The GENIUS Act’s impact on foreign stablecoin issuers

The US is in the midst of redrawing the map for stablecoins. With the signing of the Guiding and Establishing National Innovation for US Stablecoins Act (GENIUS Act) into law on 18 July, 2025, foreign (non-US) stablecoin issuers face a new reality: issuing, offering, and/or selling payment stablecoins in the US will soon be tightly regulated, with significant hurdles for those issuers outside the US market.  

While the GENIUS Act provides a comprehensive US regulatory framework for payment stablecoins, it is only one piece of a rapidly evolving US digital asset regulatory landscape. The House of Representatives has also passed the Digital Asset Market Clarity Act (CLARITY Act), which would address the broader classification and regulation of digital assets, and the Senate is actively considering its own market structure legislation. As the US moves toward a more unified approach, global players should be preparing for a new compliance reality and actively monitoring the changes the US

Ending direct stablecoin issuance in the US by foreign issuers

The GENIUS Act draws a clear line: only “permitted payment stablecoin issuers” (PPSIs) will be allowed to directly issue payment stablecoins in the US, and only a US-formed entity can qualify as a PPSI.  In general, eligible US formed entities will include subsidiaries of federally-insured banks, federally-approved nonbank entities, and state-licensed issuers under a certified regime. PPSIs and the payment stablecoins they issue will also be subject to a number of other stringent conditions and regulatory requirements, all under the supervision and oversight of US regulators. 

While many of the specific requirements of the GENIUS Act will be fleshed out through forthcoming regulations, one thing is clear: foreign issuers will generally be unable to issue payment stablecoins directly in the US. However, there is a narrow exception for federal branches of foreign banks, but only with approval from the US Office of the Comptroller of the Currency (OCC). For everyone else, the message is simple: if you’re not a PPSI, directly issuing payment stablecoins in the US will be off the table under the GENIUS Act. For most foreign firms, that means establishing an eligible US entity or federal branch will be a prerequisite for direct issuance in the US.

Foreign issuer stablecoins accessing the US through intermediaries

Although direct issuance of payment stablecoins in the US will be mostly foreclosed for foreign issuers, foreign-issued payment stablecoins still have a pathway to entering the US market through applicable intermediaries, so-called digital asset service providers (DASPs) (e.g., exchanges, wallets, and trading platforms). However, the GENIUS Act will also increase the regulatory requirements for DASPs.

After a three-year transition period that ends on 18 July, 2028, DASPs will be prohibited from offering, selling, or otherwise making available payment stablecoins to persons “located in the US” unless the stablecoin is issued by a PPSI or an exception is available. The GENIUS Act provides such an exception for foreign issuers, but it is narrow and comes with significant conditions:

• The foreign issuer’s local jurisdiction must first be approved by a new Stablecoin Certification Review Committee (SCRC) as having a regulatory framework that is “comparable” to the federal framework.  These standards have yet to be determined.
• The foreign issuer must be able to demonstrate the technological capability to comply with any US “lawful order” (e.g., freezing, seizing, or burning coins if required by US court or agency), and to comply with any reciprocal arrangements established by the US Treasury with the issuer’s home-country regime.
• The foreign issuer will also be required to register with the OCC, consent to US jurisdiction, and accept ongoing US supervision and reporting. The OCC will retain authority to revoke access if there are financial crime or stability concerns.

The US Treasury will also have robust enforcement powers, and penalties for noncompliance are steep. It can designate noncompliant foreign issuers, impose civil penalties of up to one million dollars per day, and seek court orders to block the issuer’s payment stablecoins from the US market. Note that law is intended to cover any offer or sale to a US person, regardless of where the issuer is based, and a reciprocal arrangement does with an issuer’s home country is not a free pass—every foreign issuer will still be required to independently meet US requirements.

P2P and self-custody remain outside the GENIUS Act’s scope

Not every payment stablecoin transaction will fall under the GENIUS Act, even if it involves a person located in the US. Peer-to-peer (P2P) transfers between individuals for lawful purposes, moving coins between your own accounts, or using self-custody wallets generally remain outside the Act’s scope; though availability of permitted payment stablecoins may become constrained as the law takes effect. The US Treasury can also create limited safe harbors for small transactions or emergencies, but these are likely to be used in very rare circumstances and broad exemptions are unlikely. 

Additionally, persons engaging in transactions and activities involving a US nexus that fall outside the scope of the GENIUS Act must still consider the potential application of other current US regulatory regimes such as securities and money transmission laws. Further, the broader digital asset market structure legislation, as well as guidance and rulemaking by US regulators, must continue to be actively monitored for developments and planning.

Key GENIUS Act implementation dates

• Effective date: The GENIUS Act will take effect on the earlier of 18 months after enactment (18 January, 2027) or 120 days after final implementing regulations are published, whichever comes first. The US Treasury issued its first two GENIUS Act-related rule proposals on 18 August, 2025, and 19 September, 2025.
• 3-Year DASP grace period: The three-year transition period for DASPs noted above started running with the enactment date of the GENIUS Act on 18 July, 2025. Thus, the new restrictions on DASPs offering or selling noncompliant stablecoins to persons located in the US will take effect on 18 July, 2028.
• Foreign regime comparability: The deadline for the US Treasury to issue rules for determining comparability of foreign regimes is dependent on the ultimate effective date of the GENIUS Act, so a particular date is not set. However, these rules must be issued within one year after the effective date.

Foreign issuer next steps

For non-US stablecoin issuers, the GENIUS Act marks a turning point. If you want to reach US users, you will soon need to navigate a new and much more demanding regulatory environment. However, with many details still to be determined, including the final rules, the scope of reciprocal arrangements, and the outcome of broader digital asset legislation, it is too soon to prescribe a single path forward. For now, global issuers should be closely monitoring US regulatory developments, engaging with legal and policy advisors, and strategically planning as the US regulatory environment for payment stablecoins and digital assets takes shape.