The landscape of stablecoin legislation in the United States is evolving, with significant developments stemming from two key legislative proposals: the Guiding and Establishing National Innovation for U.S. Stablecoins (GENIUS) Act and the Stablecoin Transparency and Accountability for a Better Ledger Economy (STABLE) Act. Both are moving through Congress as of April 2025, and while there are key differences between the two, both aim to establish comprehensive regulatory frameworks for payment stablecoins, emphasizing issuer qualifications, reserve requirements, and consumer protections.
GENIUS Act Reporting Implications:
Introduced in the Senate on February 4, 2025, the GENIUS Act outlines specific reporting obligations for permitted payment stablecoin issuers:
- Monthly Certifications: Issuers must submit monthly certifications from a public accounting firm to their primary federal payment stablecoin regulator. These certifications attest to the sufficiency and composition of reserves backing the stablecoins, ensuring transparency and financial stability.
- Public Disclosure of Reserve Composition: Issuers are required to publicly disclose the composition of their reserves. This measure aims to enhance consumer confidence by providing clear insights into the assets backing the stablecoins.
- Redemption Policies: Issuers must publicly disclose their redemption policies, detailing the processes and conditions under which stablecoins can be redeemed for fiat currency or other assets. This ensures that consumers are well-informed about their rights and the mechanisms available for redemption.
- Capital and Liquidity Standards: Issuers are obligated to maintain specified standards concerning capital, liquidity, risk management, operations, and information technology. Compliance with these standards is subject to regulatory oversight and reporting.
STABLE Act Reporting Implications:
Circulated as a discussion draft in the House, the STABLE Act proposes similar reporting requirements:
- Reserve Transparency: Issuers must provide detailed disclosures about their reserve holdings, including the types and amounts of assets held to back the stablecoins. This transparency is intended to ensure that the stablecoins are fully backed by high-quality liquid assets.
- Audited Financial Statements: Regular submission of audited financial statements to regulatory authorities is mandated, offering an additional layer of oversight and assurance regarding the issuer’s financial health and compliance with reserve requirements.
- Consumer Protection Disclosures: Issuers are required to provide clear information to consumers about the risks associated with stablecoin usage, redemption rights, and the legal enforceability of claims against the issuer.
Both legislative proposals underscore the importance of robust reporting and transparency to foster trust and stability in the stablecoin market. By imposing stringent disclosure and auditing requirements, they aim to integrate stablecoins into the broader financial system while safeguarding consumer interests.
Proposed Timelines
The GENIUS Act and the STABLE Act propose specific timelines for the implementation of their reporting requirements:
GENIUS Act:
- Effective Date: The Act becomes effective on the earlier of:
- 18 months after its enactment, or (Congress.gov | Library of Congress)
- 120 days following the issuance of final implementing regulations by the primary federal payment stablecoin regulators.(Consumer Financial Services Law Monitor)
- This framework ensures that the Act’s provisions are enforced no later than 18 months post-enactment, with the possibility of earlier implementation contingent upon regulatory action. Congress.gov | Library of Congress
- Rulemaking Timeline: Within one year of enactment, relevant federal and state regulators are mandated to initiate appropriate rulemaking processes to implement the Act. Congress.gov | Library of Congress
- Safe Harbor Provision: A 12-month safe harbor is available from the effective date for certain entities with pending applications to become permitted payment stablecoin issuers. This provision offers transitional relief to facilitate compliance. Congress.gov | Library of Congress
STABLE Act:
While the STABLE Act aligns closely with the GENIUS Act in many aspects, specific details regarding its implementation deadlines are not explicitly detailed in the available information.
Looking Ahead: The Future of U.S. Stablecoin Legislation
Stablecoin legislation in the United States is expected to transform with the GENIUS Act and the STABLE Act. With respect to the legislation in the United States, the GENIUS Act is intended to encourage responsible innovation with a more flexible framework and the STABLE Act is intended to improve customer protection with stricter requirements. It is important to be aware of key differences between the two, though:
Regulatory Approach: The GENIUS Act offers a more flexible framework, allowing both banks and qualified non-bank entities to issue stablecoins under regulatory oversight. In contrast, the STABLE Act imposes stricter requirements, mandating that only federally regulated banks can issue stablecoins.
Legislative Momentum: The GENIUS Act is progressing through the legislative process, aligning with the administration’s goal to establish stablecoin regulations by August 2025. The STABLE Act, while introduced, has not yet seen similar advancement.
At Taxbit, our solutions adapt with the evolving legislation and regulatory frameworks globally, and the GENIUS and STABLE Act are just two examples of legislation in process, specifically for stablecoin issuers. If you are looking for a strategic partner as your organization explores its stablecoin strategy with respect to reporting requirements, reach out to the Taxbit team today.
