Stablecoin regulation in the United States now treats payment stablecoins as regulated payment instruments subject to banklike prudential rules, mandatory reserve backing, and full Bank Secrecy Act compliance under Public Law 119–27, the GENIUS Act, signed into law in 2025. The Comptroller of the Currency serves as the primary federal supervisor for nationally chartered payment stablecoin issuers, while the Secretary of the Treasury holds rulemaking authority over BSA obligations. The practical result: any entity that issues a “payment stablecoin” in the United States must hold 1:1 reserves in permitted low-risk assets, submit to monthly public disclosures and independent attestations, maintain a full AML/KYC program, and guarantee redemption at par on demand.
Core issuer obligations under the GENIUS Act at a glance:
- 1:1 reserve backing in permitted assets (cash, overnight Treasuries, short-term repos, certain bank deposits) with currency matching required
- Monthly public disclosures and independent attestations of reserve composition and adequacy
- Licensing or charter through a federal pathway (Comptroller) or a certified state regime
- AML/KYC program meeting BSA financial-institution standards, including SAR filing, customer identification, and sanctions screening
- Redemption at par guaranteed to holders on demand, with no direct interest payments permitted to holders
Key Takeaways
The GENIUS Act establishes a federal payment stablecoin framework requiring 1:1 reserves in permitted liquid assets, monthly independent attestations, BSA financial-institution treatment, and licensing through the Comptroller or a certified state regime — with the $10 billion threshold determining which supervisory path applies.
| Point | Details |
|---|---|
| Federal framework is live | The GENIUS Act (Public Law 119–27) creates binding obligations for payment stablecoin issuers; July 2026 is the key implementation window. |
| Reserves must be 1:1 and liquid | Permitted assets are cash, overnight Treasuries, short repos, and qualifying bank deposits; currency matching is required and interest to holders is prohibited. |
| BSA treatment is full-scope | Permitted issuers are financial institutions under the BSA and must maintain AML programs, CIP, SAR filing, sanctions screening, and recordkeeping. |
| $10B threshold governs supervision | Issuers above $10 billion fall under direct federal supervision; below that level, a certified state regime may apply. |
| No deposit insurance applies | Payment stablecoins are not FDIC-insured; issuers must disclose this clearly to holders. |
| Murphyslawcrypto offers compliance counsel | The firm provides compliance program design, licensing application support, and regulatory defense for stablecoin issuers facing GENIUS Act obligations. |
Table of Contents
- What are the main types of stablecoins?
- How do stablecoins actually work in practice?
- How does the GENIUS Act regulate stablecoins in the U.S.?
- How do federal and state roles divide under the $10 billion threshold?
- What reserve rules and attestation requirements must issuers meet?
- How do AML, BSA, and sanctions obligations apply to stablecoin issuers?
- How are non-payment and algorithmic stablecoins treated differently?
- How do major foreign stablecoin regimes compare to U.S. rules?
- What are the macroeconomic risks and benefits of regulated stablecoins?
- Practical compliance checklist for stablecoin issuers
- What rulemaking deadlines and implementation steps should you watch?
- A practitioner’s perspective on the most common compliance gaps
- Murphy’s Law Crypto can help you build a defensible compliance program
- Sources
- FAQ
What are the main types of stablecoins?
Not every stablecoin is a payment stablecoin under the law, and that distinction determines which regulatory obligations apply. Three structural categories cover the market.
Fiat-backed stablecoins hold reserves of fiat currency or near-cash equivalents equal to the tokens in circulation. USDC (issued by Circle) and USDT (Tether) are the most widely held examples. Paxos issues USDP under this model and has operated under New York Department of Financial Services (NYDFS) oversight since receiving a BitLicense and trust charter. These are the tokens the GENIUS Act targets as “payment stablecoins” when issued by a permitted issuer, because their reserve structure makes 1:1 backing operationally achievable.
Crypto-backed stablecoins use overcollateralization in other digital assets to absorb price volatility. DAI, governed by MakerDAO, is the canonical example: users lock ETH or other approved collateral at ratios above 100% to mint DAI. The overcollateralization buffer substitutes for fiat reserves, but it introduces liquidation risk during correlated market downturns. DAI does not qualify as a payment stablecoin under the GENIUS Act’s definition because it is not backed by permitted reserve assets held by a licensed issuer.
