A stroke of GENIUS for stablecoins as post-trade faces change
08 Jan 2026
As regulatory clarity brings stablecoins closer to the financial mainstream, asset servicers are assessing what the new framework means for settlement, custody, and post-trade infrastructure
Image: techanimationstock/stock.adobe.com
The Guiding and Establishing National Innovation for US Stablecoins Act, commonly referred to as the GENIUS Act, was signed into law in July 2025, marking the United States’ first comprehensive federal framework for the issuance of payment stablecoins.
Designed to bring regulatory clarity to a market that has long operated in uncertainty, the legislation sets out who can issue stablecoins, how they must be backed by high-quality reserve assets, and the standards required to safeguard the integrity of those reserves, protect users, and support the wider financial system.
When the Act was passed, it was widely positioned as a milestone for digital assets. For the first time, stablecoin issuers were offered a clear legal pathway to operate in the United States, replacing years of legal uncertainty with defined rules and supervisory oversight. Yet for asset servicers, custodians and post-trade infrastructure providers, the significance of the GENIUS Act runs deeper than cryptocurrency markets alone
Although not a settlement reform bill, the legislation arrives at a moment when global markets are already grappling with accelerated settlement cycles, increased automation and growing interest in tokenised infrastructure.
In that context, the GENIUS Act represents something more structural: the formal recognition of regulated digital cash, and with it, the potential reshaping of settlement, liquidity management and operational workflows across capital markets.
A legal framework for digital cash
At its core, the GENIUS Act establishes a new category of regulated issuer known as the permitted payment stablecoin issuer. The issuers are authorised to issue and redeem payment stablecoins, which the Act deems must be backed on a one-to-one basis by high-quality liquid assets (HQLA), subject to strict reserve, disclosure, and risk-management requirements.
The legislation creates three regulatory pathways. Issuers may operate as subsidiaries of insured depository institutions, as federally qualified non-bank issuers supervised by the Office of the Comptroller of the Currency, or as state qualified issuers operating below a defined issuance threshold. From July 2028, only permitted payment stablecoin issuers will be allowed to issue payment stablecoins in the US.
Crucially, the Act explicitly excludes payment stablecoins from the definitions of securities and commodities under existing US financial legislation. This distinction positions stablecoins not as investment products, but as regulated settlement instruments.
For Richard Baker, founder and CEO of Tokenovate, that clarity is foundational. “The GENIUS Act, together with the newly published guidance by the Commodity Futures Trading Commission on tokenised settlement for digital assets, reinforces the wider shift towards market modernisation,” he says.
“By removing structural uncertainty and providing regulatory clarity, they signal that automation, interoperability and clear synchronisation between onchain and off-chain records are essential for safe and resilient markets.”
Baker argues that this framework pushes the industry towards interoperable and automated post-trade infrastructure, laying the groundwork for a move from traditional settlement cycles towards same-day or real-time settlement.
Stablecoins move into the real economy
Over the past few years, stablecoins have evolved rapidly. Once used primarily as settlement instruments within cryptocurrency markets, enabling traders to move value between exchanges, they are increasingly being explored for cross-border payments, treasury operations and enterprise settlement.
Global stablecoin supply has grown sharply, and major payment networks and financial institutions have begun integrating stablecoins into selected payment flows.
Laurent Descout, CEO and co-founder of cross-border payments fintech Neo, says stablecoins are already reshaping how value moves across borders. “Stablecoins are currently shaking up the cross-border payments landscape,” he explains. “Thanks to their ability to facilitate near-instantaneous transactions with lower fees compared to different payment processes.”
By pegging their value to fiat currencies such as the US dollar or euro, stablecoins aim to offer security, transparency, and predictability, while reducing friction inherent in legacy payment rails. Regulatory developments such as the GENIUS Act, Descout adds, suggest that adoption is accelerating, particularly as treasurers monitor evolving regulatory frameworks and reassess their payment options.
For post-trade operations, however, speed introduces new demands. Chris Ostrowski, product management leader at FinScan, an Innovative Systems solution, notes that blockchain-based payments fundamentally alter how settlement and reconciliation are managed.
“Blockchain payments are designed to settle in seconds, and carry the information in the message to assist with reconciliations,” Ostrowski says. “Because of that instant availability, you can no longer have pending payments while everything clears. The reconciliation will be instant, which then requires close monitoring of your liquidity position to stay aligned to the one-to-one requirements the Act enforces.”
In a real-time environment, batch processing gives way to continuous monitoring, and liquidity management becomes an ongoing operational discipline rather than an end-of-day exercise.
Custody, reserves, and investor confidence
For asset servicers, some of the most immediate implications of the GENIUS Act sit in custody and reporting. The legislation requires permitted payment stablecoin issuers to hold reserve assets on a one-to-one basis using high-quality, short-dated instruments. These reserves must be safeguarded with qualified custodians, may not be rehypothecated, and must be disclosed publicly through monthly reserve composition reports examined by independent auditors.
