A Guide to Digital Assets Policies Across the States

The Guiding and Establishing National Innovation for U.S. Stablecoins Act of 2025 (GENIUS Act) established a regulatory framework for stablecoins, a form of digital asset designed to maintain a stable value, typically pegged to a currency like the U.S. dollar. Unlike many cryptocurrencies, which can be highly volatile and largely speculative, fiat-backed stablecoins aim to provide a stable value medium of exchange, store of value, and unit of account. Payment stablecoins are not backed by the full faith and credit of the U.S., guaranteed by the U.S. government, or subject to federal deposit insurance.

The GENIUS Act gives states an important role in the emerging regulatory framework for payment stablecoins. As federal implementation moves forward, state policymakers may need to evaluate existing laws and regulatory structures, understand new certification requirements, and consider how changes in the payments landscape could affect consumers, financial institutions, and local economies.

State Oversight of Stablecoin Issuers

Under the GENIUS Act, payment stablecoin issuers with less than $10 billion in consolidated outstanding issuance may choose state rather than federal oversight if their state’s regulatory framework is “substantially similar” to federal standards. This allows states to maintain a role in regulating payment stablecoin issuers while operating within the federal framework. The Stablecoin Certification Review Committee (SCRC) will make that determination. Treasury has established procedures for certification and annual recertification, while the substantive criteria for approval remain pending.

State regulators can meet the January 18, 2028, initial certification deadline by submitting a certification even if it is incomplete or depends on future state legislation or regulations. However, Treasury will not begin accepting submissions until the required paperwork-review process is complete and will announce on its website when submissions can begin.

Certification also carries ongoing responsibilities. State regulators must share certain information with the Board of Governors of the Federal Reserve System, including initial applications from stablecoin issuers, and may need to update their regulatory frameworks when there is a “material change” or “significant change in circumstances.”

Other State-Relevant Provisions of the GENIUS Act

• Preemption: A host state’s laws shall only apply to the activities conducted in that state by an out-of-state qualified payment stablecoin issuer to the same extent as such laws apply to the activities conducted by an out-of-state federally qualified issuer.
• Customer Protection: Entities providing custodial or safekeeping services for payment stablecoins and reserves must be subject to supervision by a primary federal regulator or by a state bank supervisor, and they must comply with segregation requirements to protect customer assets.
• Authority of Banking Institutions: Clarifies that the Act does not limit the authority of depository institutions, credit unions, or trust companies to engage in permissible activities under state and federal law, including to issue digital assets that represent deposits (i.e., tokenized deposits), otherwise use distributed ledgers for recordkeeping, and provide custodial services for payment stablecoins and their reserves.
• Interstate Activities: A state-chartered depository with a permitted payment stablecoin issuer subsidiary may engage in the business of money transmission or provide custodial services through the permitted payment stablecoin issuer in any state if it is required by its home state to establish and maintain adequate liquidity and capital.

Stablecoins and Local Lending

The GENIUS Act prohibits payment stablecoin issuers from paying interest or yield on payment stablecoins. However, “rewards” and other payments offered by digital asset service providers can function as an indirect incentive for consumers to hold stablecoins. Allowing these arrangements can draw funds away from bank deposits, reducing resources available to support lending to consumers, small businesses, and communities. State policymakers and bank supervisors may want to weigh that impact along with the implications for the safety and soundness of state-chartered institutions.

Learn more about how stablecoin rewards can impact community lending in your state.

What Policymakers Should Consider

As implementation of the GENIUS Act moves forward, states will need to consider how their existing regulatory frameworks align with the new federal structure. Key questions include:

• Is the state’s existing regulatory framework positioned to meet the GENIUS Act’s certification requirements?
• Could changes to state law or regulation be needed as federal implementation proceeds?
• How should relevant state agencies coordinate responsibility for stablecoin oversight?
• How could broader adoption of stablecoins affect financial institutions, consumers, and access to credit in the state?