Launching State-Chartered Stablecoin Regimes under the GENIUS Act: Unlocking State-Led Innovation in Digital Currency

By

Carlo D’Angelo, Founder, Stablecoin Solutions[1]

In July 2025, the United States enacted its first comprehensive stablecoin law, the Guiding and Establishing National Innovation for U.S. Stablecoins Act of 2025 (GENIUS Act). This landmark law establishes a federal framework to ensure stablecoins are safe, fully backed, and trustworthy, helping bring the industry from a “Wild West” era into the regulated mainstream. A centerpiece of the GENIUS Act is its dual state-and-federal regulatory structure for “payment stablecoins,” which empowers U.S. states to charter and oversee stablecoin issuers under certain conditions, in parallel with federal oversight. In effect, the Act gives states a green light to innovate with state-backed stablecoins—as long as they meet uniform national standards—creating a partnership between state regulators and federal authorities. This whitepaper provides an overview of the GENIUS Act’s state charter framework, explains the concept of “state qualified” stablecoin issuers and the role of the Stablecoin Certification Review Committee (SCRC), and outlines the benefits and next steps for states looking to launch compliant stablecoin regimes.

Dual Regulatory Framework and "State Qualified" Issuers

Under the GENIUS Act, stablecoin issuers have two regulatory pathways: they can either obtain a federal license or operate under a state-chartered regime that adheres to federal standards. In practice, this means a prospective issuer may choose to be regulated at the federal level (e.g. via an OCC special stablecoin charter) or by a state if that state’s rules are “substantially similar” to the federal requirements. This dual framework blends federal oversight with state authority, recognizing states’ expertise in fintech regulation while ensuring a baseline of safety and consistency nationwide. To prevent regulatory arbitrage by large players, the Act mandates that any issuer with over $10 billion in stablecoins outstanding must be federally supervised; even if such an issuer started under a state charter, it must switch to a federal regulator once it exceeds the threshold. Likewise, insured depository institutions (banks and credit unions) or any OCC-chartered stablecoin entity cannot opt for state oversight—they are regulated federally by default. These guardrails ensure the biggest stablecoin issuers remain under direct federal oversight, while smaller and mid-sized issuers can operate under state charters if the state framework meets federal criteria.

How Can States and Small to Mid-Sized Banks Benefit from a GENIUS Act Charter?

Texas, for example, is home to one of the nation’s densest communities of small and mid‑sized banks—often referred to as community banks with under $10 billion in assets. As of late 2024, roughly 96 percent of all Texas banks fall into this category, holding about 39 percent of the state’s banking assets across some 426 institutions in the Eleventh Fed District (which includes Texas). See https://www.dallasfed.org/research/swe/2024/swe2418?utm_source=chatgpt.com. These banks are typically agile, deeply rooted in local markets, and accustomed to serving regional businesses and communities—making them ideal candidates to become state qualified payment stablecoin issuers under the GENIUS Act.

By offering state stablecoin charters in Texas under the GENIUS Act, smaller banks will gain a new, innovative avenue to diversify services—launching a fully-reserve backed payment stablecoin that functions under a federally certifiable regime. This enhances their competitive positioning and opens doors to fintech partnerships and digital revenue streams. For the state, empowering these local institutions strengthens regional banking ecosystems, retains financial activity in‑state, and positions Texas as a leader in digital innovation. Stablecoin issuance from community banks could drive economic growth, spur fintech investment, and modernize payments—while preserving the state’s supervisory role and reinforcing local trust and oversight.

If a state’s regulatory regime is approved as equivalent under the GENIUS Act, that state gains the ability to license “state qualified payment stablecoin issuers.” A state qualified payment stablecoin issuer is simply a stablecoin issuer chartered and supervised at the state level under a regulatory framework that has been federally certified as meeting the GENIUS Act’s standards. In other words, it’s a state-approved issuer that counts as a permitted stablecoin issuer under federal law by virtue of its compliant state regime. These issuers remain primarily regulated by their home state, but must uphold the same strict requirements (like 1:1 dollar reserve backing, audited reserves, redemption rights, etc.) imposed on federally licensed issuers. The result is a kind of “cooperative federalism” model: states serve as the day-to-day regulators for their stablecoin issuers, but all under a uniform set of rules vetted by federal authorities. This approach lets states continue their pioneering role in crypto oversight while avoiding a patchwork of fifty divergent standards.

