The GENIUS Act, signed into law on 18 July 2025, is the first comprehensive US federal framework for stablecoins. It requires permitted payment stablecoin issuers to maintain 100% reserves in high-quality liquid assets, segregate customer assets, prohibit commingling, and publish monthly attestations. Reserves cannot be rehypothecated except to create short-term liquidity for redemptions. These requirements may sound novel for digital assets. They are not novel for clearing infrastructure.
The principles the GENIUS Act mandates for stablecoins, full reserve backing, segregated custody, no lending against client funds, transparent reporting, are exactly the principles that specialist correspondent institutions apply to fiat clearing. The regulatory frameworks for digital and traditional finance are converging on the same custody model. That convergence has significant implications for the infrastructure that platforms need, and for how they should be thinking about compliance architecture today.
What the GENIUS Act requires
The GENIUS Act creates a dual-track framework. Banks can issue stablecoins through subsidiaries supervised by their existing federal regulator. Non-bank entities can obtain federal or state licences, with issuers above $10 billion in outstanding stablecoins required to operate under federal supervision through the OCC. De novo issuers face a minimum capital requirement of the greater of $5 million or the amount specified in their chartering conditions.
The reserve requirements are prescriptive. As the Richmond Fed's explainer notes, issuers must hold reserves backed at least 1:1 with US dollars, Treasury securities with maturities of 93 days or less, qualifying repo agreements, or government money market funds invested solely in eligible assets. Monthly CEO and CFO certifications of reserve reports are required, alongside regular examination by the appropriate regulator. Issuers cannot pay interest or yield to stablecoin holders.
The custody provisions are equally specific. Gibson Dunn's overview notes that custodial services may only be performed by entities subject to federal or state banking supervision. Reserve assets must be identifiable, segregated, and not commingled with other assets. Federal regulators may not require institutions to include custody assets as liabilities on their balance sheets. In bankruptcy, stablecoin holders receive super-priority claims over general creditors, with reserve assets explicitly excluded from the bankruptcy estate.
The parallel with fiat clearing infrastructure
The overlap between the GENIUS Act's requirements and the operating model of a specialist correspondent institution is striking. 100% reserve backing with no lending against deposits is how a non-lending clearing institution operates, holding client funds in full without deploying them for balance sheet yield. Segregated custody with no commingling is what named custody accounts provide: structural separation of client funds at the account level rather than ledger-based tracking in pooled structures.
Monthly transparency reporting mirrors the FCA's new monthly safeguarding returns under PS25/12 and the DFSA's ongoing disclosure requirements for regulated financial institutions. The prohibition on rehypothecation ensures reserves are available for redemption at all times, precisely the same principle that governs safeguarded funds under UK and EU payment services regulation. The architecture the GENIUS Act prescribes for stablecoins is the architecture that already exists for compliant fiat clearing.
The convergence is not coincidental. Regulators in both traditional finance and digital assets are arriving at the same conclusion: institutions that hold other people's money should not be lending it, commingling it, or relying on internal ledgers to track it. The custody architecture must be structural, transparent, and independently verifiable. Whether the asset being held is a dollar deposit or a tokenised instrument, the custodial obligation is the same.
Implementation is already underway
The Act takes effect on the earlier of January 2027 or 120 days after federal regulators issue final implementing rules. Most regulations are required to be finalised by July 2026, one year after enactment. The FDIC approved its first proposed rulemaking in late 2025, establishing application procedures for FDIC-supervised institutions seeking to issue payment stablecoins through subsidiaries. The OCC followed in February 2026 with a comprehensive proposed rule covering licensing, reserves, redemptions, capital requirements, and operational standards.
Stablecoin transaction volumes have grown significantly since the Act's passage. Visa reported stablecoin settlement activity exceeding $3.5 billion annualised by November 2025. The Conference Board's 2026 digital assets outlook notes the Act may encourage more firms to become stablecoin issuers, including consumer-facing brands seeking to offer dollar-denominated settlement. Circle's successful IPO has further signalled institutional confidence in the stablecoin infrastructure market.
The practical consequence is increased demand for exactly the infrastructure that specialist clearing institutions already provide. As DLA Piper's analysis notes, stablecoin issuers must hold assets like short-term Treasuries, creating demand for custodial services, liquidity management platforms, and real-time reserve auditing. The infrastructure to support compliant issuance, including custody, reserve management, and transparent reporting, must be operational before these regulatory deadlines arrive.
Why this matters for platforms
For platforms that operate in both fiat and digital asset environments, the convergence creates an opportunity to simplify. Rather than maintaining separate custody architectures for fiat safeguarding and stablecoin reserves, platforms can work with institutions that provide both under a unified compliance framework. The infrastructure requirements for compliant stablecoin operations are not additive. They are the same requirements that platforms should already be meeting for fiat safeguarding under the FCA's Supplementary Regime and PSD3.
A specialist correspondent institution operating with 100% reserves, segregated named custody accounts, and transparent reporting can extend the same infrastructure to stablecoin reserve custody without architectural changes. The compliance model is the same. The custody structure is the same. The only difference is whether the underlying asset is fiat currency or a tokenised instrument. Platforms that recognise this convergence early avoid building twice.
Lorum provides clearing, custody, and cash management infrastructure, including stablecoin wallets, within the same regulated framework. The GENIUS Act confirms what the FCA's Supplementary Regime and PSD3 had already signalled: compliant custody infrastructure for digital assets and fiat clearing converges on the same model. Platforms that build on unified infrastructure today are positioned for both regimes from day one.
