The section names the Act as the “Guiding and Establishing National Innovation for U.S. Stablecoins Act of 2025,” also referred to as the “GENIUS Act of 2025.”

This section provides definitions for various terms related to financial regulations and digital assets. It includes terms like the "Bank Secrecy Act," which refers to specific legal provisions, "digital asset," which is any form of digital value stored on a secure ledger, and "payment stablecoin," which is a type of digital asset used for payment with a stable value. Other definitions cover various organizations, such as the "Comptroller" and the "Federal Reserve Board," as well as different types of institutions like "insured depository institutions" and "nonbank entities."

In this section, it is stated that only certain authorized issuers can create payment stablecoins in the United States, and those not issued by an authorized issuer cannot be used for specific banking transactions. Violators can face fines up to $1,000,000, imprisonment for up to 5 years, or both, and such cases can be referred to the Attorney General.

The text outlines strict regulations for issuing payment stablecoins, requiring issuers to maintain sufficient reserves, disclose information, and adhere to rigorous financial and risk management standards. It mandates state-level regulatory options, criminal penalties for false certifications, and specific rules to ensure financial stability, while also prohibiting misleading claims about government backing and restricting individuals with certain felony convictions from serving as officers or directors of stablecoin issuers.

The bill outlines the process for how banks and nonbank entities can apply to issue payment stablecoins. It details how the applications will be reviewed, the criteria for approval or denial, timelines for decisions, and how to handle denials, including the right to a hearing and reapplication. Regulators are also required to report annually to Congress about applications that remain incomplete for more than 180 days.

The section outlines the supervision and enforcement rules for stablecoin issuers in the U.S., with specific obligations for reporting, examinations, and penalties for violations. Stablecoin issuers must comply with oversight by federal regulators, who can take actions like suspending registrations or imposing fines if the regulations are not followed.

State payment stablecoin regulators have the power to oversee payment stablecoin issuers in their state, and they can partner with the federal Board for supervision and enforcement. In emergencies, both the Board and Comptroller can take action against issuers to address financial risks, while state laws and host state consumer protections apply to stablecoin activities, except for laws about licensing and business authorization in the host state.

The section outlines rules to prevent money laundering related to digital assets, focusing on foreign issuers of payment stablecoins in the U.S. It defines terms, describes how foreign issuers will be designated as noncompliant if they don't follow lawful orders, and details penalties for violations, while allowing waiver and licensing options for certain situations.

In this section, the bill outlines rules for people or companies that hold or manage payment stablecoins for others, like making sure these coins and related items are kept separate from their own funds and are protected from creditors. It also states that they must follow certain regulations or similar rules set by agencies, and provide necessary information to regulators, but doesn't apply to those just offering software or tools for individuals to manage their own stablecoins.

This section explains how payment stablecoin issuers should be treated in bankruptcy cases, giving priority to people holding stablecoins over other creditors, and specifying that certain reserves must be maintained. It also allows relevant regulators to intervene in these cases and outlines how insolvency proceedings should be conducted for different types of stablecoin issuers.

The section describes how federal regulators, working with various organizations, can create rules to ensure that payment stablecoins, which are a type of digital money, work well together and with the larger financial system. This means making sure these digital currencies can communicate with one another and the different financial technologies they interact with.

The Treasury Secretary will study non-payment stablecoins, a type of digital currency, to learn about their benefits, risks, and how they are used. A report will be presented to Congress within a year, covering various aspects such as technology, participants, usage, reserves, and how information is shared with consumers. An "endogenously collateralized payment stablecoin" is defined as a digital asset promising a fixed value that depends on another asset from the same creator.

The section requires that, starting one year after the law is enacted, federal regulators provide annual reports to specific Senate and House committees and the Office of Financial Research about the payment stablecoin industry. These reports will cover trends, the number of licensing applications for issuing stablecoins, and potential risks to the financial system. Additionally, the Financial Stability Oversight Council will include these findings in its annual report.

The section outlines the authority of banking institutions to engage in activities allowed by State and Federal law, including managing digital assets and stablecoins. It also specifies that when holding assets in custody, these institutions are not required to list them as liabilities or hold regulatory capital against them, unless it is necessary to address operational risks.

The proposed amendments clarify that payment stablecoins, when issued by authorized stablecoin issuers, are not classified as securities or commodities under several existing financial laws, including the Investment Advisers Act, the Investment Company Act, the Securities Act, the Securities Exchange Act, the Securities Investor Protection Act, and the Commodity Exchange Act, as defined in the Guiding and Establishing National Innovation for U.S. Stablecoins Act of 2025.

The Secretary of the Treasury is tasked with forming agreements with other countries that have similar rules about stablecoins—digital currencies linked to a stable asset like the US dollar. These agreements aim to help international transactions and make sure that stablecoins issued in other countries work smoothly with US rules. The goal is to have these agreements ready within two years of the law being passed.

The effective date for this Act and its amendments will be the earlier of either 18 months from when the Act is enacted or 120 days after the government issues final regulations for stablecoins. Regulators must notify Congress when they start processing applications, and they can provide a temporary exemption from the new rules for up to 12 months for certain organizations with pending applications.

The section requires that within a year of the law being passed, major regulators like Federal payment stablecoin regulators and the Secretary of the Treasury must create appropriate rules for the law, making sure to coordinate with state regulators. Additionally, a report confirming these rules must be submitted to Congress within 180 days.