Algorithmic stablecoins rely on protocol-driven supply adjustments, often using a companion token, to maintain a peg without full collateral backing. The collapse of TerraUSD (UST) in May 2022 — which wiped out roughly $40 billion in market value — is the defining cautionary example regulators cite when explaining why algorithmic designs are excluded from the payment stablecoin category entirely.
The label “payment stablecoin” under the GENIUS Act is not a marketing term. It is a legal classification that triggers the full set of federal obligations described below. Tokens that do not meet the statutory definition remain subject to state law, SEC jurisdiction if they exhibit securities characteristics, or CFTC oversight depending on their structure. For a closer look at where securities law risks intersect with stablecoin design, that boundary deserves separate analysis.
How do stablecoins actually work in practice?
The mechanics matter for regulation because they determine where liability arises and who bears counterparty risk.
When a fiat-backed issuer mints tokens, it accepts fiat currency from a customer, records a corresponding liability on its books, and issues an equivalent number of tokens to a blockchain address. Those tokens circulate freely on-chain without further issuer involvement. The issuer’s obligation is to redeem tokens for the reference fiat currency at par when a holder presents them. That redemption obligation is what makes the reserve requirement non-negotiable: the issuer must hold enough qualifying assets to satisfy every outstanding token simultaneously.
The pegging mechanism is straightforward for fiat-backed designs. Arbitrageurs keep the market price near $1.00 by minting when the price rises above par (buying cheap fiat, minting tokens, and selling at a premium) and redeeming when the price falls below par (buying cheap tokens and redeeming for full-value fiat). This arbitrage loop only functions if the issuer actually honors redemptions, which is why the GENIUS Act’s redemption-at-par requirement is operationally central.
Key mechanics and their regulatory touchpoints:
- Minting: issuer accepts fiat, credits reserves, issues tokens on-chain; triggers reserve and custody obligations
- Pegging: arbitrage-driven price correction; depends entirely on credible, unrestricted redemption
- Redemption: holder presents tokens, issuer burns them and returns fiat; triggers KYC/AML checks at the redemption interface
- On-chain transfers: peer-to-peer transfers between wallets require no issuer involvement but may trigger sanctions screening obligations when the issuer has technical capability to freeze or block
- DeFi interactions: tokens bridged to other chains or wrapped in DeFi protocols create custody chain complexity that auditors flag as a concentration and counterparty risk
The DeFi layer is where regulatory touchpoints multiply. When USDC or USDT is deposited into a lending protocol or bridged to a Layer 2 network, the issuer loses direct visibility into the holder. The GENIUS Act’s sanctions-blocking requirement — which mandates that issuers maintain technical capability to freeze or block transfers to sanctioned addresses — creates a compliance obligation that extends into on-chain infrastructure design, not just off-chain KYC processes.
How does the GENIUS Act regulate stablecoins in the U.S.?
Public Law 119–27 creates a federal category called “permitted payment stablecoin issuer” and establishes the baseline obligations every such issuer must meet. The White House fact sheet accompanying the signing described the law’s objective as establishing a clear federal framework for payment stablecoins — ending the period in which issuers operated under patchwork state rules or no rules at all.
The headline issuer obligations, drawn from the statute:
| Obligation | Statutory Requirement |
|---|---|
| Reserve backing | 1:1 in permitted assets (cash, overnight Treasuries, short repos, qualifying bank deposits) |
| Monthly disclosures | Public disclosure of reserve composition and quantity; independent attestations required |
| Redemption rights | At-par redemption on demand guaranteed to holders |
| Licensing/charter | Federal charter (Comptroller) or certified state regime required |
| AML/BSA compliance | Treated as financial institution; full AML program, SAR filing, customer ID, sanctions screening |
| Interest prohibition | Direct interest payments to holders prohibited |
| Sanctions capability | Technical capability to freeze or block transfers to sanctioned addresses required |
Enforcement authorities named in the statute include the Comptroller of the Currency (primary federal supervisor for nationally chartered issuers), primary federal payment stablecoin regulators for federally chartered depository institutions, and the Secretary of the Treasury for BSA rulemaking. The statute also establishes a Stablecoin Certification Review Committee to evaluate state regime certification requests.
