What Does the GENIUS Act Mean for Credit Unions?
America’s Credit Unions, the national trade association representing credit unions, released a comprehensive FAQ document addressing how the GENIUS Act creates new opportunities and obligations for the credit union industry. The guidance breaks down what the law allows, who regulates it, and what credit unions should be thinking about now.
The GENIUS Act gives federally insured credit unions two significant new authorities: custodial authority for stablecoins under NCUA oversight, and the ability for credit union subsidiaries — including credit union service organizations (CUSOs) — to issue payment stablecoins directly.
Can Credit Unions Issue Stablecoins?
Credit unions themselves cannot issue stablecoins directly. However, subsidiaries of federally insured credit unions, including credit union service organizations, can apply to become permitted payment stablecoin issuers. This subsidiary model mirrors the approach for banks, where the parent institution’s charter is protected while a dedicated entity handles stablecoin operations.
The NCUA serves as the primary federal regulator for credit union stablecoin subsidiaries, overseeing compliance with the GENIUS Act’s requirements for capital, liquidity, reserves, and operational risk management.
What Is the Custodial Authority?
Beyond issuance, the GENIUS Act grants federally insured credit unions custodial authority for payment stablecoins. This means credit unions can hold, safekeep, and manage stablecoins on behalf of their members — even if the credit union itself does not issue stablecoins through a subsidiary.
This custodial role is supervised by the NCUA and creates an entry point for credit unions that want to serve members’ stablecoin needs without taking on the full operational requirements of issuance.
What Are the Key Requirements?
Reserve Backing
Any stablecoin issued by a credit union subsidiary must be backed 1:1 by permitted reserve assets including U.S. dollars, Treasury bills, demand deposits at insured institutions, and other qualifying assets. Reserves cannot be commingled with operational funds or rehypothecated.
Regulatory Oversight
Credit union stablecoin subsidiaries operate under dual oversight — the NCUA as the primary federal regulator, with state regulators retaining authority in relevant contexts. Monthly liquidity reporting, audits, and transparency obligations apply.
Consumer Protections
Members holding stablecoins retain a clear, enforceable right to redeem at face value on demand. Redemption policies must be published in plain language with disclosed fees.
Compliance Infrastructure
Subsidiaries must demonstrate BSA/AML compliance capabilities, including systems for detecting illicit activity and monitoring transactions. This requires dedicated technology and operational capacity.
Does Federal Law Override State Stablecoin Regulations?
The GENIUS Act establishes a dual-track system where state-qualified issuers can operate under certified state regimes — but only if the state framework is deemed “substantially similar” to federal standards. For credit unions operating under state charters, the interaction between state and federal requirements will depend on how the NCUA and state regulators coordinate their rulemaking.
America’s Credit Unions has flagged this as an area where implementation details will matter significantly, and the association is actively engaged in advocacy to ensure credit union interests are represented in the rulemaking process.
What Is the Implementation Timeline?
The GENIUS Act requires regulators to issue implementing regulations by July 18, 2026 — one year after enactment. The NCUA has already submitted its GENIUS Act rulemaking to the Office of Management and Budget, signaling that credit union-specific rules are in active development.
Credit unions have until the earlier of 18 months after enactment or 120 days after final regulations to come into compliance if they intend to offer stablecoin services.
What Should Credit Unions Do Now?
America’s Credit Unions recommends that credit unions begin evaluating the opportunity:
- Assess member demand — Are members using stablecoins already? Would stablecoin custody or issuance serve their needs?
- Evaluate the subsidiary model — What would it take to establish or designate a CUSO for stablecoin issuance?
- Build compliance capabilities — BSA/AML monitoring, reserve management, and redemption processing require dedicated infrastructure
- Monitor rulemaking — NCUA, FDIC, and OCC rules will define the specific operational requirements
The Coinbax Perspective
America’s Credit Unions’ FAQ document highlights a critical reality: the GENIUS Act doesn’t just allow credit unions to participate in stablecoins — it requires institutional-grade infrastructure to do so. The subsidiary model, 1:1 reserve backing, BSA/AML compliance, and real-time redemption requirements demand capabilities that many credit unions will need to build or acquire.
For credit unions and CUSOs evaluating this opportunity, the infrastructure question is central. Programmable escrow handles reserve segregation and 1:1 backing verification. Built-in reversibility supports the plain-language redemption rights the Act requires. Real-time compliance monitoring satisfies BSA/AML obligations. These are not features credit unions need to build from scratch — they are the trust infrastructure that Coinbax provides, purpose-built for the regulatory environment the GENIUS Act creates.
Frequently Asked Questions
Can a credit union hold stablecoins for its members?
Yes. The GENIUS Act grants federally insured credit unions custodial authority for payment stablecoins under NCUA supervision. This allows credit unions to hold and manage stablecoins on behalf of members without needing to issue their own.
What is a CUSO’s role in stablecoin issuance?
Credit union service organizations (CUSOs) can serve as the subsidiary entity that actually issues stablecoins. This allows the parent credit union to offer stablecoin services through its CUSO while keeping the credit union charter separate from direct issuance activities.
How is the NCUA involved?
The NCUA is the primary federal regulator for credit union stablecoin activities. It oversees both the custodial authority granted to credit unions and the issuance activities of credit union subsidiaries. The NCUA is currently developing its implementing regulations for the GENIUS Act.
When do credit unions need to be ready?
Implementing regulations are due by July 2026. Credit unions must comply by the earlier of 18 months after enactment or 120 days after final rules are published. Credit unions should begin evaluating the opportunity now and monitoring rulemaking developments.
Does the GENIUS Act help or hurt credit unions?
America’s Credit Unions views the legislation as an opportunity. The Act creates a path for credit unions to participate in stablecoin innovation — either as custodians or issuers through subsidiaries — while establishing consumer protections that align with the credit union mission of serving members’ financial needs.