The first section of the bill states that the official title for this legislation is the "Guiding and Establishing National Innovation for U.S. Stablecoins Act of 2025," which can also be referred to as the "GENIUS Act of 2025."

The section provides definitions for terms related to financial institutions, digital assets, and regulation, including the Bank Secrecy Act, which involves various financial regulations, the Board of Governors of the Federal Reserve System known as the Board, and other key terms like digital asset, distributed ledger, payment stablecoin, and distinctions between state and federal regulated entities. It specifies what constitutes legal tender or money, types of financial issuers, regulatory bodies, and relevant financial acts and laws.

A bill section states that only authorized issuers can create payment stablecoins in the U.S. and any stablecoins not issued by them will not be recognized as cash or acceptable for financial activities. Violation of this rule can lead to a fine of up to $1 million, up to 5 years in prison, or both, and suspected violations must be reported to the Attorney General.

The section outlines the requirements and standards for entities known as "permitted payment stablecoin issuers." These issuers must back their stablecoins with specific reserves, disclose redemption policies, and meet specific auditing, capital, and technology standards. They are also subject to various federal regulations, including compliance with the Bank Secrecy Act, and face restrictions on marketing, activities, and misrepresentation. Moreover, these issuers can be overseen by either federal or state-level regulators, depending on their size and compliance with certain criteria.

The section outlines the process for insured depository institutions and nonbank entities to apply for permission to issue payment stablecoins. It mandates that a federal regulator must evaluate applications based on specific factors, decide within a set timeframe, and provide detailed explanations or hearings if an application is denied; if the regulator does not decide in time, the application is automatically approved.

The section outlines how federal regulators will supervise and enforce rules for stablecoin issuers that are not state-qualified, emphasizing the need to monitor financial conditions and risks. It details procedures for handling violations, which include potential penalties and the requirement for issuers to provide reports and adhere to federal guidelines, while enforcement measures may involve penalties or temporary bans on operations.

State payment stablecoin regulators have the power to oversee and enforce rules on State qualified payment stablecoin issuers, and they can work with the Board to ensure compliance. In special situations, the Board and the Comptroller can take enforcement actions against stablecoin issuers if they believe there's a significant risk to financial stability, and there's a process for reviewing and potentially challenging such actions. Additionally, the laws of a host State where stablecoin activities occur apply only to a certain extent, with the home State laws taking precedence if host State laws are deemed not applicable.

This section outlines anti-money laundering protections involving digital assets. It defines terms related to digital asset service providers, describes the Treasury's authority to designate noncompliant foreign issuers of payment stablecoins, and discusses penalties for violations, including potential civil fines. Additionally, it allows for appeals, grants waiver and licensing authority to the Treasury, and includes exceptions for U.S. intelligence and law enforcement activities.

A person can only provide services to store or protect payment stablecoins and their reserves if they are supervised by certain financial regulators and meet specific requirements. They must keep customer assets separate from their own, with some exceptions, and ensure customer assets are protected above others except when agreed otherwise. The rule doesn't apply to those providing tools for customers to store their own stablecoins.

In the event of insolvency for companies that issue payment stablecoins, this section ensures that people holding these stablecoins get paid back before other creditors. It explains changes to existing laws to protect stablecoin holders, defines key terms, and outlines who can intervene in these cases to safeguard customers.

Primary federal regulators, in consultation with relevant organizations, are responsible for evaluating and potentially setting standards for payment stablecoin issuers. These standards aim to ensure that stablecoins can work easily with one another and with the wider digital finance system, covering areas like communication protocols and blockchain technology.

The section mandates a study by the Secretary of the Treasury, along with various financial agencies, on non-payment stablecoins, especially those backed by endogenous collateral. They have one year to report findings to Congress, covering aspects like types of stablecoins, benefits and risks, use cases, governance, and transparency of consumer information. An "endogenously collateralized payment stablecoin" is defined as a digital asset promised to be exchanged for a fixed value, backed exclusively by another asset from the same creator.

The section outlines a yearly requirement for federal regulators to report on the payment stablecoin industry to certain congressional committees and the Office of Financial Research, covering trends, applications for issuers, and potential risks to the financial system. Additionally, these findings must be included in the Financial Stability Oversight Council's annual report as per the Dodd-Frank Act.

The section outlines the authority of banks and credit unions to handle digital assets and payment stablecoins, ensuring they comply with state and federal laws. It also specifies that these institutions don't need to list assets they hold but don't own as liabilities, nor do they have to hold capital against these assets unless required for operational risk management. Regulatory agencies are tasked with updating rules to allow these activities.

The section clarifies that payment stablecoins, which are a type of digital currency issued by permitted entities, are not considered as "securities" or "commodities" under laws like the Investment Advisers Act, the Securities Act, and others. This means such stablecoins are treated differently from traditional financial products and the issuers are not seen as investment companies.

The Secretary of the Treasury is required to create agreements with countries that have similar rules for payment stablecoins to those in this Act. These agreements will help make international transactions with U.S. dollar-backed stablecoins smoother, and they need to be established within two years of the Act's passing.

The section outlines when the Act and its amendments will become effective, specifying it will be either 18 months after enactment or 120 days following final regulations by stablecoin regulators. It also mentions that regulators must inform Congress when they start processing applications and that there’s a 12-month grace period for certain applicants to comply with the Act’s requirements.

The section requires that within one year of the law being passed, federal and state regulators must create rules to enforce the Act, coordinating their efforts. Additionally, federal banking agencies must report to Congress within 180 days describing the rules they have established.