Rulemaking and implementation deadlines are specific. The statute sets rulemaking windows and application-decision timelines that agencies must observe. The OCC’s Bulletin 2026-3 addresses supervisory expectations and chartering pathways consistent with the statute’s amendments. July 2026 marks a key implementation window by which agency rulemaking and application processes are expected to be operational. Issuers that were operating before the statute’s effective date have a defined transition period to come into compliance or obtain authorization.
Consumer protection provisions embedded in the statute include the redemption-at-par guarantee, the prohibition on interest payments (which prevents issuers from taking on the risk profile of a bank without bank-grade supervision), and the monthly disclosure requirement that gives holders visibility into what backs their tokens. The statute does not extend FDIC deposit insurance to payment stablecoins — a critical distinction that issuers must disclose clearly to customers.
Cybersecurity and data privacy obligations flow from the BSA financial-institution treatment and from the sanctions-blocking technical requirement. Issuers must maintain systems capable of identifying and freezing sanctioned addresses, which requires ongoing blockchain monitoring infrastructure. Incident response planning and data security programs are expected elements of a compliant issuer’s operational framework.
How do federal and state roles divide under the $10 billion threshold?
The GENIUS Act does not create a purely federal system. It establishes a tiered structure in which federal supervision applies above a defined size threshold, while certified state regimes may supervise smaller issuers.
The threshold dividing federal and state supervision applies based on issuer size, with larger issuers subject to federal supervision and smaller issuers eligible for certified state regimes.
Key application and licensing mechanics under the statute:
- Application timeline: substantially complete applications must receive a decision within 120 days under the compiled statutory language
- Grounds for denial: regulators may deny applications on safety and soundness, AML, consumer protection, or financial stability grounds; the statute specifies that issuance on an open public network is not by itself a valid ground for denial
- Waiver criteria: the statute provides waiver mechanisms for certain requirements, subject to regulator approval and conditions
- State requirements: a rule of construction in the statute preserves applicable state requirements that do not conflict with federal law, meaning state consumer protection and money transmission rules may still apply alongside the federal framework
- Growth planning: an issuer approaching the $10 billion threshold must plan governance and supervisory transitions in advance; crossing the threshold without the appropriate federal authorization is a compliance failure
NYDFS and the BitLicense remain relevant for issuers operating in New York regardless of the federal framework. Paxos, for example, has held a NYDFS trust charter and operated under NYDFS oversight for its stablecoin products. The BitLicense regime predates the GENIUS Act and continues to apply to virtual currency businesses operating in New York. Issuers must assess whether their New York nexus triggers NYDFS obligations in addition to, or as a substitute for, federal authorization under a certified state regime.
What reserve rules and attestation requirements must issuers meet?
Reserve composition is not discretionary. The statute specifies the permitted asset classes, and industry analysis from Visa confirms that major jurisdictions converge on requiring full backing with high-quality liquid assets (HQLA), currency matching, and bans on direct interest payments to holders.
Permitted reserve assets under the GENIUS Act include cash, overnight Treasury securities, short-term repurchase agreements collateralized by Treasuries, and qualifying bank deposits. The currency-matching requirement means a USD-denominated stablecoin must hold USD-denominated reserves — issuers cannot substitute foreign-currency assets or longer-duration bonds to chase yield.
Monthly disclosures must show the composition and total quantity of reserves, broken down by asset class. Independent attestations — performed by a qualified third party, not management — must accompany these disclosures. The attestation standard is not a full audit, but it requires the attestor to verify that the disclosed reserves exist, are held in the issuer’s name or a qualifying custodial arrangement, and match the outstanding token supply.
Pro Tip: Auditors examining stablecoin reserves focus on three red flags: maturity mismatches (holding longer-duration assets than overnight or short-term), concentration risk (a single custodian or counterparty holding a disproportionate share of reserves), and gaps in the custody chain (reserves held through intermediaries without clear legal title documentation). Issuers should resolve all three before their first attestation, not after. For a detailed look at crypto custody standards and what they mean operationally, that analysis is worth reviewing alongside reserve policy design.
