The GENIUS Act became the first federal law in the United States to regulate payment stablecoins when it was signed as Public Law 119-27 on July 18, 2025CITE:E1. The statute's stated purpose is "to provide for the regulation of payment stablecoins, and for other purposes"CITE:E1. That single date — July 18, 2025 — anchors every reserve, disclosure, and prohibition rule that follows.
Permitted payment stablecoin issuers must maintain identifiable reserves backing their outstanding stablecoins on an at least 1-to-1 basisCITE:E2. The law does not let issuers choose freely what counts as reserve: qualifying assets are limited to U.S. coins and currency, including Federal Reserve notes, or balances held at a Federal Reserve Bank, plus Treasury bills, notes, or bonds with a remaining maturity of 93 days or lessCITE:E3. The 93-day ceiling keeps issuers confined to the shortest end of the Treasury curve, which matters for how their income behaves as short-term rates move.
Issuers must publicly disclose their redemption policy and publish the monthly composition of their reserves on their websiteCITE:E4. Combined with the 1-to-1 and 93-day rules above, this creates a recurring, public paper trail: every month, the market can check what is actually sitting behind circulating stablecoins.
By confining reserves to cash and Treasuries maturing within 93 daysCITE:E3, the GENIUS Act channels stablecoin growth directly into demand for U.S. government debt. On the day the Act was signed, Treasury Secretary Scott Bessent said the law "will buttress the dollar's status as the global reserve currency, expand access to the dollar economy for billions across the globe, and lead to a surge in demand for US Treasuries, which back stablecoins"CITE:E6. That statement is Treasury's own stated expectation rather than a provision of the statute itself, but it makes explicit why the reserve-asset rule was written the way it was.
Issuers earn on the same reserve assets the law requires them to hold, not on fees charged to token holders. Circle Internet Group's second-quarter 2026 results show total revenue and reserve income of $701 million, up 7% year-over-yearCITE:E5, of which reserve income alone was $668 million, up 5% year-over-yearCITE:E5. Circle attributed the reserve-income growth primarily to a 25% increase in average USDC in circulation, partially offset by a 66 basis-point decline in its Reserve Return RateCITE:E5.
| Metric (Circle, Q2 2026) | Value | YoY change |
|---|---|---|
| Total revenue and reserve income | $701 million | +7% |
| Reserve income | $668 million | +5% |
| Average USDC in circulation | — | +25% |
| Reserve Return Rate | — | -66 bps |
The GENIUS Act states that "no permitted payment stablecoin issuer or foreign payment stablecoin issuer shall pay the holder of any payment stablecoin any form of interest or yield"CITE:E7. This provision sits directly next to the reserve-income mechanics above: issuers collect income from their 93-day-or-shorter Treasury and cash holdingsCITE:E3, but the law prevents that income from being passed through to the people holding the stablecoin itselfCITE:E7.
Taken together, the reserve rules, disclosure requirements, and interest ban form one connected structure: the GENIUS Act pushes issuer reserves into short-dated Treasuries and cashCITE:E3, which Treasury's own July 18, 2025 statement frames as a driver of Treasury demandCITE:E6, while the same law keeps the resulting income — $668 million in Circle's case for Q2 2026CITE:E5 — on the issuer's side of the ledger by prohibiting interest payments to holdersCITE:E7.
The GENIUS Act became the first federal law in the United States to regulate payment stablecoins when it was signed as Public Law 119-27 on July 18, 2025CITE:E1…
Permitted payment stablecoin issuers must maintain identifiable reserves backing their outstanding stablecoins on an at least 1-to-1 basisCITE:E2.
Issuers must publicly disclose their redemption policy and publish the monthly composition of their reserves on their websiteCITE:E4.
By confining reserves to cash and Treasuries maturing within 93 daysCITE:E3, the GENIUS Act channels stablecoin growth directly into demand for U.S.
The structure here is worth naming plainly: the GENIUS Act requires reserves in cash and Treasuries maturing within 93 days, and separately bars issuers from paying that reserve income to token holders. Those two rules together are what turn a stablecoin issuer into a spread business — Circle's Q2 2026 reserve income of $668 million, on $701 million total revenue, is a direct product of holding short-dated Treasuries while owing depositors nothing in interest. The number to watch going forward is the Reserve Return Rate, which Circle reported falling 66 basis points even as average USDC in circulation grew 25% — that's the tension between rate cycles and stablecoin adoption playing out inside the reserve-income line itself, and it's the clearest signal of whether this model holds up as short-term rates move.
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