The Genius Act is set to reshape the landscape for stablecoin payments in the United States. Signed into law by President Donald Trump on 18 July 2025, the statute introduces the first unified regulatory framework for dollar-backed digital tokens.
For a deeper understanding of the Act and its implications, watch our expert Agnieszka Hołownia-Niedzielska interview Dr Katharina Lasota Heller on YouTube. The 20-minute session explores licensing requirements, reserve obligations, issuer eligibility and cross-border compliance. It clarifies what the law does and doesn’t cover—and why that matters.
To unpack the implications of the new law, we invited Dr Katharina Lasota Heller LLM – Managing Partner at Lexcellence Legal Services – to share her expert perspective. Her insights outline the five key takeaways.
The Genius Act covers payment stablecoins only
“Genius Act addresses stable payment coins only, backed by traditional reserves. So Genius Act does not concern algorithmic stablecoins, does not really concern any kind of tokenized deposit, which might be held by U.S. banks or other banks. It’s just basically about issuing stablecoins that Agnieszka, me, or whoever can buy in order to purchase another coin, which is issued on distributed ledger technology. And issuers are actually only companies who are licenced to issue stablecoins.”
~ Dr Katharina Lasota Heller LLM
The law excludes algorithmic designs, tokenised deposits and security tokens. It defines what qualifies as a fully redeemable, dollar-backed payment token.
You need a federal or state license
The Act creates a new category: Permitted Payment Stablecoin Issuer (PPSI). Banks, credit unions and eligible fintechs may apply. Foreign firms must hold reserves in a U.S. bank and register with the Office of the Comptroller of the Currency.
Full‑reserve rules protect holders
“In order to issue a stablecoin, the company issuing has to have a reserve on the balance sheet, which actually corresponds with the number of issued stablecoins. So if somebody is issuing 50,000 stablecoins, it has to have 50,000 U.S. dollars in reserves.”
~ Dr Katharina Lasota Heller LLM
Permitted reserves include cash, demand deposits or Treasury bills with maturities of up to 93 days. Audits, conducted monthly, must confirm that circulating tokens match available reserves.
“The reserves must be as liquid that they will be possible to be sold and liquidated within 93 days. So something that might be sold very swiftly, very quickly, something very secure. Let’s say U.S. state bonds, something like that or cash. They have to have these reserves. And not only we believe, but they actually need to provide audits and reporting on them that they’re keeping them.”
~ Dr Katharina Lasota Heller LLM
Redemption at par is mandatory
Holders may demand one‑for‑one cash redemption at any time. The rule aims to keep tokens trading at face value and anchors stablecoin payments as cash‑equivalent instruments rather than speculative assets.
Compliance scope is broad
PPSIs must meet Bank Secrecy Act (BSA) requirements, including customer due diligence, reporting of suspicious activity and sanctions checks. Yield payments are not permitted. In case of insolvency, stablecoin holders have first claim on the reserves.
Summary of the Genius Act
The Genius Act sets a clear, enforceable path for stablecoin payments: licensing, full‑reserve backing, monthly audits, redemption at par and Bank Secrecy Act compliance. Early movers that align governance and liquidity policies now will be ready when applications open. Dr Lasota Heller leaves us with a pragmatic reminder: “Genius Act is bringing security, is bringing a good move.” In coming weeks we will explore practical implementation steps, including reserve management playbooks and onboarding checklists—stay tuned.
Preparing for Genius Act compliance?
Need an execution plan for Genius Act compliance as well as the tech to run stablecoin payments? Espeo Software can help. Our Blockchain for Payments team designs cloud, custody and ledger architecture that meets regulator standards, links effortlessly to banks and merchants, and settles value 24 hours a day at network‑fee cost. We model token flows, build liquidity ramps and hard‑wire Know‑Your‑Transaction and Travel Rule data into every hop, so you stay audit‑ready from day one. Talk with us to turn the Genius Act’s legal clarity into a production‑grade payment rail your users will trust.