The GENIUS Act’s prohibition on paying direct interest to holders is operationally significant. Issuers earn yield on their reserves but cannot pass that yield directly to token holders. Indirect reward schemes and yield wrappers remain a regulatory gray area that practitioners should treat as high legal risk until regulators issue clarifying guidance.
MiCA comparison on reserves: The EU’s Markets in Crypto-Assets Regulation (MiCA) requires authorized credit institutions or e-money institutions to issue asset-referenced tokens and prescribes minimum bank deposit percentages within the reserve mix. The Brookings analysis notes that MiCA’s stricter issuer-type requirements produced real-world consequences: at least one large stablecoin issuer lost listings on EU-regulated venues after failing to secure MiCA authorization before the compliance deadline.
How do AML, BSA, and sanctions obligations apply to stablecoin issuers?
The GENIUS Act’s treatment of permitted payment stablecoin issuers as financial institutions under the Bank Secrecy Act is one of its most consequential provisions. It is not a soft analogy — it is a statutory designation that triggers the full suite of BSA obligations that banks and money services businesses already carry.
Required AML program elements for permitted issuers:
- Written AML policy covering risk assessment methodology, customer risk tiering, and prohibited activities
- Designated AML compliance officer with authority, resources, and independence to implement the program; see the compliance officer role guide for what that function requires in practice
- Customer Identification Program (CIP) meeting FinCEN standards, including identity verification at onboarding and ongoing monitoring
- Suspicious Activity Report (SAR) filing for transactions that meet reporting thresholds or exhibit red-flag patterns; the SAR filing obligations for crypto businesses are more nuanced than many founders expect
- Sanctions screening against OFAC’s SDN list and other applicable lists, with technical capability to block or freeze transfers to sanctioned addresses
- Recordkeeping meeting BSA retention requirements (generally five years)
- Enhanced due diligence (EDD) for high-value transactions, high-risk customers, and politically exposed persons
The Secretary of the Treasury holds rulemaking authority to tailor BSA requirements to the size and complexity of different issuers, which means smaller issuers may eventually operate under scaled-down program requirements. Until that rulemaking is final, the safest posture is to build a full-scope program and document the risk-based rationale for any calibration decisions.
Pro Tip: The most common AML gap in early-stage stablecoin operations is not the absence of a policy document — it is the absence of a functioning SAR escalation process. Build the escalation workflow, test it with a tabletop exercise, and document the results before regulators ask.
Sanctions compliance for stablecoin issuers extends beyond screening at onboarding. The technical blocking requirement in the GENIUS Act means issuers must be able to act on OFAC designations in near-real time, which requires blockchain monitoring tools capable of flagging sanctioned wallet addresses across the networks where the token circulates. This is an infrastructure requirement, not just a policy requirement.
How are non-payment and algorithmic stablecoins treated differently?
Non-payment stablecoins fall outside the GENIUS Act’s core framework. The statute’s obligations apply specifically to “payment stablecoins” issued by “permitted payment stablecoin issuers” — tokens that do not meet that definition are not subject to the federal licensing, reserve, and AML requirements the statute creates.
That does not mean they are unregulated. Algorithmic stablecoins face heightened scrutiny from state regulators, the SEC (if they exhibit investment-contract characteristics), and the CFTC (if they are used in derivatives markets). The consumer protection focus of state attorneys general has been particularly active in this space following high-profile failures.
The TerraUSD collapse is the regulatory reference point for algorithmic designs. UST maintained its peg through a mint-and-burn mechanism with LUNA, its companion governance token. When LUNA’s price fell sharply, the arbitrage mechanism that was supposed to restore the peg instead accelerated the collapse — a reflexive dynamic that fiat-backed reserve models do not exhibit. Regulators cite this failure explicitly when explaining why algorithmic stablecoins are excluded from the payment stablecoin definition: the absence of real reserves means there is no asset base to satisfy redemptions under stress.
DAI occupies a middle position. Its overcollateralization provides a genuine buffer, but the collateral is volatile crypto assets rather than permitted reserve assets. MakerDAO has introduced real-world asset collateral into DAI’s backing over time, which moves it closer to a reserve-backed model — but it still does not qualify as a payment stablecoin under the GENIUS Act’s current definition. State-level money transmission analysis and potential SEC scrutiny remain the primary regulatory risks for DAI holders and the MakerDAO protocol.
