The GENIUS Act is the United States federal statute for payment stablecoins: Public Law 119-27, the Guiding and Establishing National Innovation for U.S. Stablecoins Act, signed July 18, 2025. It defines a payment stablecoin, restricts who may issue one in the country, sets the reserve and redemption rules the issuer must follow, and gives digital asset service providers a three-year window to stop offering stablecoins from anyone else. It is an issuer law. It regulates the company behind the dollar token, and only indirectly the businesses that move the token.
That indirect effect is what a payments operator has to understand, because the act changes which stablecoins may be offered to US persons after the transition, without changing the money transmission rules that already applied to anyone transferring value for others. This post takes the act section by section, gives the dates, and marks what it does not do. It describes the statute as written; whether a given company or token is caught is a question for counsel.
What counts as a payment stablecoin
Section 2(22) of Public Law 119-27 defines a payment stablecoin as a digital asset that is, or is designed to be, used as a means of payment or settlement, whose issuer is obligated to convert, redeem or repurchase it for a fixed amount of monetary value, and who represents that it will maintain a stable value relative to that fixed amount. National currency, bank deposits (including deposits recorded on a distributed ledger) and securities are excluded.
The definition catches USDC and USDT as used in payments. It does not catch a tokenised bank deposit, which stays a deposit, and it does not catch an algorithmic token whose issuer promises nothing. The USDC explainer and the stablecoin explainer cover how the two main dollar tokens are structured, which is what the definition tests.
Who may issue one in the United States
Section 3(a) makes it unlawful for any person other than a permitted payment stablecoin issuer to issue a payment stablecoin in the United States. Section 2(23) defines a permitted issuer as a person formed in the United States that is one of three things: a subsidiary of an insured depository institution approved under Section 5, a Federal qualified payment stablecoin issuer, or a State qualified payment stablecoin issuer.
Section 4(c)(1) lets a State qualified issuer with no more than 10 billion dollars in consolidated outstanding issuance opt for a State regime, provided that regime is substantially similar to the federal framework, under principles the Treasury Secretary sets. Above that figure, Section 4(d) gives the issuer 360 days to move to the federal framework or stop issuing new tokens. Section 6 covers the supervision of federal qualified issuers and bank subsidiaries, and Section 7 gives State regulators supervisory authority over State qualified issuers.
Section 17 amends the securities and commodities statutes so that a payment stablecoin issued by a permitted issuer is not a security or a commodity, and a permitted issuer is not an investment company. That closes the classification question that had been open since the first dollar tokens appeared.
What backs the token and what the issuer may not do
Section 4(a)(1)(A) requires identifiable reserves on an at least 1 to 1 basis. The reserve may consist of US coins and currency or balances at a Federal Reserve Bank, demand deposits or insured shares at an insured depository institution, Treasury bills, notes or bonds with a remaining maturity of 93 days or less, overnight repurchase agreements backed by such Treasuries, overnight reverse repurchase agreements collateralised by Treasuries and centrally cleared or tri-party, and a few further categories in the same list.
Section 4(a)(11) prohibits a permitted issuer or a foreign issuer from paying the holder any form of interest or yield solely for holding, using or retaining the stablecoin. A stablecoin issuer that wants to share reserve income with holders cannot do it through the token.
Section 10 restricts who may custody the reserve, the stablecoins used as collateral or the private keys used to issue: a person subject to supervision by a federal or state regulator with the relevant authority. Section 11 sets the treatment of holders in an insolvency of the issuer. Section 12 directs the federal regulators to assess interoperability standards.
The consequence for a business holding a balance is that the reserve composition is now a legal requirement rather than a disclosure the issuer chooses to make, and the issuer's monthly attestation becomes something a treasury team can read against Section 4.
The dates that decide when any of this applies
Section 20 sets the effective date at the earlier of 18 months after enactment, which is January 18, 2027, or 120 days after the primary federal regulators issue final implementing regulations. Section 13 gives those regulators, the Treasury and the State regulators one year from enactment, that is until July 18, 2026, to promulgate regulations through notice and comment.
Section 3(b)(1) sets the separate date for service providers. Beginning three years after enactment, July 18, 2028, it is unlawful for a digital asset service provider to offer or sell a payment stablecoin to a person in the United States unless the stablecoin is issued by a permitted issuer, subject to the safe harbors in Section 3(c) and the foreign issuer exception in Section 18.
So the practical timeline for a payments business runs in two steps. The issuer rules bite by January 2027 at the latest, sooner if the rules are final earlier. The restriction on which tokens may be offered to US persons bites in July 2028. Between those dates a provider can keep offering a token whose issuer is not yet permitted, and after the second date it cannot.
Foreign issuers and the dollar stablecoin used from Latin America
Section 2 defines a foreign payment stablecoin issuer as an issuer organised or domiciled outside the United States that is not a permitted issuer. Section 3(b)(2) makes it unlawful for a digital asset service provider to offer a foreign issuer's stablecoin in the United States unless that issuer can and will comply with lawful orders and any reciprocal arrangement under Section 18.
Section 18(a) lifts the Section 3 prohibitions for a foreign issuer that meets four conditions: it is regulated in a jurisdiction the Treasury Secretary finds comparable, including on the Section 4(a) reserve rules; it is registered with the Comptroller of the Currency; it holds reserves in a US financial institution sufficient for the liquidity demands of US customers, unless a reciprocal arrangement says otherwise; and its home country is not under comprehensive US sanctions or a jurisdiction the Treasury Secretary has determined to be of primary money laundering concern.