Stablecoin Certification Review Committee (SCRC)

To make the dual system work, the GENIUS Act creates a federal Stablecoin Certification Review Committee (SCRC) that bridges state and federal regulation. When formed, the SCRC panel will likely include top financial regulators from U.S. Treasury, Federal Reserve, and FDIC. Its job will be to evaluate state stablecoin regulatory frameworks and certify which states meet the bar. A state that wishes to oversee stablecoin issuers must have in place a legal and regulatory framework “substantially similar” to the federal standards, covering key areas like 100% reserve requirements, monthly audits, capital and liquidity minimums, redemption guarantees, consumer protection, and so on. The SCRC must unanimously agree that a given state’s laws are equivalent to the federal framework before that state’s regime is federally certified. This high regulatory bar underscores why states aiming to establish a GENIUS Act–compliant charter would benefit greatly from partnering with experienced strategic advisors who can guide the certification process from start to finish.Once a state is SCRC-certified, any stablecoin issuer licensed under that state framework is treated as a permitted issuer under the GENIUS Act (i.e., a “state qualified” issuer) without needing a separate federal license.

The Act sets an expedited timeline for this certification process. Regulators are directed to fast-track review for states that already have robust digital asset rules, with a goal of approving the first state regimes within 180 days of the Act’s passage. See GENIUS Act at Sec. 106(b). This sense of urgency is because several states—such as New York, Texas, Wyoming, and others—already have pre-existing crypto banking or stablecoin regulations and are eager to continue their programs under the new law. By late 2025, we expect to see the first wave of states applying for SCRC approval. Once approved, those states maintain primary supervision of their stablecoin issuers, with federal regulators as a backstop in case of problems. Notably, the GENIUS Act explicitly preserves states’ rights to oversee their own chartered institutions, clarifying that nothing in the federal law limits a state’s authority to supervise and examine entities it charters. In short, the SCRC process ensures high standards and consistency, but day-to-day oversight remains with the state for any state-qualified issuers – a critical point for state regulators concerned about losing control. At the same time, the GENIUS Act includes a federal preemption clause to allow a state-chartered bank’s stablecoin to operate across the country without separate state licenses, enhancing nationwide usability of state-issued coins.

Benefits for States

State participation in the GENIUS Act framework offers significant benefits for forward-looking states. By establishing a compliant stablecoin regime, states can retain local control over an emerging financial market, attract fintech business and innovation, and improve public sector financial efficiency. In particular:

• Preserve Local Oversight: States that get their frameworks certified can continue to license and supervise stablecoin issuers domiciled in-state, rather than seeing all stablecoin activity move under exclusive federal control. A certified state remains the primary regulator for its stablecoin issuers, preserving its authority and expertise. The GENIUS Act explicitly protects this arrangement: it includes provisions clarifying that state-chartered stablecoin entities remain subject to the home state’s supervision. This empowers states to enforce their rules and protect local users, all while operating under the umbrella of federal standards.

• Attract Fintech Investment and Innovation: By offering a state-run path to stablecoin issuance, a state can position itself as a fintech-friendly jurisdiction and hub for digital asset innovation. Businesses that want to issue or use stablecoins may flock to states with clear, friendly regulatory regimes. The mere existence of a well-defined stablecoin charter can draw startups, tech firms, and financial institutions to set up shop in-state, creating jobs and investment. As the recent federal law validates stablecoins as a mainstream payment medium, states have an opportunity to promote local innovation in this sector under safe conditions. For example, a well-run state stablecoin program could attract major payment companies or blockchain firms to partner with the state. Early-adopter states are already eyeing this benefit – as noted in the guide, a compliant state stablecoin could “attract fintech business to the state” by leveraging a favorable regime.

