What reserves must stablecoins hold under the GENIUS Act?

The full answer

What does the Act require an issuer to hold?

The GENIUS Act passed the Senate 68 to 30 on June 17, 2025 and the House 308 to 122 on July 17, 2025, and President Trump signed it into law on July 18, 2025, according to Latham & Watkins [2].

A White House research paper published in April 2026 states that the Act requires stablecoin issuers to maintain reserves backing outstanding stablecoins on at least a one-to-one basis [1]. The same paper says reserves may only consist of specified assets, including US dollars, Federal Reserve notes, funds held at certain insured or regulated depository institutions, certain short-term Treasuries, Treasury-backed reverse repurchase agreements and money market funds [1].

K&L Gates, in its March 2026 note on the Office of the Comptroller of the Currency (OCC) proposal, says the statute limits reserve assets primarily to US currency, certain deposits, short-term Treasury securities and specified repurchase agreements, and also lets “money” qualify [3]. The firm also notes that the Act lets “money” count as a reserve asset, defined broadly to include mediums of exchange authorized or adopted by domestic or foreign governments [3].

Reserves must be disclosed. Mayer Brown reported in December 2025 that the Federal Deposit Insurance Corporation (FDIC) proposal requires applicants to file an engagement letter with a registered public accounting firm, to support the Act’s monthly reserve disclosure and examination requirement [4].

Issuers with no more than $10 billion of stablecoins outstanding may choose a state regime that is “substantially similar” to the federal one, according to Latham [2]. Whether these reserve rules were designed to raise demand for US government debt is covered in Is using stablecoins to boost demand for US Treasuries official policy?.

Who is allowed to issue, and who supervises them?

Latham summarises the Act as making it unlawful for anyone other than a permitted payment stablecoin issuer to issue a payment stablecoin in the US [2]. Subsidiaries of insured banks and credit unions are overseen by their primary financial regulator, and federally licensed non-bank issuers are overseen by the OCC [2]. K&L Gates quotes Section 4(b)(1) of the Act: a federal qualified issuer “shall be licensed, regulated, examined, and supervised exclusively by the Comptroller” [3].

Can stablecoin issuers pay interest to holders under the Act?

No. The White House paper states that the Act prohibits issuers from offering any form of interest or yield to holders, but does not explicitly prohibit affiliate or third-party arrangements that might offer interest-bearing products [1]. The paper adds that some versions of the proposed CLARITY Act would close that channel [1].

The OCC’s proposed rule, as described by K&L Gates in March 2026, would bar an issuer from paying interest or yield “whether in cash, tokens, or other consideration” for holding or using its stablecoin, and would presume prohibited yield in certain third-party relationships [3]. This is a proposal, not a final rule.

In Congress, the Senate Banking Committee released a bill text on May 12, 2026 with a compromise that prohibits interest on idle stablecoin balances while permitting activity-based rewards, and advanced the CLARITY Act 15 to 9 on May 14, 2026, according to Latham [2]. Latham reports that a procedural Senate vote was scheduled for September 15, 2026 [2]. What that bill means for XRP is covered in What happened to the CLARITY Act, and does it affect XRP?.

The ban has critics inside government. The same White House paper modelled the effect of the ban and found that, even stacking worst-case assumptions, it adds only $531 billion in bank lending, a 4.4% increase in bank loans as of the fourth quarter of 2025 [1]. The paper concludes that a yield prohibition “would do very little to protect bank lending” [1].

When do the rules take full effect, and what is the transition period?

Latham reports that the Act takes effect on the earlier of 18 months after enactment or 120 days after the federal stablecoin regulators issue final implementing rules [2]. Mayer Brown puts this as January 2027, or 120 days after final rules if that comes first [4]. The FDIC issued its proposal on applications on December 16, 2025, with comments due by February 17, 2026, and expects to finalise it before the effective date, according to Mayer Brown [4].

On August 17, 2026 the Treasury issued its own proposed rule on section 3 of the Act [5]. The Treasury gives January 18, 2027 as the expected effective date, after which a person generally may not issue a payment stablecoin in the US without a federal or state licence [5]. From July 18, 2028, digital asset service providers generally may not offer or sell payment stablecoins to people in the US unless a licensed issuer issued them [5].

What happens to holders if a stablecoin issuer fails under the Act?

Latham reports that stablecoin holders have priority over all other claims against a permitted issuer in insolvency proceedings [2].

The Bank for International Settlements (BIS) argues that this does not remove run risk. In an August 28, 2026 speech, BIS General Manager Pablo Hernández de Cos said stablecoin issuers invest in a narrow set of high-quality assets but, without the backstops that support bank deposits, remain exposed to runs, and that fire sales of government bills in a run could spread into core money markets [7].

Do full reserves make a stablecoin safe?

The strongest critique comes from the BIS. Its June 2025 Annual Economic Report describes “an inherent tension” between a stablecoin’s promise of par convertibility and the need for a profitable business model that involves liquidity or credit risk [6]. It warns that growing stablecoins could pose financial stability risks, including the tail risk of fire sales of safe assets [6]. The report concludes that “even with regulation”, stablecoins’ limitations cast serious doubt on their ability to be the mainstay of the monetary system [6]. A different view, that stablecoin reserves could help fund US debt, is weighed in Could stablecoins help America’s debt problem?.

Does the Act say anything about XRP or other non-stablecoin assets?

Latham describes the Act as a regulatory framework for payment stablecoins [2]. As of October 3, 2026, I could not find any source on the Act that names XRP. The one reference to other crypto-assets is in the OCC’s proposal: K&L Gates reports that it would let issuers hold non-stablecoin crypto-assets for the limited purpose of paying transaction fees [3]. XRP’s own legal status is a separate question, covered in Is XRP a security?.

How does RLUSD’s reserve fit these rules?

Ripple’s documentation, checked on September 29, 2026, says the RLUSD reserve follows New York Department of Financial Services guidance and holds Treasury bills with three months or less to maturity, government money market funds, overnight reverse repurchase agreements and deposits at US depository institutions [8]. Ripple says Deloitte produces monthly reserve reports [8]. The same letter requires Ripple National Trust Bank, if necessary, to conform, cease or divest its planned collateral trustee structure to comply with the GENIUS Act and its implementing rules [9]. More detail is in What backs RLUSD, Ripple’s stablecoin?.