How do major foreign stablecoin regimes compare to U.S. rules?
The dominant axes of difference across jurisdictions are who may issue, what assets count as reserves, and whether passporting or cross-border access is available. The Brookings comparison and Visa’s regulatory analysis both confirm that full 1:1 reserve backing and licensed-issuer requirements are now the global baseline, but the details diverge significantly.
| Jurisdiction | Who may issue | Reserve rules | Notable constraints |
|---|---|---|---|
| United States (GENIUS Act) | Permitted payment stablecoin issuers (federal charter or certified state regime) | Cash, overnight Treasuries, short repos, qualifying bank deposits; 1:1; currency matched | No interest to holders; $10B federal threshold; BSA financial-institution treatment |
| EU (MiCA) | Authorized credit institutions or e-money institutions | 1:1; minimum bank deposit percentage prescribed; currency matched | Passporting across EU/EEA; volume caps for non-EUR stablecoins; delistings for non-authorized issuers |
| Singapore (MAS) | Licensed Major Payment Institution | 1:1 in cash or cash equivalents; daily reconciliation | Redemption within one business day; no interest to holders |
| Hong Kong (HKMA) | Licensed stablecoin issuers under HKMA regime | Full backing; permitted high-quality liquid assets | Retail distribution restrictions; ongoing supervisory review |
| Japan (FSA) | Registered electronic payment instrument issuers | 1:1 in bank deposits or government bonds | Strict AML; limited to yen-denominated or foreign-currency with FSA approval |
The most operationally important differences for an issuer deciding where to seek authorization:
- MiCA’s requirement that issuers be authorized credit institutions or e-money institutions effectively bars most crypto-native companies from issuing directly in the EU without partnering with or acquiring a licensed entity
- MiCA imposes volume caps on non-euro-denominated stablecoins, which creates a structural ceiling on USD stablecoin growth within EU-regulated venues
- Singapore’s one-business-day redemption requirement is stricter than the GENIUS Act’s at-par guarantee, which does not specify a time window beyond “on demand”
- Japan’s restriction to yen-denominated or FSA-approved foreign-currency stablecoins limits USD stablecoin issuance without specific approval
What are the macroeconomic risks and benefits of regulated stablecoins?
Regulation aims to reduce default and spillover risk by requiring liquid, high-quality reserves and transparent monthly disclosures. The Federal Reserve’s analysis of payment stablecoins and cross-border payments identifies a more complex picture: broad adoption of USD-backed payment stablecoins could meaningfully affect demand for liquid assets and complicate monetary policy implementation by shifting reserve balances and altering the transmission of interest rate decisions.
The BIS Working Paper on stablecoin stability models how liquidity and capital thresholds function as regulatory tools. Its key finding: thresholds work best as usable buffers rather than rigid minima, because buffers that issuers can draw on during stress allow for orderly adjustment, while rigid floors that cannot be breached trigger fire sales and amplify the very instability regulators are trying to prevent.
Residual risks that regulation does not eliminate include:
Custody and counterparty risk. Even with 1:1 reserves, the reserves must be held somewhere. A custodian failure, a bank run at a reserve-holding institution, or a legal dispute over title to reserve assets can impair redemption capacity even when the issuer has technically complied with reserve requirements.
Market consolidation. Stricter reserve and transparency rules raise recurring compliance costs. Industry analysts note that these costs likely increase consolidation as smaller issuers struggle to absorb the overhead of monthly attestations, AML programs, and licensing fees. The result may be a market dominated by a small number of large, regulated issuers — which reduces counterparty diversity and creates concentration risk of a different kind.
No deposit insurance. Payment stablecoins are not bank deposits. The GENIUS Act does not extend FDIC insurance to stablecoin holders. A permitted issuer that fails may leave holders with claims against a reserve pool rather than a guaranteed government backstop.
Practical compliance checklist for stablecoin issuers
The most important step is assessing whether your token qualifies as a payment stablecoin under the GENIUS Act’s definition before assuming which regulatory pathway applies. That classification drives every subsequent obligation.
A prioritized compliance readiness sequence:
- Classify the token. Determine whether the token meets the payment stablecoin definition. If it does, federal or certified-state authorization is required. If it does not, identify which other regulatory frameworks apply (state money transmission, SEC, CFTC).