Germán Soto Sanchez, chief product and strategy officer at Broadridge Financial Solutions, says these measures are central to building trust in the stablecoin ecosystem. “The GENIUS Act requires payment stablecoin issuers to hold high-quality reserve assets, safeguard them with qualified custodians, provide monthly reserve disclosures, and publish redemption policies,” Soto Sanchez says.
“Given the importance of investor confidence in the underlying reserve assets, it is reasonable that the composition of the reserve assets would be affirmatively provided to investors on a periodic basis.”
While the Act allows certain forms of commingling within omnibus accounts under defined conditions, it significantly tightens expectations around segregation, transparency and auditability.
For custodians and fund administrators, these principles are familiar, but the challenge lies in applying them to a digital asset class that operates continuously rather than within traditional market hours.
Data, compliance and the limits of legacy systems
Despite assumptions that the GENIUS Act introduces sweeping new data-handling requirements, its impact on data governance is more nuanced. The legislation primarily extends existing Bank Secrecy Act and sanctions compliance frameworks to stablecoin issuers, with a particular focus on detecting illicit activity.
Steve Marshall, director of advisory services for FinScan, notes that permitted payment stablecoin issuers will need to carefully assess their operational partners. “Regulatory guidance around third-party risk management will be an important cornerstone to managing the operational and regulatory risk associated with these offerings,” says Marshall.
Ostrowski adds that many existing reporting frameworks are unlikely to scale effectively in a native blockchain environment. “Over the long term, the data management and reporting frameworks of today will prove to be insufficient,” he says. “Core competencies will still exist, but the framework will need to be enhanced to support cross-blockchain use cases.”
Marshall cautions that the industry risks repeating historical data-quality issues if incentives are not aligned. While stablecoins present an opportunity to improve data standards from the outset, he warns that poor habits have a tendency to persist unless enforcement and accountability are clear.
Artificial intelligence under regulatory scrutiny
The GENIUS Act also signals regulatory expectations around the use of advanced technologies, particularly artificial intelligence in financial crime prevention. While the legislation does not address artificial intelligence-driven investor advice directly, it explicitly references the use of artificial intelligence, application programming interfaces (APIs), and blockchain monitoring tools to detect illicit activity.
Soto Sanchez notes that this creates a clear signal for firms to modernise their compliance tooling. Many financial institutions already operate mature know-your-customer (KYC) and anti-money laundering (AML) frameworks, but operationalising artificial intelligence in a way that meets regulatory expectations for explainability and auditability remains uneven across the industry.
“Currently, the industry is not prepared for the level of reporting and oversight that will come with today’s technology,” Ostrowski says. “Until there is better regulatory guidance and expectations, companies are hesitant to adopt and hand off critical parts of the process to artificial intelligence.”
Marshall adds that accountability will remain firmly with firms themselves. “If artificial intelligence models used in financial crimes prevention overlook customers or activity associated with terrorism, the responsibility will fall on those who developed and use the model,” he says. Compliance leaders, he warns, should be wary of assuming that automation reduces regulatory exposure.
Cross-border implications and fragmentation risk
Beyond the US, the GENIUS Act carries significant cross-border implications. Foreign stablecoin issuers may only access US users if their home regulatory regimes are deemed comparable by the US Treasury and if they meet strict reserve and supervision requirements.
Marshall notes that this effectively pressures foreign jurisdictions to align with US standards if they wish to participate in the US market. At the same time, divergent regulatory approaches in Europe and Asia risk fragmenting the global stablecoin landscape.
Ostrowski points to Europe’s Markets in Crypto-Assets Regulation (MiCA), under which US-issued stablecoins may be treated as non-European tokens, triggering additional restrictions. In Asia, jurisdictions such as Singapore and Hong Kong apply heightened due diligence to foreign-issued stablecoins.
“If similar standards do not exist, you will encounter more complex due diligence, reporting and documentation,” Ostrowski says.
“This will slow down payment speed. Long term, this risks freezing the US out of the market if it tries to set its own standards.”
For Soto Sanchez, interoperability remains the most overlooked issue. Without common standards, he warns, the market could end up with hundreds of stablecoins, each requiring bespoke on and off ramps, ultimately undermining usability and scale.
A foundation rather than a finish line
The GENIUS Act does not resolve every challenge associated with digital assets or post-trade transformation. Implementation will stretch into 2028, and much will depend on forthcoming rulemaking by federal and state regulators.
Compliance costs, operational change and technology investment remain significant hurdles.
Yet for asset servicers, the direction of travel is clear. By establishing a regulated form of digital cash, the GENIUS Act lays the foundation for real-time settlement, continuous liquidity management and deeper integration between traditional and tokenised infrastructure.
