S. 919 — GENIUS Act of 2025

This section establishes definitions for 19 terms used in the Act, including "payment stablecoin" (i.e., a digital asset designed for use as a means of payment or settlement, redeemable for a fixed monetary value, and excluding national currency, deposits, yield-bearing instruments, or most securities), "permitted payment stablecoin issuer" (i.e., an approved subsidiary of an insured depository institution, Federal qualified nonbank payment stablecoin issuer, or State qualified issuer), "Federal qualified nonbank payment stablecoin issuer" (i.e., a nonbank entity approved by the Comptroller of the Currency), "digital asset," "distributed ledger," and "primary Federal payment stablecoin regulator."

This section prohibits any person other than a permitted payment stablecoin issuer from issuing a payment stablecoin in the United States. It further provides that a payment stablecoin not issued by a permitted issuer is unacceptable as a settlement asset to facilitate wholesale payments between banking organizations or by payment infrastructure to facilitate exchange and settlement among banking organizations. The section establishes criminal penalties for knowing violations, including fines of up to $1,000,000 per violation, imprisonment for up to five years, or both, and directs a primary Federal payment stablecoin regulator to refer suspected violations to the Attorney General.

This section establishes standards for permitted issuers of payment stablecoins, requiring them to (1) maintain reserves backing outstanding payment stablecoins on a 1-to-1 basis using specified liquid assets (i.e., U.S. coins and currency, demand deposits at insured depository institutions, Treasury bills/notes/bonds with remaining maturity of 93 days or less, certain repurchase and reverse repurchase agreements, compliant money market funds, other regulator-approved assets, or tokenized versions thereof); (2) publicly disclose their redemption policy and establish procedures for timely redemptions; (3) publish monthly the total outstanding stablecoins and reserve composition; and (4) prohibit rehypothecation of reserves except to meet margin obligations, custodial services, or liquidity needs via cleared repurchase agreements or with regulator approval. The section further requires monthly examinations of reserve reports by registered public accounting firms, certifications of accuracy by the issuer's CEO and CFO (subject to criminal penalties under 18 U.S.C. 1350(c) for knowing falsehoods), and tailored capital, liquidity, reserve diversification, and risk management regulations to be issued jointly by primary Federal payment stablecoin regulators (or by State regulators for qualified State issuers). (Thus, these measures aim to ensure redeemability and stability of payment stablecoins, which are digital assets designed to maintain a stable value for use in payments and settlements.)

This section directs primary Federal payment stablecoin regulators to receive, review, and approve or deny applications from insured depository institutions to issue payment stablecoins through subsidiaries and from nonbank entities to become Federal qualified nonbank payment stablecoin issuers. Regulators must establish a licensing, regulation, examination, and supervision framework prioritizing safety and soundness; issue implementing regulations by the date specified in section 18; and, for substantially complete applications, notify completeness within 30 days and render decisions within 120 days based on (1) the applicant's financial ability to meet section 4 requirements, (2) absence of officers or directors convicted of specified felonies (i.e., insider trading, embezzlement, cybercrime, money laundering, terrorism financing, or financial fraud), and (3) other safety-and-soundness factors. Denials are permitted only for unsafe-or-unsound activities (with issuance on open, public, or decentralized networks not qualifying as grounds), must include specific explanations and remediation recommendations within 30 days, and are subject to appeal via hearing (scheduled within 30 days of request, with final determination within 60 days thereafter) or become final within 10 days if no hearing requested.

This section subjects permitted payment stablecoin issuers—other than state-qualified issuers with less than $10 billion in consolidated total outstanding issuance—to supervision by their primary Federal payment stablecoin regulator, including requirements to submit reports on financial condition, risk monitoring systems, and compliance; periodic examinations of operations, risks to safety and soundness or financial stability, and risk controls; and directives to use existing reports, avoid duplicative activities, and minimize supervisory burden comparable to that on similarly situated regulated entities. This section further authorizes such regulators to (1) suspend or revoke an issuer's registration to issue payment stablecoins for reckless violations; (2) issue cease-and-desist orders for violations, attempted violations, or related practices; and (3) remove or prohibit institution-affiliated parties for knowing violations of the Act or specified anti-money laundering laws. All such enforcement actions must follow procedures in subsections (b) and (e) of section 8 of the Federal Deposit Insurance Act, with judicial review exclusively under subsection (h).

