-compliant tokens from generic ERC-20 stablecoins. The OCC’s broader stablecoin rulemaking package provides the operational floor for that capability.
The State Pathway, the $10 Billion Ceiling, and the Waiver
The state route is capped. Under Treasury’s April 3, 2026 NPRM, a State qualified payment stablecoin issuer with greater than $10 billion of outstanding payment stablecoins is required to transition to the Federal regulatory framework within 360 days. The GENIUS Act establishes a presumption in favor of waiver approval where the State regulator has established a certified prudential regulatory regime for digital assets as of April 19, 2025, and the State regulator has approved at least one issuer under that regime.
Applicants are pre-positioning OCC charter applications rather than betting on a state-pathway waiver.
Worth noting: Only states whose digital-asset regimes were certified by April 19, 2025, with at least one approved issuer, qualify for the presumption in favor of a waiver under the Treasury’s NPRM. New York’s BitLicense and Wyoming’s special-purpose depository institution framework are the two regimes most often cited as candidates.
What This Means for Circle, Tether, Paxos, Ripple, PayPal, and USD1
Issuers split into three reaction camps. In December 2025, the Office of the Comptroller of the Currency conditionally granted Circle a national trust bank charter, positioning Circle as a federally qualified nonbank payment stablecoin issuer under the GENIUS Act framework. Circle, Paxos, Ripple, and BitGo each received conditional national trust bank charters from the OCC in late 2025 in connection with their intended status as permitted payment stablecoin issuers.
Tether took a different route. Tether announced USAT, a US-issued stablecoin designed for the American market under the GENIUS Act framework, with Anchorage Digital Bank serving as the issuer of record, and the launch was announced in January 2026. Tether’s flagship USDT token, registered in El Salvador, continues to serve non-U.S. markets, while the GENIUS Act prohibits offering offshore-issued payment stablecoins to U.S. persons through U.S. digital asset service providers absent the Treasury Secretary’s determination of comparable foreign regulation.
A new entrant rounded out the early field. World Liberty Financial, a venture associated with the Trump family, issued the USD1 stablecoin in 2025 with stated intent to operate within the GENIUS Act framework. PayPal’s PYUSD continues to issue through Paxos Trust, riding Paxos’ charter pathway rather than seeking its own.
Processors tend to align with new frameworks quickly after enactment, and Ripple’s national trust bank approval is one early example.
Implementation Timeline, Effective Date, and Open Issues
The statute does not switch on at signing. The effective date of most provisions is the earlier of 18 months after the enactment date or 120 days after the primary Federal payment stablecoin regulators issue final implementing regulations. Brookings Institution analysis notes that the Act requires 21 separate rulemakings from federal agencies including the Treasury Department, the Office of the Comptroller of the Currency, the Federal Deposit Insurance Corporation, the National Credit Union Administration, and the Federal Reserve Board, with federal agencies given one year from enactment to complete most required rulemakings and the rulemaking deadline falling on July 18, 2026.
Banks have flagged a structural concern that has not been resolved. Banks have raised concerns that the Act does not prohibit interest-like rewards by exchanges and third parties, which could allow stablecoins to function as deposit substitutes and siphon funding from depository institutions.
Frequently Asked Questions (FAQs)
No. The phrase “SEC stablecoin approval” misstates the architecture. Payment stablecoins issued by permitted payment stablecoin issuers are explicitly excluded from the definition of a “security” under the Securities Act of 1933 and the Securities Exchange Act of 1934, and the Securities and Exchange Commission and the Commodity Futures Trading Commission do not have jurisdiction over them. Approval runs through federal banking regulators plus certified state regulators.
Reserves must run on at least a 1-to-1 basis with United States coins and currency, balances at Federal Reserve Banks, demand deposits at insured depository institutions, Treasury bills with a remaining maturity of 93 days or less, repurchase agreements collateralized by such Treasury bills, and qualifying money market funds. Re-hypothecation is prohibited under the statute and the OCC’s proposed rule.
A State qualified payment stablecoin issuer with greater than $10 billion of outstanding payment stablecoins is required to transition to the Federal regulatory framework within 360 days, with a presumption in favor of waiver approval where the State regulator has established a certified prudential regulatory regime for digital assets as of April 19, 2025, and approved at least one issuer.
The effective date of most provisions is the earlier of 18 months after the enactment date or 120 days after the primary Federal payment stablecoin regulators issue final implementing regulations. Federal agencies have one year from enactment to complete most required rulemakings, with the rulemaking deadline falling on July 18, 2026.
The GENIUS Act prohibits offering offshore-issued payment stablecoins to U.S. persons through U.S. digital asset service providers absent the Treasury Secretary’s determination of comparable foreign regulation, and Tether’s USDT, registered in El Salvador, continues to serve non-U.S. markets. Without that comparable-regulation determination and a registration with the OCC, offshore-issued stablecoins cannot be offered to US persons through US digital asset service providers.
An FDIC-supervised insured depository institution must obtain prior written approval from the FDIC before any subsidiary of the institution may issue a payment stablecoin, with approval requirements that include capital and liquidity requirements, an operational risk management framework, and recovery and resolution planning. OCC-chartered nonbanks operate under a parallel set of OCC-issued requirements rather than insured depository institution rules.
Conclusion
The GENIUS Act was signed on July 18, 2025, after the Senate cleared the bill 68 to 30 on June 17, 2025, and the House passed it 308 to 122 on July 17, 2025. The OCC, FDIC, and Federal Reserve sit at the center of approval, and despite the popularity of the search phrase “SEC stablecoin approval,” securities regulators stay out of scope under the statute.
Federal agencies have one year from enactment to complete most required rulemakings, with the rulemaking deadline falling on July 18, 2026. Banks have raised concerns that the Act does not prohibit interest-like rewards by exchanges and third parties, which could allow stablecoins to function as deposit substitutes and siphon funding from depository institutions. Circle, Paxos, Ripple, and BitGo each received conditional national trust bank charters from the OCC in late 2025 in connection with their intended status as permitted payment stablecoin issuers. That early response suggests the market expects the framework to harden rather than soften over the next twelve months.
