Payment stablecoin issuers permitted to operate in the United States must back every outstanding token with at least one dollar of eligible reserves, publish the composition of those reserves each month, and have the figures examined by a registered public accounting firm. Those obligations sit in Section 4 of Public Law 119-27, the GENIUS Act, approved July 18, 2025.
The statute has been law for more than a year, but almost none of it binds anyone yet. The operative dates and the definitions that decide who is captured are still being written in rulemakings, the most consequential of which the Treasury Department put out for comment on August 17, 2026. This article sets out what the text requires, which agencies are filling in the gaps, and when each piece takes effect. It is information about a regulatory regime, not investment advice; crypto markets are volatile and losses are possible.
What must a permitted issuer hold in reserve?
At least one dollar of identifiable reserve assets for every dollar of outstanding stablecoin, drawn from a closed list. Section 4 of the enrolled statute requires issuers to "maintain identifiable reserves backing the outstanding payment stablecoins ... on an at least 1 to 1 basis," and then enumerates what those reserves may consist of, according to the text of Public Law 119-27 published by the Government Publishing Office.
The list is short and deliberately liquid. It admits U.S. coins and currency and Federal Reserve notes; demand deposits and insured shares at depository institutions; Treasury bills, notes or bonds with a remaining maturity of 93 days or less; repurchase and reverse-repurchase agreements collateralized by Treasury securities; government money market funds; and tokenized versions of those same instruments.
The 93-day tenor cap is the detail that does the most work, and it is the one most often skipped in summaries of the law. A reserve pool constrained to bills maturing inside roughly three months behaves very differently under stress from one holding longer-dated paper, because the duration risk that turns a redemption wave into a mark-to-market problem is largely absent. The constraint is structural, not discretionary. An issuer cannot reach for yield further out the curve and still be inside the statute.
How often must an issuer prove the reserves exist?
Every month, in public, and under the signature of named officers. The statute requires an issuer to "publish the monthly composition of the issuer's reserves on the website of the issuer," covering the volume of stablecoins outstanding, the amount and composition of reserves, the tenor of those holdings and where they are custodied, per the Public Law 119-27 text.
Publication alone is not the mechanism. That same monthly reserve information must be examined by a registered public accounting firm, and the issuer's chief executive and chief financial officer must certify its accuracy to the issuer's primary federal or state regulator. The statute attaches criminal exposure to a false certification, matching the penalties that apply under 18 U.S.C. section 1350.
That combination — monthly cadence, an outside examining firm, and personal officer certification carrying criminal liability — is the enforcement edge of the reserve regime. Disclosure obligations that rest only on a company's own published figures depend on the company. A certification statute moves the consequence onto individuals, which is a materially different compliance posture for any issuer that wants a U.S. license.
Who is allowed to issue, and from when?
Licensing begins January 18, 2027. In its August 2026 notice, Treasury states that from that date a stablecoin issuer must hold the appropriate federal or state license to issue in the United States, and that from July 18, 2028 any payment stablecoin offered or sold to U.S. persons must have been issued by a licensed issuer, according to the department's announcement of the proposed rulemaking.
The second date is the same three-year mark the statute itself sets: the enrolled text provides that the prohibition on sales of stablecoins from non-permitted issuers commences three years after enactment. Enactment was July 18, 2025. The two dates describe one runway with two gates — a licensing gate for issuers, then a distribution gate covering anyone offering the tokens to U.S. persons.
Foreign issuers are addressed directly. Treasury's proposal states that a foreign stablecoin issuer must demonstrate the technological capability to comply with lawful orders from U.S. authorities, per the department's August 17, 2026 announcement. That is a capability test applied to the issuer's own systems rather than a jurisdictional carve-out.
| Date | What it marks | Attributed source |
|---|---|---|
| July 18, 2025 | GENIUS Act approved as Public Law 119-27 | Government Publishing Office text |
| August 18, 2025 | Treasury request for comment on illicit-finance detection methods; comments due October 17, 2025 | Treasury press release |
| June 18, 2026 | Federal Reserve and four other agencies propose a customer identification program requirement | Federal Reserve Board |
| August 17, 2026 | Treasury proposes rules implementing Section 3; 60-day comment period | Treasury press release |
| January 18, 2027 | Act's effective date; licensing requirement begins | Treasury press release |
| July 18, 2028 | Only licensed issuers' stablecoins may be offered to U.S. persons | Treasury press release; statute (three years after enactment) |
What is Treasury's August 2026 proposal actually deciding?
Definitions, and therefore scope. The notice implements Section 3 of the Act and, per Treasury's announcement, clarifies what counts as "issuing a payment stablecoin in the United States" and what counts as "offering or selling" a stablecoin to U.S. persons. Those two phrases determine which businesses are inside the licensing perimeter on January 18, 2027 and which are not.
For market participants the practical question is not whether the reserve rules are strict. They are written down. It is whether a given distribution arrangement — an offshore issuer, a U.S. front end, a wallet that lists the token — falls inside "offering or selling." That is exactly the boundary the proposal asks the industry to comment on.
Comments are due 60 days from Federal Register publication and are filed at regulations.gov, per the Treasury announcement. Treasury Secretary Scott Bessent said in the release that "Treasury welcomes input from stakeholders as we work to provide the regulatory certainty businesses need to innovate and grow in America."
What are the banking agencies adding on top?
Identity verification. On June 18, 2026 the Federal Reserve Board, jointly with four other federal agencies, requested comment on a proposal that would require certain payment stablecoin issuers to maintain a customer identification program comparable to those required of banks and credit unions, according to the Board's press release. The Federal Register notice, dated June 22, 2026, is titled "Permitted Payment Stablecoin Issuer Customer Identification Program." Governor Michael Barr issued a separate statement on the proposal. Comments run 60 days from publication.
This is the second track of the regime, and it runs on a different logic from the reserve rules. Reserves answer whether the token is backed. A customer identification program answers who is on the other side of an issuance or redemption — a bank-style obligation being extended to a non-bank category of issuer.
Treasury opened the illicit-finance question earlier. On August 18, 2025 it issued a request for comment under the Act on detection methods for illicit activity involving digital assets, naming application programming interfaces, artificial intelligence, digital identity verification and blockchain monitoring, and asking about their effectiveness, cost, privacy risk and cybersecurity implications. Comments closed October 17, 2025. The release noted that such tools "present new resource burdens for financial institutions" even as they are "critical to advancing efforts to address illicit finance risks."
What should a reader take from the sequencing?
That the reserve rules are settled text while the perimeter is not. An issuer reading Section 4 today knows precisely what it may hold, how often it must publish, and who signs. An issuer or distributor trying to work out whether it is captured at all is waiting on definitions that were still out for comment as of August 2026.
Nothing here is a view on any token, issuer or price. It is a description of statutory text and pending rulemakings, each attributed above, and each subject to change through the comment process before the January 18, 2027 date takes effect. Whether any particular token or arrangement is covered by these rules is a legal question for counsel and the agencies, not one this article resolves.
For a related business news perspective, read How Proof-of-Reserves Audits Actually Verify What an Exchange Holds.
