---
type: source
title: "GENIUS Act: First US Stablecoin Regulatory Framework Signed Into Law"
author: "Multiple sources (Congress.gov, Elliptic, CoinDesk, K&L Gates)"
url: https://www.congress.gov/bill/119th-congress/senate-bill/1582
date: 2025-07-18
domain: internet-finance
secondary_domains: [grand-strategy]
format: legislation
status: processed
priority: high
tags: [regulation, stablecoins, GENIUS-Act, US-law, crypto-legislation, digital-assets]
processed_by: rio
processed_date: 2026-03-11
claims_extracted: ["genius-act-creates-first-legal-precedent-distinguishing-payment-stablecoins-from-securities.md", "genius-act-stablecoin-yield-prohibition-creates-structural-tension-with-defi-savings-models.md"]
enrichments_applied: ["Living Capital vehicles likely fail the Howey test for securities classification because the structural separation of capital raise from investment decision eliminates the efforts of others prong.md", "futarchy-based fundraising creates regulatory separation because there are no beneficial owners and investment decisions emerge from market forces not centralized control.md", "internet finance generates 50 to 100 basis points of additional annual GDP growth by unlocking capital allocation to previously inaccessible assets and eliminating intermediation friction.md", "cryptos primary use case is capital formation not payments or store of value because permissionless token issuance solves the fundraising bottleneck that solo founders and small teams face.md"]
extraction_model: "anthropic/claude-sonnet-4.5"
extraction_notes: "First comprehensive US stablecoin law. Two claims extracted: (1) the securities exemption precedent, (2) the yield prohibition tension. Four enrichments to existing regulatory/capital formation claims. The 'stablecoins are not securities' classification is the key legal development — it establishes that crypto-native financial instruments can get purpose-built regulation rather than being forced into securities law. The yield prohibition creates interesting tension with DeFi models and may drive innovation in layered yield products. Agent notes correctly identified this as highest-priority regulatory development for internet finance domain."
---

## Content

**The GENIUS Act (Guiding and Establishing National Innovation for U.S. Stablecoins of 2025)** was signed into law on July 18, 2025 — the first comprehensive US stablecoin regulatory framework.

**Key Requirements:**
- Stablecoin issuers must back tokens with 1:1 reserves of cash or short-term US Treasuries
- Monthly reserve disclosure required
- Stablecoin holders receive legal protections if issuer goes insolvent
- Boundaries on who can issue stablecoins

**Critical Classification:**
- Permitted payment stablecoins are explicitly NOT securities under securities law
- However, issuers are subject to Bank Secrecy Act for AML purposes

**Implementation Timeline:**
- Supervisory agencies must publish implementing rules by July 18, 2026
- Regulations take effect by January 18, 2027 at latest

**Current Tensions (as of March 2026):**
- Stablecoin yield/rewards: The Act barred payment stablecoin issuers from paying interest, but yield allowance has become central to follow-up legislation (Digital Asset Market Clarity Act)
- Senators attempting to unlock stalled Clarity Act with compromise on stablecoin yield (CoinDesk, March 10, 2026)
- FDIC reportedly pushing interpretation that could restrict crypto-native stablecoin models (CoinDesk, Feb 26, 2026)

**Broader Significance:**
- First clear regulatory lane for crypto-native financial infrastructure in the US
- Sets precedent for how other digital assets may be regulated
- The "stablecoins are not securities" classification has direct implications for the broader ownership coin and futarchy-governed vehicle classification

## Agent Notes
**Why this matters:** The GENIUS Act is the single biggest regulatory development for internet finance in the past decade. It creates the first clear lane for stablecoin infrastructure, which is Layer 1 of the internet finance stack. Stablecoin clarity reduces one entire layer of regulatory uncertainty for Living Capital — capital pools can be denominated in regulated stablecoins.
**What surprised me:** The stablecoin yield prohibition. This creates tension with DeFi models that generate yield by deploying stablecoin reserves. If issuers can't pay interest, the "stablecoin as savings account" model is blocked — but yield may be unlocked via the Clarity Act.
**What I expected but didn't find:** Any mention of futarchy-governed or DAO-issued stablecoins. The law assumes centralized issuers. Decentralized stablecoin issuance (e.g., DAI-type models) may need separate treatment.
**KB connections:** Directly updates the regulatory uncertainty discussion in [[Internet finance is an industry transition from traditional finance where the attractor state replaces intermediaries with programmable coordination and market-tested governance]]. The "stablecoins are not securities" classification is relevant to [[Living Capital vehicles likely fail the Howey test for securities classification]] — if the underlying capital pool uses regulated stablecoins, one layer of classification risk disappears. Also connects to the adjacent-possible sequence in identity.md: "stablecoins establishing digital dollar equivalence" is now legally achieved.
**Extraction hints:** Key claim candidate: "The GENIUS Act's stablecoin-are-not-securities classification creates the first legal precedent for distinguishing crypto-native financial instruments from securities, potentially extending to other token types through the follow-up Digital Asset Market Clarity Act."
**Context:** This is actual law, not proposal or thesis. Highest epistemic weight possible for regulatory claims.

## Curator Notes (structured handoff for extractor)
PRIMARY CONNECTION: [[Internet finance is an industry transition from traditional finance where the attractor state replaces intermediaries with programmable coordination and market-tested governance]]
WHY ARCHIVED: First US crypto law signed — directly reduces the "regulatory uncertainty is primary friction" claim's force; updates the attractor state adjacent-possible sequence
EXTRACTION HINT: Focus on what this changes for the regulatory landscape discussion — stablecoin clarity is now ACHIEVED, shifting the primary uncertainty to token/securities classification and DAO legal wrappers


## Key Facts
- GENIUS Act signed into law July 18, 2025
- Implementation rules due by July 18, 2026
- Regulations take effect by January 18, 2027
- Stablecoin issuers must maintain 1:1 reserves in cash or short-term US Treasuries
- Monthly reserve disclosure required
- Payment stablecoins explicitly classified as NOT securities
- Issuers subject to Bank Secrecy Act for AML purposes
- Interest payments to stablecoin holders prohibited
