The draft Guaranteeing Economic Stability Through Trusted Institutions (GENIUS) Act has been introduced to radically reshape U.S. stablecoin oversight, prioritizing banking integration while leaving key decentralized finance (DeFi) regulatory questions unresolved. This comprehensive framework incentivizes stablecoin issuers to obtain national banking charters through a streamlined approval process offered by the Office of the Comptroller of the Currency (OCC).
Among sweeping changes, the legislation prohibits stablecoin issuers from offering yield or financial incentives to users—a move directly affecting established practices like Circle’s USDC rewards program. Simultaneously, all issuers must maintain 1:1 reserve backing for their tokens and publicly disclose the composition of these reserves quarterly.
The act establishes a multi-agency oversight system involving the Treasury Department, Federal Reserve, OCC, FDIC, and NCUA, while permitting smaller issuers to operate under state-level regulation. Non-U.S. and unapproved domestic issuers face prohibitions or stringent compliance requirements after a three-year transition period. Notably, stablecoin activity in DeFi protocols remains unaddressed, creating ambiguity until complementary legislation such as the CLARITY Act provides clarification.