This section establishes a supervisory, examination, and enforcement framework for state qualified payment stablecoin issuers under their respective state payment stablecoin regulators, with coordination and backstop authorities for federal regulators. Specifically, it (1) authorizes state regulators to enter memoranda of understanding with the Federal Reserve Board for shared supervision; (2) requires ongoing information sharing between state regulators and the Board, including initial applications; (3) permits state regulators to issue orders and rules under section 4 of the Act, consistent with federal regulators; and (4) allows the Board or Comptroller of the Currency, after 48 hours' prior written notice to the state regulator and in defined unusual and exigent circumstances established by rulemaking, to take enforcement actions against such issuers (or institution-affiliated parties) and impose restrictions via directives—equivalent to final cease-and-desist orders—limiting dividends, affiliate transactions, and risky activities, subject to administrative review (with automatic lapse after 10 days absent Board action) and judicial review. (Thus, states retain primary oversight of state-qualified issuers, typically nonbank entities issuing stablecoins pegged to fiat currency, while federal regulators provide emergency intervention to protect financial stability.)

This section establishes anti-money laundering protections applicable to foreign issuers of payment stablecoins (i.e., digital assets pegged to monetary value) that are not permitted payment stablecoin issuers and to digital asset service providers (i.e., entities exchanging, transferring, or custodizing digital assets for compensation in the U.S.). Specifically, it directs the Secretary of the Treasury, within 30 days of identifying noncompliance with a lawful order (i.e., a federal court or agency order to seize, freeze, burn, or block specified payment stablecoins), to designate the foreign issuer as noncompliant and provide written notice. If the issuer does not comply within 30 days of notice, the Secretary must publish the determination in the Federal Register and prohibit digital asset service providers from facilitating secondary trading of the issuer's payment stablecoins in the U.S., effective 30 days after publication (with case-by-case waivers and extensions available). It imposes civil monetary penalties of up to $100,000 per violation per day on digital asset service providers that knowingly violate the prohibition and up to $1,000,000 per violation per day on foreign issuers that continue publicly offering such stablecoins in the U.S. (with Treasury able to seek injunctions against the issuer). Determinations of noncompliance are subject to judicial review in the U.S. Court of Appeals for the D.C. Circuit. The Secretary may issue waivers or licenses for secondary trading if it would harm the U.S. financial system or the issuer is remedying noncompliance (with reports to specified congressional committees within 7 days); the President may waive restrictions for national security; and the section does not apply to authorized U.S. intelligence or law enforcement activities.

This section establishes requirements for persons providing custodial or safekeeping services for payment stablecoin reserves, payment stablecoins used as collateral, or private keys of permitted payment stablecoins. Such persons must be supervised or regulated by a primary Federal payment stablecoin regulator, a primary financial regulatory agency under the Dodd-Frank Act, or a state bank or credit union supervisor that shares relevant information with the Federal Reserve Board; treat customer assets (payment stablecoins, private keys, cash, and other property) as belonging to the customer and protect them from the custodian's creditors; and separately account for and segregate customer assets from the custodian's funds (with exceptions allowing limited commingling in omnibus accounts at qualifying institutions for convenience or transaction settlement, or as prescribed by regulators). Custodians must submit business operations and customer asset protection information to their primary regulator, and the requirements do not apply to providers of hardware or software solely for customer self-custody.

This section establishes priority claim status and other protections for holders of payment stablecoins issued by permitted payment stablecoin issuers (as defined in the Guiding and Establishing National Innovation for U.S. Stablecoins Act of 2025) in any Federal or State insolvency proceeding, including under the Bankruptcy Code. Specifically, it (1) adds definitions of "payment stablecoin" and "permitted payment stablecoin issuer" to 11 U.S.C. §101(40C); (2) excepts redemptions of such stablecoins from required reserves from the automatic stay under §362(a)(9) and authorizes relief from the stay under §362(d)(5) if reserves are available for ratable distribution (with distributions to begin within 14 days of hearing); (3) excludes required reserves from the bankruptcy estate under §541(b)(11); (4) grants such holders' claims priority over all other claims (including §507(a) priorities) with respect to reserves under new §507(e), with first priority for any shortfalls to the extent additional reserves were required; and (5) requires the Comptroller of the Currency or a state payment stablecoin regulator to intervene in any Chapter 11 case involving such an issuer under §1109(c). The section further directs that depository institutions be resolved by the FDIC, NCUA, or state regulators (as applicable); while subsidiaries of depositories or nonbank entities may proceed under the Bankruptcy Code. (Thus, stablecoin holders effectively receive pass-through access to 1:1 reserve backing ahead of other creditors.)

This section directs the primary Federal payment stablecoin regulators, in consultation with the National Institute of Standards and Technology, other relevant standard-setting organizations, and state bank and credit union regulators, to assess and, if necessary, prescribe interoperability standards for permitted payment stablecoin issuers. The standards must promote compatibility with (1) other permitted payment stablecoin issuers and (2) the broader digital finance ecosystem, including accepted communications protocols and blockchains (permissioned or public), using notice-and-comment rulemaking procedures consistent with the National Technology Transfer and Advancement Act of 1995.

