Part 1 of “Stablecoins After the GENIUS Act: A Practical Legal Guide for Businesses”
The GENIUS Act has changed the planning process for businesses that issue, distribute, or use stablecoins. Founders now have a federal framework to evaluate, while exchanges and payment companies must consider how that framework affects the tokens they support and the services they provide.
The immediate question is practical: What does your business need to change, and when? The answer depends on its activities. Issuing a stablecoin, processing customer payments, holding tokens in treasury, and accepting payment for services are different functions. They should not be treated as a single regulatory category.
Our earlier GENIUS Act overview introduced the legislation following its passage. Businesses now need to move from understanding the framework to evaluating their operations, counterparties, and implementation deadlines.
The first distinction concerns timing. The GENIUS Act, enacted July 18, 2025, does not give every business the same three-year transition period. Section 20 generally makes the Act effective on the earlier of 18 months after enactment or 120 days after the primary federal payment stablecoin regulators issue final implementing regulations. Treasury has identified January 18, 2027 as the expected effective date. A separate restriction on certain offers and sales begins July 18, 2028.
| Date | Business significance |
|---|---|
| January 18, 2027 — expected general effective date | Businesses planning U.S. payment stablecoin issuance should prepare for the issuer-approval framework and applicable requirements, subject to relevant exceptions or regulatory relief. |
| July 18, 2028 — separate distribution deadline | Digital asset service providers generally become subject to the restriction on offering or selling payment stablecoins to U.S. persons unless the issuer qualifies under the statutory framework, including applicable foreign-issuer provisions and exceptions. |
Treasury’s August 2026 proposal expressly distinguishes these dates. The later deadline is not permission to disregard existing law or other GENIUS Act provisions taking effect sooner.
Implementation also remains a combination of enacted requirements and regulatory proposals. The OCC announced its principal proposal in February 2026. The Federal Reserve announced proposals on September 24, 2026 addressing supervised issuers, reserves, capital, risk management, custody, and applications. Proposed operational requirements should inform preparation, but businesses should identify them accurately as proposals.
Some implementation measures are already effective. An interim final rule effective September 30, 2026 established forms and procedures for state regulatory regime certifications. The rule separately conditions acceptance of certifications on information-collection approval and a Treasury notification. Businesses considering state supervision should therefore verify the actual status of the relevant state’s process.
Before choosing a regulatory pathway, a company should identify precisely what it does.
Issuers face the central approval and prudential requirements. The statutory definition of a payment stablecoin focuses on payment or settlement use, an issuer’s obligation to redeem or repurchase for a fixed monetary value, and representations or expectations of stable value. A token’s label does not replace that analysis. Tokenized deposits and other excluded products require separate consideration.
Distributors and intermediaries face different questions. The Act’s definition of a digital asset service provider encompasses specified business activities involving exchange, transfers, custody, and issuance-related financial services, with express exclusions. A platform can have obligations concerning the stablecoins it offers even though another company issues them.
Businesses holding stablecoins should evaluate redemption access, reserve arrangements, custody, freezes, and counterparty exposure. Those issues matter whether the tokens support operating expenses, settlement, or treasury management.
Businesses accepting stablecoins should distinguish payment for their own goods or services from moving funds for others. A consultant receiving tokens against an invoice presents a different analysis from a platform collecting customer funds and routing them to third-party merchants.
That distinction also matters under existing regulation. FinCEN’s guidance on virtual-currency business models addresses when activities constitute money transmission. GENIUS Act planning should accompany a review of applicable federal and state obligations. It should not replace that review with an assumption that using a regulated stablecoin makes the entire business exempt.
For prospective issuers, choosing the right structure is an early decision. The Act provides pathways involving approved subsidiaries of insured depository institutions, federally qualified issuers, and state-qualified issuers. Eligible state-qualified issuers with no more than $10 billion in consolidated outstanding issuance may opt for state regulation under a substantially similar regime. That threshold concerns outstanding issuance, not the company’s total assets.
The framework also requires identifiable reserves backing outstanding payment stablecoins at least one-to-one, limits eligible reserve assets, requires redemption policies, and establishes reserve reporting requirements. These obligations affect banking relationships, liquidity management, accounting, and customer documentation.
A commercial partner can help perform these functions, but the agreement must explain who is responsible. A branded stablecoin arrangement should identify the legal issuer, who controls minting and burning, who owes redemption obligations, and what happens if the partnership ends.
For businesses preparing now, four workstreams deserve attention:
- Document the movement of funds and control. Map who receives fiat, holds tokens, controls private keys, initiates transfers, and approves redemptions. Include outsourced providers. This gives counsel and compliance teams a reliable basis for evaluating the business.
- Review counterparties and customer rights. Obtain the issuer’s legal identity, regulatory status, reserve disclosures, and redemption terms. Determine whether your company can redeem directly or must use an intermediary. Contracts should address service interruptions, freezes, termination, and changes in law.
- Assign compliance responsibilities. Decide who conducts customer identification, sanctions screening, monitoring, reporting, and escalation. Treasury’s April 2026 proposed rule on illicit finance addresses the Act’s treatment of permitted issuers under the Bank Secrecy Act and its sanctions-compliance requirements. Outsourcing services should come with clear oversight and information-sharing arrangements.
- Review product economics and marketing. Examine rewards, yield arrangements, redemption promises, and descriptions of regulatory protection. Section 4(a)(11) prohibits covered issuers from paying interest or yield solely in connection with holding, using, or retaining a payment stablecoin. Third-party arrangements require their own analysis; changing the name of a payment does not resolve its legal treatment.
The resulting implementation plan should identify owners, dependencies, and decision dates. A payment company may need to renegotiate a provider agreement before changing its customer terms. An issuer may need banking and reserve arrangements before submitting a complete application. Those dependencies should be identified before a deadline forces rushed decisions.
Does every business accepting stablecoins need issuer approval?
No. Accepting an existing token as payment does not, by itself, make the recipient its issuer. Additional activities can create separate obligations.
Can businesses wait until July 2028?
Not as a general rule. That date concerns a specific offer-and-sale restriction. The expected general effective date is earlier, and existing legal obligations must be assessed now.
Does partnering with a regulated issuer cover the entire product?
Not automatically. The partner’s authorization and your company’s activities must be analyzed separately, including custody, transfers, customer relationships, and contractual responsibility.
Kelman PLLC advises digital-asset businesses on MSB, BSA, and AML issues. Companies preparing a stablecoin launch or integrating stablecoin payments can contact the firm to discuss their business model, applicable requirements, and implementation priorities.
Attorney Advertising. This article provides general information, not legal advice. Contacting the firm does not establish an attorney-client relationship.