Payment stablecoin

Payment stablecoin is the phrase US law chose when it stopped treating dollar tokens as an anomaly and started treating them as a regulated instrument. The GENIUS Act, signed on 18 July 2025, defines the term functionally: a digital asset issued for payment or settlement, redeemable by its issuer at a fixed dollar value, and not otherwise a deposit, a national currency, or a security. The definition is the gateway to everything else in the statute, because what qualifies must be issued under its rules, and what does not qualify falls to other regimes.

Three routes lead to permitted issuance. A subsidiary of an insured depository institution can issue with the approval of its federal banking regulator, which is the path that lets banks put a stablecoin beside their deposit business. A non-bank can become a federal qualified issuer supervised by the OCC. And a state-chartered issuer can operate under a state regime certified as substantially similar to the federal framework, generally while its outstanding tokens remain under $10 billion. Outside these routes, issuing a payment stablecoin to US persons is unlawful.

The backing rule is the statute’s center of gravity: at least one dollar of defined high-quality liquid assets per token, in a short list that runs from coins and insured deposits to Treasury bills with short maturities, Treasury-backed repurchase agreements, government money market funds, and central bank reserves. Monthly public disclosure of reserve composition is mandatory, examined by registered accounting firms, with executive certification. The list is deliberately narrower than what leading issuers historically held, which is why reserve composition is where regulation bites first.

Two boundaries repay attention. The Act’s definition excludes tokenized deposits, which remain bank money under banking law, a separation that shapes how US banks choose between issuing a stablecoin and tokenizing their deposit base. And yield is fenced: permitted issuers may not pay interest on the stablecoin itself, keeping the instrument money-like rather than deposit-like. The result is a US category that rhymes with the EU’s e-money token while differing in detail, and institutions operating across both jurisdictions inherit the differences as routing and compliance decisions.