This section directs the Secretary of the Treasury, in consultation with the Federal Reserve, OCC, FDIC, SEC, and CFTC, to conduct a study on non-payment stablecoins—including endogenously collateralized payment stablecoins (i.e., digital assets represented as redeemable for a fixed monetary value and backed solely by another digital asset from the same originator)—and issue a report to the House Financial Services Committee and Senate Banking Committee within 365 days of enactment. The report must analyze (1) categories of such stablecoins, including benefits and risks of technological design features; (2) participants; (3) utilization and potential utilization; (4) reserve compositions; (5) algorithms employed; (6) governance structures, including decentralization; (7) public promotion and advertising; and (8) clarity and availability of consumer disclosures.

This section requires primary Federal payment stablecoin regulators to submit annual reports, beginning one year after enactment, to the Senate Committee on Banking, Housing, and Urban Affairs, the House Committee on Financial Services, and the Director of the Office of Financial Research on the status of the payment stablecoin industry, including (1) trends in payment stablecoin activities, (2) the number of applications for permitted payment stablecoin issuer status under section 5, with aggregate approvals and rejections, and (3) potential financial stability risks to the broader financial system posed by such activities. It further directs the Financial Stability Oversight Council (FSOC) to incorporate these findings into its annual report required under 12 U.S.C. 5322(a)(2)(N).

This section establishes a rule of construction clarifying that nothing in the Act limits the authority of depository institutions (as defined in the Federal Deposit Insurance Act), Federal credit unions, State credit unions, national banks, or trust companies to engage in activities permitted by applicable State and Federal law, including (1) accepting deposits and issuing digital assets representing those deposits; (2) using a distributed ledger for books and records and intrabank transfers; and (3) providing custodial services for payment stablecoins, private keys of payment stablecoins, or reserves backing payment stablecoins. This section directs primary Federal payment stablecoin regulators to review existing guidance and regulations and, if necessary, amend or promulgate new regulations to clarify that regulated entities may engage in payment stablecoin activities consistent with the Act. This section prohibits the appropriate Federal banking agency, National Credit Union Administration (for credit unions), and Securities and Exchange Commission from requiring such institutions to (1) recognize non-owned custody assets as liabilities on their balance sheets, including for payment stablecoin custody; (2) hold regulatory capital against custody assets or reserves backing them except as needed to address operational risks, as determined by the relevant Federal or State supervisor; or (3) recognize liabilities for non-owned digital assets exceeding related income statement expenses or consideration received.

This section excludes a payment stablecoin issued by a permitted payment stablecoin issuer (as such terms are defined in section 2 of the Guiding and Establishing National Innovation for U.S. Stablecoins Act of 2025) from the definition of "security" in (1) the Securities Act of 1933, (2) the Securities Exchange Act of 1934, (3) the Investment Advisers Act of 1940, (4) the Investment Company Act of 1940, and (5) the Securities Investor Protection Act of 1970. The section further excludes such stablecoins from the definition of "commodity" under the Commodity Exchange Act and excludes such issuers from the definition of investment company under the Investment Company Act of 1940. (Thus, such stablecoins and issuers are exempt from securities registration, disclosure, antifraud, and investment company requirements under those acts and from commodity regulation under the Commodity Exchange Act.)

This section directs the Secretary of the Treasury to create and implement reciprocal arrangements or bilateral agreements with foreign jurisdictions having substantially similar payment stablecoin regulatory regimes as required under this Act—including reserve requirements, supervision, anti-money laundering and counter-terrorism features, sanctions compliance, liquidity requirements, and risk management standards—to facilitate international transactions and interoperability with overseas-issued U.S. dollar-denominated payment stablecoins. The Secretary must aim to complete such arrangements not later than two years after the date of enactment.

This section establishes the effective date of the Act and its amendments as the earlier of 18 months after enactment or 120 days after the primary Federal payment stablecoin regulators issue final regulations implementing the Act. It directs those regulators to notify Congress upon beginning to process applications under the Act. It also authorizes the regulators to waive the Act's requirements for up to 12 months from the effective date for (1) subsidiaries of insured depository institutions with pending applications to become permitted payment stablecoin issuers and (2) nonbank entities with pending applications to become Comptroller-regulated entities.

This section directs each primary federal payment stablecoin regulator, the Secretary of the Treasury, and each state payment stablecoin regulator to implement the Act through notice-and-comment rulemaking, including promulgating necessary regulations, not later than one year after enactment of the Act. It also (1) encourages coordination among federal payment stablecoin regulators and state payment stablecoin regulators on such regulations and (2) requires each federal banking agency to submit to the Senate Committee on Banking, Housing, and Urban Affairs and the House Committee on Financial Services, not later than 180 days after enactment, a report confirming and describing the rules promulgated to implement the Act.