• Improve Government Efficiency: Perhaps the most exciting benefit is the potential to streamline public-sector financial operations using stablecoins. State governments handle enormous volumes of payments—paying vendors, disbursing benefits, collecting fees and taxes—often through slow, costly traditional methods. A state-issued, fully-reserved stablecoin allows instant settlement of transactions, reducing delays and costs for both the government and recipients. Wyoming’s recent pilot of a state stablecoin vividly demonstrated this efficiency gain: in July 2025, Wyoming tested its “Wyoming Stable Token” and was able to cut a typical 45-day vendor payment process down to a matter of seconds using blockchain-based stablecoin transfers.[2] This kind of improvement can save taxpayer money and improve service delivery. Beyond faster payments, stablecoins enable new capabilities like programmable funds (for example, automatically enforcing spending rules via smart contracts) and greater transparency in government finances. Overall, a state that adopts stablecoin technology under the Act’s safeguards could significantly modernize its financial infrastructure. As the Wyoming pilot showed, a compliant state stablecoin can “reduce costs and delays in government payments” while maintaining full trust in the funds.

Next Steps for States

For state officials and policymakers, launching a GENIUS Act-compliant stablecoin regime involves a clear sequence of steps. States that wish to reap the benefits outlined above should begin planning and capacity-building now. Below is a high-level roadmap for states to adopt a compliant framework and get a state-chartered stablecoin off the ground:

1. Establish a GENIUS Act–Aligned Legal Framework: Pass state legislation or regulations that mirror the federal stablecoin standards, so that your state’s rules are “substantially similar” to those in the GENIUS Act. This means instituting requirements such as 1:1 high-quality reserve backing for any stablecoin issued, independent audits and examinations, clear redemption rights for coin holders, strong consumer protections, and prudential measures like capital and liquidity minimums for issuers. States that have already enacted digital asset laws (for example, Wyoming’s SPDI bank charter or New York’s BitLicense regime) may only need to tweak existing statutes to meet the federal baseline. For other states, engaging with legislators, state banking commissioners, and industry experts to draft model stablecoin legislation will be an essential first step. The goal is to get your state framework federally certified by the SCRC. Early movers will take advantage of the Act’s 180-day fast-track window for review, potentially becoming certified within months of the law’s effective date. Once the SCRC is formed and unanimously approves a state’s regime, that state then becomes an “SCRC-certified” jurisdiction and can begin licensing state qualified stablecoin issuers.

2. Charter or Designate a Compliant Issuing Entity: With the legal framework in place, identify the vehicle that will actually issue and manage the stablecoin. This could be an existing state-chartered bank or trust company that the state authorizes to launch a stablecoin product, or it could be a newly chartered special-purpose entity. Some states may choose to create a state-controlled commission or public authority (as Wyoming did with the WYST Commission) to issue a state-run stablecoin on behalf of the government. Others might empower a private sector player under state supervision—for instance, granting a state trust company license to a fintech firm that will issue the coin. In any case, the issuer must be structured to meet all GENIUS Act criteria. If it’s a bank subsidiary or a private firm, it will need to maintain the required safeguards just as a federally regulated issuer would. The state’s banking department should be closely involved in vetting the entity’s business plan, governance, technical capabilities, and financial strength before granting a stablecoin charter or license. Once licensed, the issuer will be regulated by the state’s financial regulator under the certified framework (with federal oversight in reserve). It’s also wise to coordinate with federal regulators during this phase, to ensure the entity’s plan will pass muster—remember that even state-chartered issuers ultimately require federal blessing as “permitted” issuers.

