What is a payment stablecoin under the GENIUS Act?

A payment stablecoin is a digital asset that is, or is designed to be, used as a means of payment or settlement, and whose issuer is obligated to redeem it for a fixed amount of monetary value and represents (or creates a reasonable expectation) that it will keep a stable value against that amount (12 U.S.C. 5901(22)).

The definition has these parts:

• Digital asset: any digital representation of value recorded on a cryptographically secured distributed ledger (12 U.S.C. 5901(6)).
• Use: the asset is, or is designed to be, used as a means of payment or settlement (12 U.S.C. 5901(22)(A)(i)).
• Issuer obligation: the issuer must be obligated to convert, redeem, or repurchase it for a fixed amount of monetary value. A digital asset that is itself denominated in a fixed amount of monetary value is not counted for this purpose (12 U.S.C. 5901(22)(A)(ii)(I)).
• Stable value: the issuer represents that it will maintain, or creates the reasonable expectation that it will maintain, a stable value relative to a fixed amount of monetary value (12 U.S.C. 5901(22)(A)(ii)(II)).
• Monetary value means a national currency, or a deposit denominated in a national currency (12 U.S.C. 5901(17)).

Exclusions: the term does not include a digital asset that is a national currency, a deposit (including a deposit recorded using distributed ledger technology), or a security as defined in the referenced federal securities statutes. A bond, note, evidence of indebtedness, or investment contract issued by a permitted payment stablecoin issuer does not qualify as a security solely because it meets the payment stablecoin conditions (12 U.S.C. 5901(22)(B)).

This answer covers only the definition. Who may issue payment stablecoins and the obligations that apply to issuers are outside this answer.

Sources

1. 12 U.S.C. 5901: https://www.law.cornell.edu/uscode/text/12/5901

This answer is general information, not legal advice. Forteris is not a law firm.