Stablecoin rules late, statutory clock on time: the GENIUS Act’s awkward first year

The week

The GENIUS Act, the first comprehensive federal framework for payment stablecoins, was signed into law on July 18, 2025. It gave the federal regulators one year to issue implementing regulations. It takes effect on the earlier of January 18, 2027, or 120 days after the primary regulators issue final rules. By the July 18, 2026 anniversary, the regulators had published proposals but no final rules. The FDIC had proposed application procedures for bank subsidiaries on December 16, 2025. The OCC proposed its rule for issuers under its supervision on February 25, 2026, with comments closing May 1. Treasury’s FinCEN and OFAC proposed anti-money laundering and sanctions rules for issuers in April, and the FDIC followed with a prudential proposal. In the week of July 20, banks and credit unions were planning against a statutory date six months away without final rule text.

Much of the banking discussion about stablecoins has been framed as one question: should we issue one. For most institutions that is the wrong question. The law creates or implies several roles, and each carries different obligations, technology and risk. The missed rulemaking deadline made the choice harder, because the detail for each role was still in proposals. It did not make the choice optional, because the statute’s backstop date was fixed and customers were already bringing stablecoin activity to their banks. We separate the decision into three roles that do not overlap, issuer, reserve custodian and payments partner, and one constraint that applies to all three, which is funding. Organizations should check with counsel on how the final rules will treat their charter and activities.

Role one: issuer

The law allows three kinds of issuer. Subsidiaries of insured depository institutions may issue with approval from their primary federal regulator. Federally qualified nonbank issuers are supervised by the OCC. Below a size threshold, state-qualified issuers may operate under a state regime that meets federal standards. Issuers must back outstanding coins at least one to one with a defined list of high-quality liquid assets. They must publish monthly reserve reports examined by a registered public accounting firm, redeem at par, and meet anti-money laundering and sanctions obligations. They may not pay interest or yield to holders.

For a bank, issuance is a new line of business with its own capital, liquidity, operational and technology requirements. Those include the technical ability to freeze or burn coins when lawfully ordered. Issuance makes sense for institutions with a specific use case, such as settlement among their own corporate clients, and the scale to run a new regulated activity. The pending rules matter most here, since capital floors, reserve composition and redemption timing will shape the economics. A bank can still do the work that does not depend on them: define the use case, size the market, and decide whether to build alone or join a shared arrangement with other institutions, which raises its own governance questions.

Role two: reserve custodian

Every issuer needs institutions to hold its reserves and, often, custodians for reserve assets and for the coins themselves. Banks are natural candidates. This role sits closer to existing business: deposits, treasury management and custody. It still needs new capabilities. The bank must understand the reserve requirements its issuer client must meet, support the client’s monthly disclosures, and handle large, fast redemptions.

Concentration is the main risk. Reserves for a large issuer can be substantial relative to a mid-sized bank’s balance sheet, and they can leave quickly when the issuer’s own customers redeem in a stress event. A bank holding reserve deposits needs liquidity planning that assumes that behavior, not the behavior of ordinary operating deposits. Custody of the digital assets themselves adds key management, segregation and customer asset questions that existing custody operations may not cover. Banks considering this role should test whether their technology and operations can support it, or whether a partner is needed.

Role three: payments partner

The broadest role is the one many banks will meet through customers before they choose it. Banks may accept stablecoin payments for business customers, convert to and from dollars, or provide accounts and services to issuers and platforms. The law also limits, after a transition period, which stablecoins digital asset service providers may offer to US persons, which affects platform partners.

This role is mostly integration and compliance work. It includes screening wallet addresses against sanctions lists, monitoring on-chain activity, handling travel rule information, reconciling blockchain records with the bank’s ledger and performing due diligence on clients whose business involves stablecoins. None of it depends much on the final text of the issuer rules. A bank can build it now and reuse it in any of the three roles. The practical starting point is an inventory of where stablecoin flows already touch the bank, such as business clients receiving them through payment processors or exchanges, so that monitoring is aimed at real activity.

The constraint across all three: funding

Whatever role a bank chooses, payment stablecoins compete with deposits for the same balances. Reserves held at other institutions or in Treasury bills are money that is not on deposit at the bank. The ban on issuers paying yield limits direct competition with interest-bearing accounts. Whether affiliates or platforms may offer rewards on stablecoin balances has remained contested, and bank trade groups have pressed Congress and regulators on it. The size of the funding effect depends on adoption, which no one can forecast with confidence.

Treasury and asset-liability teams can still model scenarios. They can estimate which deposit segments, such as operating balances of payment-heavy business clients, are most likely to move, and what replacing that funding would cost. That analysis belongs next to any business case for the three roles, because a role that earns fees while draining low-cost deposits may not pay.

With hindsight

From October 2026, no implementing rule is final. On August 19, Comptroller of the Currency Jonathan Gould said the OCC aimed to finalize its rule by November, after revising the proposal in light of comments. The goal was to begin taking issuer applications in early 2027. Treasury published a further proposal on stablecoin issuance, offer and sale on August 18, with comments due October 19. That leaves a short window before the January 18, 2027 statutory date, which makes the work that does not depend on final text more valuable. The debate over rewards on stablecoin balances has continued alongside broader digital asset legislation. A decision on role, even a decision to stay a payments partner for now, lets an institution start on screening and reconciliation while the text settles. Organizations should rely on final rules and agency guidance when published, rather than proposals, and confirm dates with counsel.