The GENIUS Act &
Stablecoin Custody.
The Guiding and Establishing National Innovation for U.S. Stablecoins (GENIUS) Act is the first federal stablecoin law. Signed in July 2025, it creates mandatory custody and reserve requirements for every stablecoin issuer operating in the United States. Here's what it means for custody.
What the GENIUS Act Requires
1:1 Reserve Backing
Every payment stablecoin must be backed by reserves equal to or greater than the total outstanding supply. Reserves must be held in U.S. dollars, Treasury bills (≤93 days), repurchase agreements, or central bank reserves.
Segregated Custody
Reserves must be legally segregated from the issuer's operating assets. No commingling. If the issuer fails, reserve assets cannot be claimed by creditors — they belong to token holders.
Regulated Custodians Only
Reserves must be held at regulated financial institutions: insured depository institutions, Federal Reserve banks, or entities approved by the primary federal regulator. No unregulated offshore custody.
No Rehypothecation
Reserve assets cannot be pledged, repledged, hypothecated, or rehypothecated. The reserves sit there — they cannot be lent out, used as collateral, or otherwise deployed for yield.
Monthly Public Attestations
Issuers must publish monthly reserve attestations from a registered public accounting firm. The CEO and CFO must personally certify the accuracy of each report. False certification carries criminal penalties.
Full Annual Audit
For issuers with more than $50B in outstanding stablecoins: a full annual audit of reserve assets is required. This goes beyond the attestation model that most issuers currently use.
Implementation Timeline
Who Meets GENIUS Act Standards?
Based on our analysis of public disclosures, here is where the major stablecoin issuers stand relative to GENIUS Act requirements. Final rules may change specific requirements.
| Issuer | Token | Segregated | Reg. Custodian | Attestations | No Rehypo |
|---|---|---|---|---|---|
| Circle | USDC | ✅ | ✅ | ✅ | ✅ |
| Paxos | USDP | ✅ | ✅ | ✅ | ✅ |
| PayPal / Paxos | PYUSD | ✅ | ✅ | ✅ | ✅ |
| Ripple | RLUSD | ✅ | ✅ | ✅ | ✅ |
| Tether | USDT | ❓ | ❓ | ❓ | ❓ |
✅ = Publicly disclosed compliance. ❓ = Insufficient public disclosure or non-U.S. domiciled issuer. Assessment based on public disclosures as of February 2026. This is not legal advice.
How Proof of Custody Solves the Verification Problem
The GENIUS Act mandates what proof of custody has always advocated: verifiable, segregated reserve management with independent oversight. Monthly attestations with CEO/CFO certification raise the bar from voluntary transparency to legal requirement.
But attestations alone are not enough. An attestation confirms what exists at a point in time — it doesn't provide continuous verification. The next frontier is on-chain proof of reserves combined with regulatory attestations: the best of both worlds.
Our scoring framework evaluates every stablecoin issuer not just on whether they publish attestations, but on the entire custody architecture: who holds the reserves, how they're segregated, what insurance exists, and whether the custodian is a qualified institution under federal law.
See How Every Issuer Scores
Our six-category scoring framework evaluates every stablecoin issuer and custody provider. See the full rankings.
View Stablecoin Scores