July 18 Rulemaking Will Decide Stablecoin Survivors

GENIUS became law on July 18. Federal and state regulators have one year to write implementing rules. That deadline will trigger the full compliance requirements set out in the statute.

When the rules are finalized, Section 13 of the law will require stablecoin issuers to meet standards for reserve composition, monthly independent audits, licensing, anti-money-laundering programs, transaction monitoring, sanctions screening, customer due diligence and redemption procedures.

The law requires reserves to be held in highly liquid, government-backed assets such as demand deposits, short-dated Treasury bills, overnight repurchase agreements and government money market funds. A registered public accounting firm must review reserve reports monthly, and chief executive and finance officers must personally certify those reports. The statute also treats issuers as financial institutions under the Bank Secrecy Act.

The stablecoin market remains concentrated. Total market capitalization is about $311.5 billion, with the two largest tokens holding roughly 80% of the supply. One issuer holds about $184.4 billion and another about $73.3 billion; one of those issuers reported $73.7 billion in circulation as of June 29 and keeps reserves largely in a government money market fund managed by an asset manager.

Executives and industry strategists say the law creates fixed operational costs that recurrently affect issuers. Zaheer Ebtikar, chief strategy officer at Plasma, warned the compliance burden is “a recurring operational infrastructure involving segregated reserve accounts, monthly independent audits, transaction monitoring, and dedicated compliance personnel,” and said mid-sized issuers face high setup costs before meaningful issuance.

Reserve income will be a primary source of revenue to cover compliance expenses. At a 3.74% secondary-market yield on three-month Treasury bills, a $200 million stablecoin generates about $7.5 million in gross reserve income per year; a $2 billion program produces roughly $74.8 million; a $10 billion program yields about $374 million. Assuming an annual compliance cost of $15 million for audits, legal, AML systems and licensing, compliance would consume roughly 201% of the smaller issuer’s gross reserve income, about 20% for a $2 billion issuer, and about 4% for a $10 billion issuer.

Mike McCluskey, chief executive of tx, described the law as establishing a compliance cost floor that affects smaller participants more heavily than large incumbents. The statute also bans paying holders interest or yield solely for holding a token, shifting economic competition toward how reserve income is managed and distributed.

The law includes a scale-based regulatory pathway. Issuers with under $10 billion in outstanding stablecoins may remain under state regimes if regulators certify those regimes as substantially similar to the federal framework. Crossing the $10 billion threshold requires a transition to federal oversight within 360 days unless a waiver is granted. Ebtikar said the $10 billion provision could act as a growth ceiling for some firms and that the compliance impact will show up in margins and reserve management before any acquisition activity.

Payment companies and exchanges, including major card networks and large crypto platforms, are among more than 140 firms building a dollar stablecoin designed to share reserve earnings with participants after fees. The GENIUS law’s restrictions on yield and its reserve rules make reserve income and distribution networks central to competitive strategy.

The statute sets an additional milestone: starting July 18, 2028, digital asset service providers generally cannot offer a payment stablecoin to U.S. users unless it is issued by a permitted or qualifying foreign issuer. Ebtikar warned tokens outside the permitted perimeter would lose exchange access, liquidity and users in that order.

With the one-year rulemaking clock running, issuers face choices about reserves, corporate governance, compliance staffing and possible partnerships or sales as they prepare for federal and state implementation. Market participants have treated the deadline as a test of which stablecoin issuers can meet the operational and financial demands the law requires.