3. Ensure Operational Readiness (Reserves, Technology, and Controls): Launching a stablecoin requires robust operational infrastructure. A state-chartered issuer must adhere to the same stringent prudential standards as any issuer in the country, so careful planning and investment are needed. Key operational elements include: 

Reserve Management—the issuer must hold 100% of stablecoin reserves in approved high-quality assets (like U.S. dollars, Treasury bills, or equivalents) and custody those reserves safely (e.g. in segregated accounts with a federally insured bank or the state treasury). Strong safeguards should be in place to ensure reserves are bankruptcy-remote and cannot be diverted or pledged for other uses. Regular reserve attestations or audits (at least monthly) will be required to verify full backing. 

Redemption Mechanisms—the state should establish user-friendly processes for redeeming the stablecoin: holders (citizens, businesses, etc.) must be able to exchange the token for fiat currency (e.g. $1 per token) at par value, on demand, subject to standard KYC/AML checks. This may involve setting up a redemption portal through state agencies or partnering with local banks/payment processors to handle conversions. Clear terms of redemption (including any fees and expected time frames, which ideally would be near-instant) should be published to build public confidence. 

Technology and Cybersecurity—choose a reliable blockchain or distributed ledger platform for the stablecoin. Factors to consider include transaction speed, security, scalability, and cost. Some states might opt for established public networks (like established L-1 chains) or possibly use permissioned side-chains for more control. Smart contract programming must incorporate compliance features—for example, the ability to freeze or wipe tokens if required by law enforcement, and embedding rules to prevent unauthorized transfers. Rigorous cybersecurity testing, audits of smart contracts, and an incident response plan are a must to protect against hacks or failures. 

Compliance and Oversight—implement strong anti-money-laundering (AML) and know-your-customer (KYC) programs from day one. Even if the state is the issuer, it must comply with Bank Secrecy Act requirements, which may mean registering the program, training staff, or partnering with experienced crypto compliance firms to monitor transactions on the blockchain for illicit activity. The state should also set up an examination and reporting schedule for the stablecoin issuer, just as it would for a bank, to continually supervise risk management. By addressing these operational components, a state will ensure its stablecoin is not only legally compliant but also technologically sound and secure for users.

By following these steps a state can confidently launch its own stablecoin regime under the GENIUS Act. The payoff is a regulated digital currency that carries the state’s imprimatur, is interoperable with the broader U.S. financial system, and serves the public interest. In the next sections of this white paper, we will delve deeper into implementation considerations, stakeholder engagement, and strategies for scaling state-issued stablecoins in a safe and sustainable manner. But the message at the outset is clear: states now have a pathway to innovate with stablecoins on their own terms, and early adopters stand to gain a leadership advantage in the digital economy. The GENIUS Act’s dual regulatory regime presents a historic opportunity for states to modernize their financial services, attract fintech growth, and better serve their citizens through the prudent use of stablecoin technology.

Now is the time for states to lead. The GENIUS Act offers not just permission—but a strategic framework—for forward-thinking states to shape the future of digital public finance. By establishing a certified regime, chartering compliant issuers, and embracing blockchain-backed efficiency, states can unlock new sources of revenue, drive local innovation, and deliver faster, more transparent services to their citizens.

The path is clear. The tools are available. What’s needed now is leadership.

If your state is ready to seize this opportunity, Stablecoin Solutions stands ready to help—from policy design to certification and launch. Let’s build the first generation of trusted, regulated, and state-powered digital dollars—together.

Disclaimer

Stablecoin Solutions provides strategic and educational consulting services related to stablecoins, digital assets, and financial regulation. This white paper is for informational purposes only and does not constitute legal advice or create an attorney-client relationship. For legal, tax, or investment guidance, please consult a licensed professional in your jurisdiction.

[1] Carlo D’Angelo is a digital asset attorney, former law professor, and founder of Stablecoin Solutions, a consulting firm that advises U.S. states, banks, and family offices on implementing GENIUS Act–compliant stablecoin programs. With over 20 years of legal experience and a background in digital asset regulatory strategy, Carlo helps clients navigate fully-regulated stablecoins with clarity and confidence—bridging the gap between regulation and innovation.

[2] See https://www.coindesk.com/tech/2025/07/17/wyoming-tests-instant-payments-with-state-issued-stablecoin-on-avalanche-based-hashfire?.