As Baker observes, the legislation pushes the industry towards interoperable and automated post-trade systems. Whether firms are ready to meet that challenge will shape the next phase of market modernisation.
Designed to bring regulatory clarity to a market that has long operated in uncertainty, the legislation sets out who can issue stablecoins, how they must be backed by high-quality reserve assets, and the standards required to safeguard the integrity of those reserves, protect users, and support the wider financial system.
When the Act was passed, it was widely positioned as a milestone for digital assets. For the first time, stablecoin issuers were offered a clear legal pathway to operate in the United States, replacing years of legal uncertainty with defined rules and supervisory oversight. Yet for asset servicers, custodians and post-trade infrastructure providers, the significance of the GENIUS Act runs deeper than cryptocurrency markets alone
Although not a settlement reform bill, the legislation arrives at a moment when global markets are already grappling with accelerated settlement cycles, increased automation and growing interest in tokenised infrastructure.
In that context, the GENIUS Act represents something more structural: the formal recognition of regulated digital cash, and with it, the potential reshaping of settlement, liquidity management and operational workflows across capital markets.
A legal framework for digital cash
At its core, the GENIUS Act establishes a new category of regulated issuer known as the permitted payment stablecoin issuer. The issuers are authorised to issue and redeem payment stablecoins, which the Act deems must be backed on a one-to-one basis by high-quality liquid assets (HQLA), subject to strict reserve, disclosure, and risk-management requirements.
The legislation creates three regulatory pathways. Issuers may operate as subsidiaries of insured depository institutions, as federally qualified non-bank issuers supervised by the Office of the Comptroller of the Currency, or as state qualified issuers operating below a defined issuance threshold. From July 2028, only permitted payment stablecoin issuers will be allowed to issue payment stablecoins in the US.
Crucially, the Act explicitly excludes payment stablecoins from the definitions of securities and commodities under existing US financial legislation. This distinction positions stablecoins not as investment products, but as regulated settlement instruments.
For Richard Baker, founder and CEO of Tokenovate, that clarity is foundational. “The GENIUS Act, together with the newly published guidance by the Commodity Futures Trading Commission on tokenised settlement for digital assets, reinforces the wider shift towards market modernisation,” he says.
“By removing structural uncertainty and providing regulatory clarity, they signal that automation, interoperability and clear synchronisation between onchain and off-chain records are essential for safe and resilient markets.”
Baker argues that this framework pushes the industry towards interoperable and automated post-trade infrastructure, laying the groundwork for a move from traditional settlement cycles towards same-day or real-time settlement.
Stablecoins move into the real economy
Over the past few years, stablecoins have evolved rapidly. Once used primarily as settlement instruments within cryptocurrency markets, enabling traders to move value between exchanges, they are increasingly being explored for cross-border payments, treasury operations and enterprise settlement.
Global stablecoin supply has grown sharply, and major payment networks and financial institutions have begun integrating stablecoins into selected payment flows.
Laurent Descout, CEO and co-founder of cross-border payments fintech Neo, says stablecoins are already reshaping how value moves across borders. “Stablecoins are currently shaking up the cross-border payments landscape,” he explains. “Thanks to their ability to facilitate near-instantaneous transactions with lower fees compared to different payment processes.”
By pegging their value to fiat currencies such as the US dollar or euro, stablecoins aim to offer security, transparency, and predictability, while reducing friction inherent in legacy payment rails. Regulatory developments such as the GENIUS Act, Descout adds, suggest that adoption is accelerating, particularly as treasurers monitor evolving regulatory frameworks and reassess their payment options.
For post-trade operations, however, speed introduces new demands. Chris Ostrowski, product management leader at FinScan, an Innovative Systems solution, notes that blockchain-based payments fundamentally alter how settlement and reconciliation are managed.
“Blockchain payments are designed to settle in seconds, and carry the information in the message to assist with reconciliations,” Ostrowski says. “Because of that instant availability, you can no longer have pending payments while everything clears. The reconciliation will be instant, which then requires close monitoring of your liquidity position to stay aligned to the one-to-one requirements the Act enforces.”
In a real-time environment, batch processing gives way to continuous monitoring, and liquidity management becomes an ongoing operational discipline rather than an end-of-day exercise.
Custody, reserves, and investor confidence
For asset servicers, some of the most immediate implications of the GENIUS Act sit in custody and reporting. The legislation requires permitted payment stablecoin issuers to hold reserve assets on a one-to-one basis using high-quality, short-dated instruments. These reserves must be safeguarded with qualified custodians, may not be rehypothecated, and must be disclosed publicly through monthly reserve composition reports examined by independent auditors.
