The GENIUS Act for Asset Managers: What to Know

August 22, 2025

Key Takeaways

Passed with broad bipartisan support, the GENIUS Act establishes a comprehensive regulatory framework for “payment stablecoins,” a type of digital asset that is designed to maintain a stable value. A core feature of a payment stablecoin is its primary use case: a means of payment or settlement rather than investment.
Payment stablecoin issuers will be prohibited from paying any form of interest or yield to stablecoin holders and will be required to maintain identifiable reserves backing their outstanding stablecoins on at least a 1:1 basis. The Act also imposes bank-like prudential regulatory and consumer protection standards.
The Act clarifies that payment stablecoins are neither “securities” nor “commodities” for purposes of the U.S. federal securities and commodities laws and that a “permitted payment stablecoin issuer” is not an “investment company” for purposes of the Investment Company Act of 1940.
The GENIUS Act is expected to accelerate the growth of stablecoins and adoption of blockchain-based payment systems in the United States and across borders. The Act may also encourage more industry initiatives to incorporate blockchain technology into the wider financial services industry.
While the Act could create potential competitive pressures within certain segments of the financial services industry, the Act is expected to create opportunities, including for asset managers that seek to manage stablecoin reserve assets.
Fund managers may also benefit because the GENIUS Act permits a payment stablecoin issuer to maintain its reserves in a registered government money market fund that invests solely in the type of eligible reserve assets enumerated in the Act.

Introduction

Despite significant growth in the stablecoin market over the last five years, stablecoins and stablecoin issuers have generally operated outside of an overarching regulatory framework in the United States. During this time, U.S. policymakers have debated the merits and risks of stablecoins and their proper regulatory framework.¹The Guiding and Establishing National Innovation for U.S. Stablecoins Act (GENIUS Act or Act), which was signed into law on July 18, 2025, with broad bipartisan support, is intended to address a perceived regulatory gap for stablecoins.² The Act partly addresses President Trump’s promise to make the United States the “crypto capital of the world” and follows a number of significant executive, legislative and regulatory developments impacting U.S. crypto regulation and policy since the beginning of 2025, including the recent policy recommendations from the President’s Working Group on Digital Asset Markets and the recent announcement of “Project Crypto” from the Securities and Exchange Commission (SEC).³

The GENIUS Act establishes a comprehensive regulatory framework for “payment stablecoins,” a type of stablecoin to be used as a means of payment or settlement. Payment stablecoin issuers will generally be limited to: (1) certain U.S. qualified persons subject to federal or, for certain issuers, state supervision; or (2) certain non-U.S. qualified persons registered with the Office of the Comptroller of the Currency (OCC) and subject to a comparable regulatory and supervisory regime (as determined by the Treasury Secretary). Among other provisions, the Act imposes licensing requirements on issuers and subjects them to bank-like prudential regulatory and consumer protection standards that are designed to promote transparency into reserve assets and mitigate a variety of perceived risks. Importantly, payment stablecoins will not include so-called “algorithmic” stablecoins, and payment stablecoin issuers will be prohibited from paying any form of interest or yield to stablecoin holders.

The GENIUS Act will take effect on the earlier of: (1) January 18, 2027 (18 months after the enactment of the Act); or (2) 120 days following the issuance of final regulations implementing the Act (see Appendix A for a timeline of selected key dates).

In this Dechert OnPoint, we provide a brief overview of the stablecoin market and discuss the key features of the GENIUS Act and implications for asset managers.