Money & Finance › Currencies, the dollar & crypto › GENIUS Act (2025): the federal law for payment stablecoins
GENIUS Act reserve rules: 1:1 in cash and short T-bills
· Law or rule
Fact, law or dataA rule, statute, definition or measured number.
The GENIUS Act requires every payment stablecoin to be backed one-for-one by cash and very short-term US government assets.
See it on the Money & Finance map →How it works
Allowed reserves are currency, Fed balances, bank deposits, Treasury bills, notes or bonds maturing within 93 days, overnight repos backed by Treasuries, and government money market funds holding those. Reserves cannot be re-pledged except in repos for liquidity. Each month the issuer publishes their makeup, examined by a registered accounting firm; the CEO and CFO certify it, with criminal penalties for false statements. Issuers above $50 billion must publish audited annual financials. Holders must be able to redeem promptly at $1.
Why it matters
They make a stablecoin closer to a government money market fund than a bank: little credit or interest-rate risk, so a run should be survivable.
Think of it like
Like a tenant's security deposit held in a segregated trust account: the money must sit in safe, liquid form, not be put to work.
Facts, rules and data
The reserve section of the GENIUS Act's text, and issuers' monthly reserve reports; Circle and Tether published attestations even before the law.
Debates and risks
Whether short T-bills can be sold fast enough in a severe run, and how regulators will set extra capital and liquidity buffers.
Connections (3)
▸GENIUS Act reserve rules: 1:1 in cash and short T-bills require backing in cash and Treasury bills (T-bills)Fact, law or data
The connection
The reserve list centers on cash, bank deposits and Treasury securities maturing within 93 days, in effect T-bills, plus repos backed by them and government money funds holding them. Bills are the easiest dollar asset to sell quickly at a known price, and they pay close to the Fed's policy rate.
When and why
Set by the GENIUS Act in July 2025; Tether and Circle already held mostly bills before then.
How we know
Reserve reports show Tether with about $115 billion in T-bills in June 2026; Circle's reserve fund holds bills and Treasury repo.
Debates and risks
Whether regulators will later widen the list to longer Treasuries or other assets if issuers lobby for more yield.
▸GENIUS Act reserve rules: 1:1 in cash and short T-bills aim to prevent the stablecoin version of Bank runs: when depositors all want out at onceFact, law or data
The connection
A stablecoin promises $1 on demand, like a bank deposit, so fear can trigger mass redemptions. Requiring full backing in cash and short bills means an issuer can sell assets near face value and pay everyone. TerraUSD, an algorithmic token with no cash or T-bill reserves, collapsed in 2022; USDC dipped when reserves were stuck at a failed bank.
When and why
Rules written in 2025, after the 2022 TerraUSD collapse and the March 2023 USDC depeg.
How we know
Past runs show what failed; the new reserve rules have not yet been tested by a major run.
Debates and risks
Whether dumping billions of T-bills within hours during a panic would move prices, and whether the Fed would ever step in.
▸GENIUS Act reserve rules: 1:1 in cash and short T-bills lock in Stablecoins as major buyers of Treasury billsMainstream view
The connection
Because the law allows almost nothing but cash, deposits, short Treasuries and Treasury-backed repos, every dollar of stablecoin growth must land in those assets. Cash and deposits pay little, so issuers keep most reserves in bills and repo to earn their profit. Growth in tokens therefore becomes growth in bill demand.
When and why
US law since July 2025; visible in Tether's and Circle's reserve reports.
How solid is the link?
Monthly reserve reports show the mix; the link is mechanical, not a forecast.
Debates and risks
Whether issuers shift toward bank deposits, as banks would like, reducing the T-bill share.