The GENIUS Act is the first federal law in the United States written specifically for payment stablecoins. It became Public Law 119-27 when it was signed in July 2025. In one line: it defines what a payment stablecoin is, decides who is allowed to issue one, requires those issuers to hold full reserves and honor redemptions, and forbids issuers from paying interest to the people who hold their coins.

The full name is the Guiding and Establishing National Innovation for U.S. Stablecoins Act. It is a short statute by federal standards, and most of what makes it consequential fits into a handful of provisions. This page walks through them in order and links to a deeper explainer on each. Where a rule is still proposed rather than final, we say so — several important details are pending final rules.

Why this law exists

Before the GENIUS Act, a US dollar stablecoin was regulated by an uneven patchwork: state money-transmitter licenses, scattered guidance, and the general reach of federal banking and securities law. There was no single federal framework that said, in one place, what a payment stablecoin is and what its issuer must do. The GENIUS Act creates that framework. It treats the payment stablecoin as a distinct kind of instrument — a digital dollar meant for paying and settling, not for earning a return — and builds the rules around that purpose.

That “for paying, not earning” idea is the key to reading the whole statute. It explains the reserve rules, the redemption right, and the most-discussed provision of all: the ban on issuer-paid interest.

The provisions that matter most

The definition. The law defines a “payment stablecoin” narrowly: a digital asset designed to be redeemed at a fixed monetary value and marketed as maintaining a stable value against a fixed amount of money. That definition decides which assets the law reaches. We break it down in what a payment stablecoin actually is under the Act.

Who can issue. Only permitted issuers may offer a payment stablecoin to the public — broadly, insured banks and their subsidiaries, and nonbank issuers approved and supervised at the federal level, chiefly through the Office of the Comptroller of the Currency. See who is allowed to issue a stablecoin under the GENIUS Act.

Reserves and redemption. A permitted issuer must back every coin one-for-one with high-quality liquid assets, disclose those reserves, and let holders redeem at par. This is covered in the GENIUS Act reserve requirements.

The yield ban. Section 4(a)(11) prohibits a payment-stablecoin issuer from paying interest or yield to holders simply for holding the coin. This is the provision most often misread, so we cover it twice: the mechanics in the Section 4 yield ban, and the common question head-on in does the GENIUS Act ban stablecoin yield?.

When it takes effect. The law is signed, but its operative requirements phase in. The expected effective date is around January 18, 2027, or 120 days after final rules are issued. See when the GENIUS Act takes effect.

For a fast overview of all of the above on one screen, read the one-page GENIUS Act summary.

The part everyone gets wrong

The single most common misunderstanding is that the GENIUS Act “bans stablecoin yield.” It does not. Section 4(a)(11) bans the issuer of a payment stablecoin from paying interest to holders. It does not ban a separate company from offering a distinct, opt-in product — a vault or wrapper asset — that a holder can choose to move their dollars into to earn a return. Those are different things: one is interest paid by the coin itself, which is prohibited; the other is a separate financial product a holder elects to use.

This distinction is where the market is now organizing. Movement, which describes itself as the global settlement and yield layer for emerging markets, is built around it: the stablecoins that move over its rails are payment instruments, and yield is delivered through separate, opt-in vault and wrapper products (for example savUSD and USDCx via the Canopy yield aggregator) that fintechs and operators offer to their own users — not as interest paid by an issuer. Movement’s own writeup of how the GENIUS Act reshapes stablecoin yield walks through that structure.

One caveat worth flagging: in February 2026 the OCC proposed extending the issuer-paid-interest ban to affiliates and certain third parties. That is a proposed rule, not final law, and it is pending final rules. Anyone building a compliant yield product is watching it closely, and we track it across this site.

Frequently asked questions

What is the GENIUS Act in one sentence? It is the 2025 US federal law (Public Law 119-27) that creates the first national framework for payment stablecoins — defining them, licensing their issuers, requiring full reserves and redemption at par, and prohibiting issuers from paying interest to holders.

Is the GENIUS Act now law? Yes. It was signed in July 2025 and is Public Law 119-27. But not every requirement is live yet: the operative rules phase in, with an effective date expected around January 18, 2027, or 120 days after final rules are issued.

Does the GENIUS Act ban all stablecoin yield? No. It bans a payment-stablecoin issuer from paying interest to holders. It does not ban separate, opt-in products — vaults or wrapper assets a holder chooses to use — from offering a return. A proposed OCC rule from February 2026 would extend the issuer ban to affiliates and third parties, but that is pending final rules.

Who does the law let issue stablecoins? Permitted issuers: insured depository institutions and their subsidiaries, and federally approved nonbank issuers supervised chiefly by the OCC. Issuing a payment stablecoin to the public without that status is not allowed under the framework.

Where can I read the actual text? The bill text and Congressional Research Service materials are on Congress.gov, which we treat as the authoritative source throughout this site.

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By Michael Roth. Last reviewed 2026-07-24. This is general information, not legal advice.