Crypto glossary
Payment stablecoin
A payment stablecoin is the US legal category set by the GENIUS Act for dollar payment tokens that must be fully reserved and issued by licensed firms.
The GENIUS Act, signed in July 2025, defines a payment stablecoin as a digital asset designed for payment or settlement that the issuer must redeem for a fixed amount of money. Only permitted issuers may offer them in the United States: subsidiaries of insured banks, federally licensed non-bank issuers and, below a size threshold, state-regulated issuers under comparable rules.
Issuers must back every token one to one with high-quality liquid assets such as cash, insured deposits, short-term Treasury bills and certain repos, publish monthly reserve reports examined by an accounting firm and follow anti-money-laundering and sanctions rules, including the ability to freeze tokens. Payment stablecoins that comply are explicitly not securities or commodities under federal law.
The law bars issuers from paying interest or yield to holders, a point that pushes yield-bearing products into other legal forms. Foreign issuers face conditions to be offered in the US, and the rules phase in through regulations written by banking agencies, so details on supervision and implementation dates continue to evolve.
Example
A fintech wanting to issue a dollar token to US users applies for a federal licence, keeps its reserves in Treasury bills and bank deposits and publishes a monthly breakdown certified by its accountants.