For a company in Brazil or Mexico that receives USDC from a US counterparty, this section is the one that decides whether the token it receives will still be offerable in the United States after July 2028. The token's issuer either becomes a permitted issuer, or qualifies as a comparable foreign issuer under Section 18, or the US provider on the other side of the flow has to stop offering it.
What the act does not regulate
It does not license the company that moves the stablecoin. Section 2 defines a digital asset service provider as a person that, for compensation, exchanges digital assets for monetary value, exchanges them for other digital assets, transfers them to third parties, acts as custodian or participates in issuance services. The act uses that definition to impose the Section 3(b) restriction and nothing else. The registration that reaches those providers is the existing money services business one with FinCEN, which we cover in FinCEN MSB registration for stablecoin businesses.
It does not replace state money transmission law. A company transmitting value for US persons still needs the state licences or a licensed partner, and the act does not preempt that.
It does not create a US version of a VASP (virtual asset service provider, the FATF term) authorisation. The VASP explainer compares the US approach with the licensing regimes in Brazil and the European Union, where the provider is the licensed party.
It does not tell a company outside the United States which stablecoin to use. A Mexican importer paying in USDC is not in the act's scope. Its US counterparty's provider is.
What this looks like for a client running USD flows with Lumx
Lumx is stablecoin payments infrastructure for businesses that move money between Latin America and the rest of the world: one API to collect, hold, convert, and pay out in BRL, MXN, COP, USD, EUR, and GBP or in USDC and USDT, over local rails such as PIX, SPEI, PSE, ACH, FEDWIRE, SEPA, and Faster Payments, with SWIFT and on-behalf-of payments and collections (POBO and COBO) in USD, EUR, and GBP, plus named virtual accounts, custodial wallets, and KYB/KYC built in.
In the United States the entity is Lumx US OP LLC, an MSB (money services business, the FinCEN registration category) registered with FinCEN. Lumx is not a state-licensed money transmitter, and regulated money transmission is conducted through licensed financial institution partners. That wording is on the supported countries page and it is the whole of the regulatory status we claim in the US.
A client collecting dollars from a US customer into a named virtual account and converting to USDC sees an ACH or FEDWIRE credit, a conversion, and a stablecoin balance in its custodial wallet; the USD to USDC corridor page shows that flow. What the act changes for that client is the issuer side: after the Section 3(b) date only tokens from permitted or Section 18 issuers may be offered to US persons, so the token we convert into has to be one whose issuer is on that path. The question a client should put to any provider, us included, before choosing a token for a US corridor is where the issuer of that token stands under Sections 5, 7 and 18.
I have watched compliance teams read the act as a licence for the whole flow and relax. That is the wrong reading. The act licenses the issuer, the transfer still sits under the Bank Secrecy Act and state law, and the only thing that changed for the provider is which tokens it may offer after July 2028. We put those two questions on separate lines in every US compliance conversation, issuer status under the act on one, provider registration under FinCEN and state law on the other, so nobody walks out with the first line covering the second.
KYB (know your business, the verification of a company and its owners) and KYC (know your customer, the verification of an individual) run before a US collection is enabled, because the obligations of an MSB under the Bank Secrecy Act attach to the provider regardless of anything in the act.
Methodology and sources
Public Law 119-27 was read on govinfo.gov on September 24, 2026, in the enrolled text as published by the Government Publishing Office, and the section numbers above come from that text. The dates in this post are computed from the enactment date of July 18, 2025 printed in that text and the periods in Sections 3, 13 and 20; whether final regulations have shortened the Section 20 date should be checked against the Federal Register before relying on January 2027. Lumx's US status is stated as it appears on lumx.io on the same date. This is a description of the statute, not advice on what a company must do under it.
Verified on September 25, 2026. Operational context, not legal, tax, or investment advice. Public Law 119-27 (GENIUS Act) checked against govinfo.gov on September 24, 2026.
Cover photo: Evgenii Dzhivelikian on Unsplash.
What is the GENIUS Act in one sentence?
It is Public Law 119-27, signed July 18, 2025, and it defines a payment stablecoin and restricts issuance in the United States to permitted issuers. Those issuers must hold at least 1 to 1 reserves in cash and short Treasuries, and after three years service providers may no longer offer stablecoins from anyone else to US persons.
When does the GENIUS Act take effect?
Section 20 sets the effective date at the earlier of 18 months after enactment, January 18, 2027, or 120 days after final implementing regulations. The restriction on offering non-permitted stablecoins in Section 3(b) starts three years after enactment, July 18, 2028.
Does the GENIUS Act apply to USDC?
USDC fits the payment stablecoin definition in Section 2(22). Whether it may be offered to US persons after July 2028 depends on its issuer being a permitted issuer under Section 2(23) or a comparable foreign issuer under Section 18, which is a status the issuer obtains and the market can check.
Does a payments company need a licence under the GENIUS Act?
The act licenses issuers, not service providers. A company that transfers or exchanges stablecoins for others remains under the FinCEN money services business rules and state money transmission law, and the act adds only the Section 3(b) restriction on which tokens it may offer.
Can a stablecoin pay interest under the GENIUS Act?
No. Section 4(a)(11) prohibits a permitted or foreign issuer from paying holders any interest or yield solely for holding, using or retaining the stablecoin.
