The GENIUS Act, One Year Later

The GENIUS Act,[1] which legalized and regulates U.S. dollar-denominated stablecoins, was passed in July 2025.  While the GENIUS Act is not effective until January 18, 2027, the payments industry is already responding.[2] This is partially due to the actions taken by the FDIC, the OCC, and the Federal Reserve prior to the passage of the GENIUS Act.

The impact of regulations coming from the GENIUS Act and the potential passage of the CLARITY Act (which intends to regulate digital assets that are not stablecoins) will create more competition for financial institutions (FIs). In advance of the GENIUS Act being passed into law, the prudential regulators rescinded prior guidance, creating more revenue opportunity for FIs.

That opportunity stems from three regulatory rollbacks prior to the GENIUS Act. In March 2025, the OCC rescinded its supervisory non-objection requirement for certain digital asset activities.[3] Additionally, the FDIC withdrew FIL-16-2022,[4] which had required FIs to notify regulators before engaging in crypto-related business. The Federal Reserve also rescinded SR 22-6 and SR 23-8.[5] Together, these changes signaled a more permissive approach: financial institutions now have a new category to sell to that historically had been too high-risk for most to support.

Conversely, traditional payment service providers, card networks, and fintechs who need access to payment rails can now work with regulated Digital Asset Service Providers (DASP)and Permitted Payment Stablecoin Issuers (PPSIs) to access alternative payment rails like stablecoins, while ensuring this new payment rail has the same anti-money-laundering and counter-terrorist-financing (AML/CFT) provisions and controls as traditional FI rails. These developments may encourage FIs to expand their blockchain-based payment capabilities by supporting stablecoin and/or issuing their own tokenized deposits. At the same time, the evolving landscape may affect traditional payment revenue models, reinforcing the importance of continued FI innovation.

Beyond creating a new category of regulated providers, the GENIUS Act may accelerate the convergence of traditional and blockchain-based payment infrastructure. While stablecoins are often viewed as an alternative payment rail, their long-term success may depend on interoperability with existing payment systems, including bank accounts, real-time payment networks, and card-based ecosystems. As the market evolves, competitive differentiation may increasingly center on trust, compliance, security, and customer experience rather than access to a single payment rail.

The GENIUS Act enables another category of regulated access to payments, supporting new compliant providers which will create more competition in the U.S. payments industry.