GENIUS Act
By Justin Anderson
November 6, 2025
On July 18, 2025, the Guiding and Establishing National Innovation for U.S. Stablecoins (GENIUS) Act (the Act), was signed into law. This marks the first comprehensive federal framework for payment stablecoins in the United States. The Act takes effect on the earlier of (i) 18 months after the date of enactment, or (ii) the date that is 120 days after the primary federal payment stablecoin regulators issue final regulations implementing the Act.
For federally insured credit unions (FICUs) and their subsidiaries, as defined by the Act, this law is significant as it creates a federal pathway for issuing, holding, and facilitating transactions in these digital assets. Under the Act, payment stablecoins, a subset of all stablecoins, are defined as those that are intended for payments or settlements and can be converted, redeemed, or repurchased for a fixed amount of monetary value. Notably, only “permitted payment stablecoin issuers” (PPSIs) may issue stablecoins. PPSI’s will be required to operate under the oversight of a recognized federal or state regulator. For credit unions, the law explicitly names the National Credit Union Administration (NCUA) as the primary regulator for both FICUs and their subsidiaries that engage in stablecoin activities. As a primary federal payment stablecoin regulator, the Act also requires NCUA to issue regulations implementing the Act for FICUs and their subsidiaries and gives the NCUA supervisory and examination authority over FICU subsidiaries that are PPSIs, as applicable to the issuance of stablecoins.
One of the most notable features of the Act for credit unions is the clarification of custody authority. The law affirms that credit unions may offer digital-asset custody services under NCUA oversight. Further, under Section 16, the NCUA may not require a federally-insured credit union to (i) include assets held in custody that are not owned by the credit union as a liability on any financial statement or balance sheet, including payment stablecoin custody or safekeeping activities; or (ii) hold additional regulatory capital against assets and reserves in custody or safekeeping, except as necessary to mitigate against operational risks as determined by the primary Federal payment stablecoin regulator. Many credit unions will likely use Credit Union Service Organizations (CUSOs) for issuance or operational support for stablecoins, which can centralize technology infrastructure, liquidity management, and regulatory compliance.
In accordance with the strict compliance standards imposed by the Act, PPSIs must hold reserves in cash or short-term U.S. Treasuries, keep these reserves clearly separated from other assets, and make regular public reports on both outstanding coins and the composition of reserves. Large issuers must also provide audited financial statements. Redemption rights are clearly defined, ensuring that holders can redeem their coins at par value in fiat currency within established timelines. The law prohibits paying any interest or yield directly on stablecoins, and it requires compliance with Bank Secrecy Act and anti-money laundering rules, as well as sanctions enforcement and “fit and proper” standards for leadership. In the event of a PPSI’s insolvency, stablecoin holders have a first-priority claim on the required reserves.
Although the Act is a federal statute, it creates a mechanism for coordination with state regimes. This includes a Stablecoin Certification Review Committee to evaluate state frameworks and determine whether they meet federal standards. Smaller issuers operating solely under state authority may continue if they stay below certain thresholds, but most credit unions planning national-scale issuance will likely operate under the NCUA framework.
For credit unions, preparation will require careful strategic decisions. Some will choose to focus on custody services, offering members a trusted place to store digital assets without engaging in issuance. Others may issue their own payment stablecoins through a CUSO to consolidate operational, technological, and compliance responsibilities. Regardless of the approach, credit unions will need to build governance structures—such as board-level digital asset committees—to oversee risk management, vendor relationships, and compliance readiness. They will also need to adapt operational processes for enhanced BSA/AML procedures, blockchain analytics, redemption and liquidity planning, and reserve management.
Operational readiness will also extend to financial reporting and auditing capabilities. The Act requires monthly reporting on issuance and reserves, as well as audited financial statements for larger programs. Clear and consistent member communications will be essential, particularly to explain that payment stablecoins are not NCUA-insured deposits, and to outline redemption processes, applicable fees, and risks. On the technology side, credit unions must ensure that wallet security, key management, and incident response procedures meet or exceed bank-level standards, and that they can comply promptly with lawful orders to freeze or burn tokens when legally required.
Regulators are expected to finalize the rules, as required by the Act, by the summer of 2026. The Act will become fully effective by January 2027 at the latest. The effective date may arrive sooner if rulemaking concludes early. There is also a potential twelve-month safe harbor for pending applicants during the transition period.
The opportunities for credit unions under the GENIUS Act are substantial. They can leverage their reputation for trust and member service to offer secure, compliant custody services and explore innovative payment solutions that allow instant settlement while potentially reducing transactional costs, either independently or through cooperative CUSO structures. They may also expand their role as regulated intermediaries in the digital-asset ecosystem, offering members convenient and secure access to next-generation payment tools.
These opportunities, however, are not without risk. Regulatory requirements will evolve quickly as the NCUA and Treasury implement the Act, making it important for credit unions to designate internal leads to track and interpret new rules. Operational resilience will be critical, as any failure in wallet security or liquidity management could have reputational and regulatory consequences. Finally, marketing and communications must be carefully managed to avoid any suggestion that stablecoins are federally insured or government-backed.
In the end, the GENIUS Act creates a clear, federally sanctioned pathway for credit unions to participate in the stablecoin economy while maintaining strong consumer protections and prudential oversight. Institutions that move early to establish governance, compliance, and operational capabilities—especially those leveraging the CUSO model—will be well-positioned to innovate in digital payments while upholding the trust and service that define the credit union brand.
About the Author
Justin Anderson
Justin Anderson, Of Counsel at SW&M, is a seasoned regulatory attorney with over 17 years of experience advising the National Credit Union Administration (NCUA) and credit unions on complex legal, financial, and administrative matters. He brings deep expertise in subordinated […]
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