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Digital assets have made their way to the forefront of stakeholder and regulator conversations in the US, with fintechs and banks looking to capitalise on the next wave of digital currency innovation as the regulatory framework takes shape.
Payment providers are rethinking cross-border transactions, peer-to-peer (P2P) transfers and e-commerce to accommodate an increase in consumer usage of digital currency.
Following the Guiding and Establishing National Innovation for US Stablecoins (GENIUS) Act’s passage in July 2025, several federal agencies are now tasked with crafting regulations to ensure consistent oversight, systemic risk management and compliance with its core requirements.
The GENIUS Act establishes a two-tier system, creating a federal framework while allowing smaller issuers to opt for state-level regulation if the state’s rules are “substantially similar” to the federal ones. This may lead to regulatory arbitrage, with issuers structuring their offerings and business models to take advantage of more favourable state laws.
For payment providers, understanding the act’s key requirements will be essential to maximising innovation while staying compliant and maintaining consumer trust in 2026.
Why regulate now?
The GENIUS Act signals the federal government’s intent to establish dominance in global finance and crypto-technology, particularly in comparison with other countries’ digital-asset frameworks such as the EU’s Markets in Crypto-Assets (MiCA) Regulation and Brazil’s new virtual assets regulations.
Many companies, such as Circle and PayPal, have already launched or are planning to launch stablecoin products in 2026. Financial institutions should expect rising consumer interest in stablecoins as they become more mainstream, and should consider how best to invest in and develop digital currency products to protect or grow market share.
Regulating for change
Regulators such as the US Department of the Treasury and the Office of the Comptroller of the Currency (OCC) are in the process of formulating rules to give effect to the act’s objectives. They must set the conditions for non-financial companies to issue stablecoins while avoiding excessive concentration of economic power or increasing financial stability risks.
Regulators have been directed to ensure the US dollar’s global reserve currency status, combat illicit activity and “make America the crypto capital of the world”.
Preparing for federal stablecoin regulation
The GENIUS Act is intended to provide a clear framework for regulators to enforce, so that stablecoin issuers and the financial institutions that provide their payment rails can innovate safely.
Under the act, issuers will be treated as financial institutions under the Bank Secrecy Act (BSA) and should expect to be subject to the same anti-money laundering (AML) obligations as banks. These include designating a compliance officer, conducting risk assessments and maintaining an effective customer identification programme. This is likely to increase both technological requirements and compliance costs.
Potential issuers should also prepare for monthly executive attestations and independent audits, as required by the act. In addition, issuers must maintain 100 percent reserve backing of their payment stablecoins with liquid assets, such as US dollars, short-term US Treasuries or demand deposits at insured banks.
Financial institutions that are already issuing stablecoins or thinking about doing so should assess whether they qualify for federal or state licensure, and begin preparing for the application process.
They should evaluate their business models to ensure alignment with the new rules and monitor regulatory developments closely as final rules emerge and enforcement begins.
2026 represents a critical window to shape business strategy around stablecoins. Firms that proactively align operations and compliance frameworks will not only reduce risk, but also gain a competitive advantage in a rapidly evolving digital payments market.
Early investment in governance, technology and regulatory readiness will position issuers to scale securely, build consumer trust and capitalise on the US’s emerging digital currency ecosystem.
