2025 Supervisors Symposium

GENIUSAct – PermittedActivities…How Big a Fig Leaf? REGULATORY LANDSCAPE

…but with a potentially significant “additional” authority or “loophole”

The GENIUS Act limits the permitted activities of “permitted payment stablecoin issuers” to a short list…

Issuing PSCs Redeeming PSCs

to engage in incidental nonpayment stablecoin activities that are authorized by the primary Federal (or State, if applicable) payment stablecoin regulator ” It remains to be seen how the Federal and State banking regulators will exercise this additional authority, and whether that exercise will be subject to successful legal challenges

Managing related reserves, including purchasing, selling, and holding reserve assets or providing custodial services for reserve assets, consistent with State and federal law Other activities that directly support the activities listed above

Public companies that are not predominantly engaged in 1 or more financial activities are not permitted to issue a payment stablecoin unless the public company obtains a unanimous vote of the Stablecoin Certification ReviewCommittee . This provision does not applyto privatecompanies.

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So, you want to be a “State Payment Stablecoin Regulator” (SPSR), per GENIUS?

GENIUS Substantive Requirements State Must Meet: • State-level “regulatory regime” must be “ substantially similar ” to the Federal regulatory framework under GENIUS • Process for State certification refers to meeting standards and requirements in Sec 4(a) , which include reserves; no rehypothecation; monthly certification re reserves; capital, liquidity and risk management requirements; BSA/AML; activity limitations; tying; deceptive names; audits; no interest or yield; non-financial company ownership

GENIUS Process Requirements: • Secretary of the Treasury must, through notice and comment rulemaking, establish broad-based principles for determining whether a State-level regulatory regime is “substantially similar” to the Federal regulatory framework • SPSR must submit an initial and then annual certification to the Stablecoin Certification Review Committee (SCRC) that the State-level regulatory regime meets the criteria for “substantial similarity” established by Treasury; SCRC will promulgate certification form • Within 30 days following the initial certification submission, the SCRC will approve the certification if it unanimously determines that the State-level regulatory regime meets or exceeds the standards and requirements described in GENIUS Sec. 4(a), or deny the certification and provide the SPSR with a written explanation of the denial, describing the reasoned basis for the denial with sufficient detail to enable the State payment stablecoin regulator and State level regulatory regime to make any changes necessary to meet or exceed the standards and requirements described in 4(a)