Germán Soto Sanchez, chief product and strategy officer at Broadridge Financial Solutions, says these measures are central to building trust in the stablecoin ecosystem. “The GENIUS Act requires payment stablecoin issuers to hold high-quality reserve assets, safeguard them with qualified custodians, provide monthly reserve disclosures, and publish redemption policies,” Soto Sanchez says.
“Given the importance of investor confidence in the underlying reserve assets, it is reasonable that the composition of the reserve assets would be affirmatively provided to investors on a periodic basis.”
While the Act allows certain forms of commingling within omnibus accounts under defined conditions, it significantly tightens expectations around segregation, transparency and auditability.
For custodians and fund administrators, these principles are familiar, but the challenge lies in applying them to a digital asset class that operates continuously rather than within traditional market hours.
Data, compliance and the limits of legacy systems
Despite assumptions that the GENIUS Act introduces sweeping new data-handling requirements, its impact on data governance is more nuanced. The legislation primarily extends existing Bank Secrecy Act and sanctions compliance frameworks to stablecoin issuers, with a particular focus on detecting illicit activity.
Steve Marshall, director of advisory services for FinScan, notes that permitted payment stablecoin issuers will need to carefully assess their operational partners. “Regulatory guidance around third-party risk management will be an important cornerstone to managing the operational and regulatory risk associated with these offerings,” says Marshall.
Ostrowski adds that many existing reporting frameworks are unlikely to scale effectively in a native blockchain environment. “Over the long term, the data management and reporting frameworks of today will prove to be insufficient,” he says. “Core competencies will still exist, but the framework will need to be enhanced to support cross-blockchain use cases.”
Marshall cautions that the industry risks repeating historical data-quality issues if incentives are not aligned. While stablecoins present an opportunity to improve data standards from the outset, he warns that poor habits have a tendency to persist unless enforcement and accountability are clear.
Artificial intelligence under regulatory scrutiny
The GENIUS Act also signals regulatory expectations around the use of advanced technologies, particularly artificial intelligence in financial crime prevention. While the legislation does not address artificial intelligence-driven investor advice directly, it explicitly references the use of artificial intelligence, application programming interfaces (APIs), and blockchain monitoring tools to detect illicit activity.
Soto Sanchez notes that this creates a clear signal for firms to modernise their compliance tooling. Many financial institutions already operate mature know-your-customer (KYC) and anti-money laundering (AML) frameworks, but operationalising artificial intelligence in a way that meets regulatory expectations for explainability and auditability remains uneven across the industry.
“Currently, the industry is not prepared for the level of reporting and oversight that will come with today’s technology,” Ostrowski says. “Until there is better regulatory guidance and expectations, companies are hesitant to adopt and hand off critical parts of the process to artificial intelligence.”
Marshall adds that accountability will remain firmly with firms themselves. “If artificial intelligence models used in financial crimes prevention overlook customers or activity associated with terrorism, the responsibility will fall on those who developed and use the model,” he says. Compliance leaders, he warns, should be wary of assuming that automation reduces regulatory exposure.
Cross-border implications and fragmentation risk
Beyond the US, the GENIUS Act carries significant cross-border implications. Foreign stablecoin issuers may only access US users if their home regulatory regimes are deemed comparable by the US Treasury and if they meet strict reserve and supervision requirements.
Marshall notes that this effectively pressures foreign jurisdictions to align with US standards if they wish to participate in the US market. At the same time, divergent regulatory approaches in Europe and Asia risk fragmenting the global stablecoin landscape.
Ostrowski points to Europe’s Markets in Crypto-Assets Regulation (MiCA), under which US-issued stablecoins may be treated as non-European tokens, triggering additional restrictions. In Asia, jurisdictions such as Singapore and Hong Kong apply heightened due diligence to foreign-issued stablecoins.
“If similar standards do not exist, you will encounter more complex due diligence, reporting and documentation,” Ostrowski says.
“This will slow down payment speed. Long term, this risks freezing the US out of the market if it tries to set its own standards.”
For Soto Sanchez, interoperability remains the most overlooked issue. Without common standards, he warns, the market could end up with hundreds of stablecoins, each requiring bespoke on and off ramps, ultimately undermining usability and scale.
A foundation rather than a finish line
The GENIUS Act does not resolve every challenge associated with digital assets or post-trade transformation. Implementation will stretch into 2028, and much will depend on forthcoming rulemaking by federal and state regulators.
Compliance costs, operational change and technology investment remain significant hurdles.
Yet for asset servicers, the direction of travel is clear. By establishing a regulated form of digital cash, the GENIUS Act lays the foundation for real-time settlement, continuous liquidity management and deeper integration between traditional and tokenised infrastructure.
As Baker observes, the legislation pushes the industry towards interoperable and automated post-trade systems. Whether firms are ready to meet that challenge will shape the next phase of market modernisation.
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