- Evaluate the licensing pathway. Assess whether a federal charter through the Comptroller or a certified state regime is the appropriate route, given current and projected issuance volume relative to the $10 billion threshold.
- Design the reserve policy. Document permitted asset classes, custody arrangements, concentration limits, and currency-matching procedures. Resolve custody chain documentation before the first attestation.
- Establish the monthly disclosure and attestation process. Identify a qualified independent attestor, agree on the scope of procedures, and build the internal reporting infrastructure to produce accurate monthly reserve data.
- Build the AML/KYC program. Draft the written AML policy, designate a compliance officer, implement a Customer Identification Program, establish SAR escalation workflows, and configure sanctions screening. The crypto compliance guide covers program design in detail.
- Implement sanctions-blocking technical capability. Deploy blockchain monitoring tools capable of identifying sanctioned addresses and executing freezes or blocks in near-real time across all networks where the token circulates.
- Prepare consumer disclosures. Draft clear disclosures explaining that payment stablecoins are not FDIC-insured, describing redemption procedures and timelines, and disclosing reserve composition in plain language.
- Develop incident response and cybersecurity protocols. Document procedures for data breaches, system outages, and sanctions-designation events. Test the protocols before they are needed.
Red flags that should trigger immediate legal counsel:
- Outstanding stablecoin supply approaching $10 billion without a federal authorization plan in place
- Reserve assets held through intermediaries without documented legal title
- No independent attestor engaged and no monthly disclosure process operational
- AML program exists on paper but has never been tested or audited
- Sanctions screening limited to onboarding with no ongoing transaction monitoring
Pro Tip: Engage legal counsel before submitting a licensing application, not after receiving a deficiency notice. The benefits of early regulatory counsel are most pronounced at the application stage, where a well-prepared submission can reduce the 120-day decision clock and avoid requests for additional information that reset the timeline.
What rulemaking deadlines and implementation steps should you watch?
The GENIUS Act’s statutory framework is in place, but agency rulemaking is ongoing. The statute sets specific deadlines for agencies to issue rules, and July 2026 marks a key implementation window for application processes and supervisory frameworks to become operational under the compiled statutory language.
Current rulemaking status and watchlist items:
Active rulemaking areas:
- BSA program requirements tailored to stablecoin issuers (Secretary of the Treasury)
- Technical standards for sanctions-blocking and freeze capabilities (Comptroller and Treasury)
- State regime certification standards (Stablecoin Certification Review Committee)
- Foreign stablecoin issuer policies (treatment of non-US issuers serving US customers)
Pending guidance items to monitor:
- Tax characterization of stablecoin minting, redemption, and yield arrangements (IRS/Treasury)
- Conflict-of-interest rules for issuers with affiliated trading or lending operations
- Consumer disclosure format and content standards
- Interoperability standards for cross-chain token transfers and their AML implications
Monitoring strategy: Bookmark the OCC’s news and issuances page, the Federal Register’s GENIUS Act rulemaking docket, the Treasury’s Financial Crimes Enforcement Network (FinCEN) guidance page, and the Federal Reserve’s supervision and regulation publications. The OCC Bulletin 2026-3 is the current baseline for supervisory expectations and should be reviewed alongside the statute text.
For legal teams advising issuers, the most consequential near-term items are the BSA tailoring rules (which will define the minimum program elements for smaller issuers) and the foreign stablecoin policy (which will determine whether non-US issuers serving US customers must obtain domestic authorization or can rely on home-country regulation).
A practitioner’s perspective on the most common compliance gaps
The GENIUS Act’s passage has produced a predictable pattern in the market: issuers that were operating informally scrambling to assess their exposure, and new entrants assuming that a well-drafted whitepaper substitutes for a compliance program. Neither posture survives regulatory scrutiny.
The most frequent gaps seen in practice are not exotic. Issuers often have reserve assets that technically qualify under the statute but are held through custody arrangements that cannot produce clean legal-title documentation on short notice. Monthly disclosure processes exist in concept but have never been run end-to-end, meaning the first attestation will surface data quality problems that should have been resolved months earlier. AML programs are drafted but not operationalized — the compliance officer is named, the policy is signed, but the SAR escalation process has never been tested and the sanctions screening tool has never been configured for the specific blockchain networks the token uses.
