GENIUS Act Does Not Broadly Exempt Stablecoin Firms From State Licensing

The GENIUS Act establishes federal rules for payment stablecoin issuers, but businesses that handle stablecoins for customers may still face state licensing requirements based on their activities. The federal rules for payment stablecoin issuers do not create a broad exemption for other firms.

Exchanges, wallets, payment processors and remittance companies may still need to register with the Financial Crimes Enforcement Network (FinCEN) as money services businesses and obtain state money-transmission or virtual-currency licenses.

Requirements depend on whether a business receives, controls, exchanges or transfers value for customers, and which entity performs each step. Approval as an issuer or registration with FinCEN does not automatically satisfy other federal requirements or state licensing rules.

The law provides a state-law arrangement for certain approved issuers. It does not broadly cover third-party businesses such as exchanges, distributors, wallets and payment companies. Because states vary in their definitions, exemptions and licensing systems, firms must assess their activities and the states where they operate.