- within Compliance and Insurance topic(s)
Overview
Stablecoins have come a long way from being a tool mostly used by crypto traders looking to avoid volatility. Today, they are sitting at the center of digital finance, attracting serious attention from policymakers, banks, and compliance professionals alike. With the passing of two major pieces of legislation — the Guiding and Establishing National Innovation for U.S. Stablecoins Act (GENIUS Act) and the Digital Asset Market CLARITY Act (CLARITY Act) — the U.S. has taken its biggest step yet toward defining how digital assets, especially stablecoins, will be regulated. This article offers a high-level summary of both acts and shares thoughts on what these changes mean for the compliance landscape.
The GENIUS Act: Setting the Rules for Payment Stablecoins
On July 18, 2025, President Donald Trump signed into law the GENIUS Act. It is the first federal law specifically focused on regulating "payment stablecoins," which are digital tokens pegged to a stable value like the U.S. dollar and used for payments and settlement.
Here is what stood out:
1. Dual Licensing Paths
- Federal route: Large issuers (like banks or fintech firms with over $10 billion in outstanding stablecoins) can apply for a license from the Office of the Comptroller of the Currency (OCC).
- State route: Smaller or state-chartered firms can still issue stablecoins under state laws, as long as they meet new federal standards — bringing more consistency nationwide.
2. Reserve Backing Requirements
- Issuers must maintain 1:1 reserves in
highly liquid, low-risk assets. This includes:
- U.S. dollars
- Insured bank demand deposits
- U.S. Treasury securities with maturities of 93 days or less
- Qualified repurchase agreements
3. Transparency Rules
- Issuers must publish a monthly breakdown of reserves on their website.
- CEOs and chief financial officers (CFOs) must personally certify the accuracy of reserve statements under penalty of perjury. That is a big shift toward accountability and internal controls.
4. Anti Money Laundering (AML)/KYC Compliance
- Stablecoin issuers are now considered financial institutions under the Bank Secrecy Act (BSA).
- That means they need to:
- File Suspicious Activity Reports (SARs)
- Conduct Know Your Customer (KYC) procedures
- Maintain Office of Foreign Assets Control (OFAC) screening and compliance
- Have the tech capability to seize, freeze, or burn tokens when legally required
5. Consumer Protections and Legal Clarity
- If an issuer goes bankrupt, customers holding stablecoins have super-priority status in recovery.
- Issuers cannot pay interest on these coins or claim government backing.
- Importantly, payment stablecoins are not classified as securities or commodities, so they avoid Security Exchange Commission (SEC) and Commodity Futures Trading Commission (CFTC) registration requirements — at least for now.
The CLARITY Act: Drawing the Line in the Sand
One day before the GENIUS Act was signed, the House passed the CLARITY Act (July 17, 2025), which is still awaiting final Senate approval. This bill addresses one of the biggest regulatory headaches in crypto — figuring out who is in charge: the SEC or the CFTC.
Here is what it proposes:
1. Digital Asset Classifications
- Digital assets are broken into three groups:
- Digital securities (SEC jurisdiction)
- Digital commodities (CFTC jurisdiction)
- Stablecoins (regulated under frameworks like the GENIUS Act)
- The CFTC gets the lead role, but the SEC keeps fraud enforcement powers even outside of securities.
2. DeFi Gets Some Breathing Room
- Non-custodial developers and truly decentralized protocols do not have to register.
- But if a project handles user funds or acts like a centralized exchange — even if it calls itself decentralized finance (DeFi) — it falls under regulatory supervision.
3. Stronger Consumer Protections
- Crypto exchanges and brokers must register with regulators and segregate customer assets.
- Issuers of digital commodities must provide disclosures — things like roadmaps, risks, and ownership info, especially for early-stage blockchains.
4. Limited Lookbacks and Clearer Rules
- The CLARITY Act narrows the SEC's ability to go after past conduct retroactively, creating more legal certainty for existing crypto projects.
- It also expands the BSA's definition of "financial institution" to cover more players — especially those dealing in digital commodities.
A Practical Compliance Landscape
Both acts will significantly raise the bar for compliance teams — especially those in fintech, crypto exchanges, or banking institutions exploring stablecoin adoption.
New Compliance Requirements to Prepare For:
| Area | Requirement |
|---|---|
| Licensing | Federal or state-level application process depending on the size and structure of the issuer |
| Reserves and Disclosures | Monthly reserve audits and public posting; executive certification under oath |
| Internal Controls | Systems to track, freeze, and burn tokens as required by law |
| AML/KYC Programs | Enhanced onboarding, SAR reporting, OFAC screening; foreign issuers must meet U.S. standards |
| DeFi Compliance Review | Clear policies on custody, protocol control, and decentralization claims |
| Consumer Protection and Legal Clarity | Planning for bankruptcy scenarios, customer fund segregation, and anti-fraud monitoring |
| Cross-Regulatory Coordination | Ability to manage oversight by multiple agencies (OCC, CFTC, FinCEN, SEC as needed) |
If your firm has not yet conducted a gap analysis, now is a good time to begin.
Conclusion: A Big Step, Not the Final One
The GENIUS and CLARITY Acts do not answer every question, but they do set much-needed ground rules in what is often felt like the Wild West of digital assets. For compliance professionals — especially those of us who have been following the space with interest — this marks a turning point. We are no longer operating in a vacuum of "wait and see." There is real legislative guidance to build on, backed by clear requirements and real penalties.
Personally, as someone who has watched this field grow from speculative beginnings to the edges of regulated finance, it is exciting to see stablecoins — and digital assets more broadly — finally getting a regulatory framework that balances innovation with responsibility.
There is still more to come: final Senate approval of the CLARITY Act, implementation guidance from agencies, and likely push-back from parts of the crypto community. But for now, compliance teams have something to work with. And that is a big leap in the right direction.
Sources:
https://www.ccn.com/education/crypto/genius-act-us-senate-stablecoin-legislation/
https://www.nytimes.com/2025/07/17/technology/crypto-industry-milestone-legislation.html
https://www.onesafe.io/blog/clarity-act-cryptocurrency-future
https://www.cnbc.com/2025/06/17/genius-stablecoin-bill-crypto.html
https://www.fincen.gov/resources/statutes-regulations/bank-secrecy-act
https://home.treasury.gov/policy-issues/office-of-foreign-assets-control-sanctions-programs
https://www.cftc.gov/digitalassets
https://www.sec.gov/spotlight/cybersecurity-enforcement
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
