GENIUS Act Does Not Exempt Stablecoin Companies from State Licensing Requirements

The GENIUS Act establishes a federal framework for the issuance of payment stablecoins, but it does not exempt all stablecoin businesses from money transmission regulations. Exchanges, wallets, payment processors, and remittance companies are still required to register as money services businesses with the Financial Crimes Enforcement Network (FinCEN) and obtain state-level money transmission or virtual currency licenses. Whether a business needs a license depends on whether it receives, controls, exchanges, or transmits value on behalf of customers, as well as which entity performs each of these functions. Approval from the issuer or federal registration with FinCEN does not automatically satisfy other federal requirements or state licensing requirements. The GENIUS Act provides for state law priority applicability for certain approved issuers, but does not universally exempt third parties such as exchanges, distributors, wallets, and payment companies. Each state has different definitions, exemptions, and licensing regimes for virtual currencies and money transmission, and businesses must assess their activities and operating regions accordingly.

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