Two actions worth taking this week: First, commission an independent review of your custody chain documentation. Ask your custodian to produce the legal-title evidence an attestor would require and identify any gaps before the attestor does. Second, run a tabletop exercise on your SAR escalation process using a realistic scenario — a large redemption from a wallet flagged by a blockchain analytics tool. The gaps that exercise reveals are the gaps a regulator will find.
Murphy’s Law Crypto can help you build a defensible compliance program
Stablecoin compliance is not a checkbox exercise. The GENIUS Act’s requirements — reserve design, monthly attestations, AML program construction, sanctions-blocking infrastructure, and licensing applications — each carry legal risk if implemented incorrectly, and the cost of a deficient application or a failed attestation is measured in lost market access, not just legal fees.
Murphyslawcrypto, founded by Liam Murphy, Esq. (Penn Law, formerly Paul Hastings, Selendy Gay, and McKool Smith), provides practical legal counsel for stablecoin issuers and crypto businesses navigating the GENIUS Act framework. The firm’s work spans compliance program design, regulatory defense, and litigation — including matters involving Celsius, Terraform Labs, and BitMEX. That docket gives the firm direct insight into how regulatory failures develop and what early intervention can prevent.
Services available for stablecoin issuers and crypto businesses:
- Compliance program design and gap assessment against GENIUS Act requirements
- Licensing application preparation and regulator engagement strategy
- AML/KYC program build and independent review
- Regulatory defense and response to agency inquiries
- Fraud recovery litigation when stablecoin-related losses involve misappropriation or fraud
If your reserve documentation, AML program, or licensing pathway has gaps, the time to address them is before a regulator identifies them. Contact Murphyslawcrypto through the firm’s services page or review the crypto compliance consulting practice for an initial assessment of where your program stands.
Sources
Primary sources worth bookmarking for ongoing compliance monitoring:
- Public Law 119–27 119th Congress
- Payment stablecoins and cross-border payments: benefits and implications for monetary policy (Federal Reserve)
- Making stablecoins stable®: can regulation help? (BIS Working Paper)
- What are stablecoins, and how are they regulated? (Brookings)
Bookmark the OCC’s news and issuances page, FinCEN’s guidance portal, and the Federal Register’s GENIUS Act rulemaking docket for ongoing updates as agency rules are finalized through 2026.
This article is general information, not a substitute for advice from a qualified financial advisor. Consult a qualified financial professional about your own circumstances before acting on anything here.
FAQ
What is the GENIUS Act and what does it require?
The GENIUS Act (Public Law 119–27) is the federal law that creates a regulatory framework for payment stablecoins in the United States. It requires permitted issuers to hold 1:1 reserves in permitted liquid assets, publish monthly disclosures with independent attestations, comply with BSA financial-institution obligations, and guarantee at-par redemption to holders.
Who supervises stablecoin issuers under U.S. law?
The Comptroller of the Currency supervises nationally chartered payment stablecoin issuers; issuers below the $10 billion threshold may operate under a certified state regime. The Secretary of the Treasury holds rulemaking authority over BSA requirements, and the Stablecoin Certification Review Committee evaluates state regime certification requests.
Are algorithmic stablecoins regulated under the GENIUS Act?
No. Algorithmic stablecoins do not qualify as payment stablecoins under the GENIUS Act’s definition and fall outside its core framework. They remain subject to state law, SEC oversight if they exhibit securities characteristics, or CFTC jurisdiction depending on their structure and use.
What AML obligations apply to stablecoin issuers?
Permitted payment stablecoin issuers are treated as financial institutions under the Bank Secrecy Act and must maintain written AML programs, Customer Identification Programs, SAR filing processes, sanctions screening, and five-year recordkeeping — the same baseline obligations that apply to banks and money services businesses.
How does U.S. stablecoin regulation differ from MiCA in the EU?
MiCA requires issuers to be authorized credit institutions or e-money institutions, prescribes minimum bank deposit percentages within reserves, and imposes volume caps on non-euro stablecoins. The GENIUS Act permits a broader range of permitted issuers and reserve assets but adds the $10 billion federal supervision threshold and BSA financial-institution treatment that MiCA does not replicate.