The GENIUS Act explained: what it changes for stablecoins

The GENIUS Act explained: what it changes for stablecoins

The GENIUS Act is the first US federal law on payment stablecoins. It was signed in the summer of 2025, but it will only take full effect after regulators finish writing the rules.

In this guide, we explain what exactly it regulates, when it takes effect and what changes for those who move USDT and USDC between exchanges every day.

What the GENIUS Act is

The law sets rules for payment stablecoins in the US. These are tokens pegged to the dollar that the issuer commits to redeem at a fixed price.

Before the law, there were no unified federal rules. Issuers operated under individual state licenses or entirely outside US supervision, and each disclosed the composition of its reserves in its own way.

What requirements the GENIUS Act sets for stablecoins

The core idea is simple: every token must be backed by real assets. The other requirements follow from it.

• one-to-one reserves - every token issued must be matched by a dollar in cash, deposits or short-term US Treasuries;
• regular disclosure - the issuer publishes the composition of its reserves so holders can see what backs the token;
• supervision - only issuers under federal or state supervision will be able to issue payment stablecoins in the US;
• holder protection - if the issuer goes bankrupt, token holders get priority claims on the reserves;
• no interest - the issuer does not pay holders yield just for holding the token.

In our view, the first and second points matter most for the market. It is reserve transparency that resolves the main question that has hung over stablecoins for years.

When the GENIUS Act takes effect

The law has two dates, and whichever comes first applies. Either January 18, 2027, or 120 days after regulators publish final rules.

The Office of the Comptroller of the Currency (OCC) plans to finalize its part of the rules by October 31, 2026. If that happens, the 120-day countdown will start before the January date.

Before and after: a table of changes

What the GENIUS Act means for USDT and USDC

USDC is issued by the US company Circle, and its model was close to the new requirements from the start. For Circle, the law mostly cements what already works.

Tether, the issuer of USDT, is registered outside the US. The law provides a separate procedure for foreign issuers, and how USDT will be available to US users depends on the regulators' rules.

We believe there will be no sharp moves. The law takes effect in stages, and exchanges and issuers have time to prepare.

What changes for an arbitrage trader

During the transition period, stablecoin rates across venues may diverge more than usual. US exchanges will adjust their listings to the new rules, while other venues will not.

From what we see, any regulatory event first hits the liquidity of stablecoin pairs on individual exchanges. The USDT to USDC price and stablecoin rates to fiat start to wander by hundredths of a percent.

A hypothetical example

The numbers below are hypothetical and serve only as an illustration. Suppose that on exchange A the USDT/USDC pair trades at 0.9985, and on exchange B at 1.0005.

A difference of about 0.2% on a 10,000-dollar trade gives 20 dollars before costs. Subtract trading fees on two exchanges and the network fee for the transfer, and very little may be left of that amount.

That is why such a trade has to be calculated in advance, with a full list of costs. A rate spike on news about the law often disappears faster than the transfer arrives.

How to prepare for the law taking effect

• keep part of your balance in two different stablecoins so you do not depend on a single issuer;
• watch exchange announcements about listing and delisting stablecoins for US users;
• check the stablecoin's rate to the dollar on several venues, not just one;
• mark the dates: the OCC final rules, 120 days after them and January 18, 2027.

Our tools

During the transition period, stablecoin rates diverge by hundredths of a percent, and you can only notice it by comparing dozens of exchanges at once. Our arbitrage screener keeps dozens of venues in one window, refreshes quotes every second and shows each gap together with the volume actually behind it. The spread calculator helps you check what survives fees, network costs and slippage at your size. The bot is fully manual. It never connects to your exchange API keys.

To test the tools on a live market, ArbitrageScanner offers one day of free access to the whole ecosystem.

FAQ (Frequently Asked Questions)

1. What is the GENIUS Act in simple terms?

It is a US federal law on payment stablecoins. It requires one-to-one reserves, regular disclosure of their composition and supervision of issuers.

2. When does the GENIUS Act take effect?

On January 18, 2027, or 120 days after the regulators' final rules - whichever comes first. The OCC plans to finalize the rules by October 31, 2026.

3. Will USDT be banned in the US under the GENIUS Act?

The law does not ban USDT directly. There is a separate procedure for foreign issuers, and USDT's availability in the US will depend on the regulators' rules.

4. How does the GENIUS Act affect USDC?

USDC is issued by the US company Circle, whose model is close to the law's requirements. For Circle, the law mostly cements existing practice.

5. Can you earn interest for holding stablecoins under the GENIUS Act?

The law bans issuers from paying holders interest just for holding the token. Yield products from exchanges and platforms are regulated separately.

6. What does the GENIUS Act change for arbitrage?

During the transition period, stablecoin rates on different exchanges may diverge more. Such trades should be calculated with all fees and network costs included.

Conclusion

The GENIUS Act introduces unified rules for payment stablecoins in the US: one-to-one reserves, disclosure, supervision and holder protection. It takes effect on January 18, 2027, or earlier if regulators finish the rules quickly.

For an arbitrage trader, it is not a reason to panic but a reason to watch the dates and rates. The transition period will bring small stablecoin gaps, and the winner will be the one who keeps a balance in several coins in advance and counts the costs.

IMPORTANT! We are software developers. We do not give recommendations or promises of earnings and we do not advise you to invest your money anywhere. Our software is fully manual, all your money stays under your own control. We show examples of how our clients have earned on arbitrage in the past, but we do not advise repeating those actions one to one. Your earnings depend solely on your own actions and on market factors.