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1 1 (March 10, 2025)

handle is hein.crs/govesrl0001 and id is 1 raw text is: An Overview of S. 394, GENIUS Act of 2025 March 10, 2025 On February 4, 2025, Senator Bill Hagerty introduced S. 394, the Guiding and Establishing National Innovation for U.S. Stablecoins Act of 2025, or GENIUS Act, which would establish a regime to regulate stablecoins. Currently, existing state and federal laws and regulations are applied to aspects of the stablecoin industry based on the nature of activities and individual stablecoin features. The bill's proposed regulatory framework and licensing process are described below. Requirements for Issuing Payment Stablecoins S. 394 defines payment stablecoins as digital assets, issued for payment or settlement and redeemable at a predetermined fixed amount (e.g., $1), that hold assets in reserve and that can be liquidated only to redeem the stablecoins. Issuers would be required to hold at least one dollar of permitted reserves for every one dollar of stablecoins. The bill would limit permitted reserves to coins and currency; insured deposits held at banks and credit unions, including foreign banks; short-dated Treasury bills; repurchase agreements (repos) and reverse repos backed by Treasury bills; money market funds invested in certain of these assets; or central bank reserve deposits. Additionally, the bill would require federal and state regulators, respectively, to issue tailored capital, liquidity, and risk management rules for federal and state stablecoin issuers, but exempts stablecoin issuers from the regulatory capital standards applied to traditional banks. Issuers would be required to establish and disclose stablecoin redemption procedures and to issue periodic reports of outstanding stablecoins and reserve composition. The bill would require the reports be examined-as opposed to audited-by a registered public accounting firm, and it would require that issuers' executives certify the reports. Issuers would be subject to the Bank Secrecy Act. Applications and Regulatory, Supervisory, and Enforcement Regimes The bill would create a federal or state regulatory option for stablecoin issuers, who could be subsidiaries of insured depository institutions (IDIs, e.g., banks and credit unions) or nonbanks (the bill does not restrict nonbanks to financial firms). The bill would allow any issuers with fewer than $10 billion Congressional Research Service https://crsreports.congress.gov IN12522 CRS INSIGHT Prepared for Members and Committees of Congress

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