_FINANCIAL-OPERATIONS/
Breaking Down Stablecoin Regulations Under the GENIUS Act and MiCA
By Thierry Coopman · Product Specialist
Stablecoins
E-Money
Regulation
Loading article content
Loading table of contents
Loading author
More and more companies have started to explore the world of nonbank financial services and payment stablecoins over the last several years, and even more are considering entering the game. Now, after seeing how the EU has taken crypto seriously by implementing Markets in Crypto Assets Regulation (MiCA), the U.S. has followed suit with the Guiding and Establishing National Innovation for U.S. Stablecoins (GENIUS) Act.
These moves toward a more regulated environment signal a new era for stablecoins—and hopefully, an environment where stablecoins and similar digital assets can really flourish. That’s great news if you’re an NBFI dealing in stablecoins: Not only will you have the benefit of working with a stable global currency, fewer transaction fees (compared to wire transfers), and access to customers without bank accounts, but you’ll also have more protections and legal clarity.
With that said, keeping in line with new regulations is crucial for NBFIs that want to survive and thrive in this new era. So, how exactly will these new regulations affect you?
Both GENIUS and MiCA are regulatory frameworks for stablecoin crypto asset issuers, with GENIUS focusing solely on payment stablecoins. Both require issuers to maintain full liquid reserves, undergo regular audits, and operate under strict regulatory oversight. Infringements of the rules of these regulations are punishable by fines, penalties, and/or by revoking licenses.
MiCA was approved by the EU in 2023, but did not take effect until March of 2025. However, the European Banking Authority (EBA) recently put out a "no action" statement, delaying the regulations until March of 2026. MiCA covers crypto-asset issuers (not including securities) and crypto-asset service providers (CASPs) throughout the EU.
The GENIUS Act was just passed in July of 2025, first by the U.S. Senate on June 17th and then by the House on July 1st. It will take effect either 18 months after passing or 120 days after final regulations are issued, depending on which occurs first. If this ends up being 18 months after passing, the effective date would be January 18, 2027, while the earliest effective date would be in late 2026. The GENIUS Act only regulates the issuance of payment stablecoins in the U.S. The issuance of a payment stablecoins in the U.S. or in any U.S. territory is only permitted by approved payment stablecoin issuers.
These new regulations are having an impact on how many NBFIs do business and how they keep records of their activities—something that tools like Formance can help with. Below, we’ll outline the key guidelines for compliance, so that you can get a better handle on what you’ll need to keep track of.
Under the GENIUS Act, NBFIs can be approved as “permitted payment stablecoin issuers.” Companies with a market cap of less than $10 billion can apply for a state license, but are still subject to federal rules. If a company has a market cap of over $10 billion, they’ll need a federal license.
To keep that license, NBFIs must follow certain guidelines:
This typically requires special contractual arrangements with deposit institutions regarding how they set up their 'safeguarding' or 'itemized' accounts—meaning you can deposit with them, but the banks refrain from rehypothecating deposits.
The penalties for unauthorized stablecoin issuance—issuing payment stablecoins without being either a permitted issuer or a registered foreign issuer—are pretty harsh: up to $1 million in fines and 5 years of prison.
Meanwhile in the EU, MiCA requires NBFIs issuing or trading in “crypto-assets” to register as an Electronic Money Institution (EMI) or a Crypto-Asset Issuer (CI). To comply with financial standards, an EMI license is necessary for issuing and trading crypto-assets publicly.
MiCA defines a crypto-asset as a digital representation of value that can be transferred and stored digitally and that is not already regulated. This is a broad and at the moment potentially ambiguous definition that covers not just stablecoins, but a wide range of cryptocurrencies and digital currencies.
CIs will need to acquire a Crypto-Asset Service Providers (CASP) license. Prior to the implementation of MiCA, crypto-asset issuers had to have a Virtual Asset Service Providers (VASP) license. VASP license holders were required to switch to CASP licenses at the beginning of 2025 as MiCA took effect, although there may be exceptions after the EBA’s “no action” letter.
The guidelines for NBFIs under MiCA include:
Payment stablecoins (in the U.S.) and crypto-assets (in the EU) are now regulated, which helps to provide stability and certainty in the market. These changes enable all parties to trust in using these new digital means of payment and that’s a good thing. Notably, complying with either MiCA or GENIUS requires NBFIs to track the 1:1 liquid asset requirements with a ledger.
NBFIs issuing crypto-assets or payment stablecoins now need a private, centralized, account-based ledger like Formance Ledger to account for and track the liquid assets backing the digital asset according to these new regulations. This process might sound intimidating, but Formance can make it simple.
With Formance Ledger, you can focus your efforts on your product and on your business while resting assured that everything you need for your next audit is automatically tracked and easy to access—and that digital payments are becoming safer, more reliable, and normalized around the world.
Compare EU e‑money and US payment stablecoins (GENIUS Act): how they work, how they’re regulated, and why issuers need an independent ledger for compliance.
See why classical double-entry can’t trace specific funds—and how alternative models improve asset‑liability mapping, backtracing, and auditability in fintech.
Learn the most common ledger design anti-patterns (zero-entry, single-entry pitfalls) and the accounting principles engineers need to build auditable, drift-resistant systems.
What DORA compliance means for fintechs, NBFIs and marketplaces as digital resilience requirements and vendor oversight reshape the financial ecosystem.
If you work with cross-border payments, you need to be acquainted with the Travel Rule and prepare for stablecoin compliance.