Stablecoins are no longer a fringe topic.

Regulators worldwide are moving from “wait and see” to detailed, binding rules. Three regimes are already especially important for banks that expect to custody, onboard, partner with or compete against dollar-pegged stablecoins: the U.S. GENIUS Act, the EU’s MiCA framework and Singapore’s MAS stablecoin framework.

Below we cover the core rules, highlight practical implications for banks and financial institutions and give a short checklist you can use right away. More jurisdictions will bring their rules to bear soon, but until then here is what you need to know.

1) GENIUS Act — the U.S.’s answer to stablecoin oversight

The GENIUS Act (Guiding and Establishing National Innovation for U.S. Stablecoins of 2025), signed July 18, 2025, establishes a federal licensing and supervisory regime for “payment stablecoins.” Only permitted payment stablecoin issuers (U.S.-formed, bank subsidiaries or approved non-bank issuers) may issue payment stablecoins in the U.S.; foreign issuers can participate only if they meet strict comparability and U.S. reserve-location conditions. The law requires identifiable one-to-one reserves (including cash, Fed balances, short-dated Treasuries, certain money-market instruments), monthly third-party-examined reserve reports, AML/BSA compliance, and gives stablecoin holders priority in an issuer insolvency. It also expressly excludes permitted payment stablecoins from the federal securities and commodity definitions (for those that meet the Act’s definitions), while imposing broad supervisory, capital and operational requirements on issuers. 

The GENIUS Act is not yet signed into law, which means that no stablecoin issuer today is “compliant with GENIUS,” despite what claims are made for marketing purposes. Once it goes into effect, all issuers will need to become compliant with the act as written in order to issue and offer stablecoins in the United States. 

Why this matters for banks:

• Banks and trust companies may be regulators’ natural partners (or the issuer vehicle) — the Act contemplates insured depository institutions and bank subsidiaries as permitted issuers and allows banks to provide custody and reserve services under supervision.

• Reserve-holding and custody opportunities: U.S. banks that offer deposit accounts, Treasury custody, or settlement rails will be natural counterparties for permitted issuers.

• Compliance burden: issuing or servicing stablecoins will trigger BSA/AML, sanctions, periodic audits and likely examinations — so banks need to align onboarding and transaction monitoring with these new expectations.

2) MiCA — the EU’s approach 

MiCA (Regulation (EU) 2023/1114) is the EU’s comprehensive regulation for crypto-assets. Its rules for e-money tokens (EMTs — fiat-pegged stablecoins) and asset-referenced tokens (ARTs) require issuers to be authorised, hold appropriate reserves, provide transparent whitepapers and disclosures, and ensure redemption at par. MiCA created an EU supervisory architecture (with technical standards and EBA/ESMA implementation workstreams) and is already shaping market access and conduct rules across member states. Authorities are actively clarifying how EMTs issued outside the EU interact with the Union’s safeguards (cross-border questions remain a live supervisory issue). 

Why this matters for banks:

• Double-licensing and overlap: service platforms and banks interacting with EMTs/ARTs may face overlapping obligations (MiCA plus national e-money/payment services rules) — expect supervisory coordination requests and potential licensing needs in multiple regimes. Recent supervisory guidance highlights the need for payment/e-money licenses in addition to MiCA authorisations in some cases.

• Operational resilience and DORA interplay: MiCA sits alongside the EU’s broader digital finance rules (operational resilience, AML/CTF, prudential regimes), so banks should integrate MiCA compliance into enterprise-wide risk programs.

• Custody and settlement: banks offering custody, reserve deposits or settlement will need to map MiCA’s redemption and reserve requirements into client-level contracts and accounting.

3) MAS — Singapore’s single-currency stablecoin (SCS) framework 

MAS finalized a tailored stablecoin framework on Aug 15, 2023, which is expected to go into effect in mid-2026. It applies to single-currency stablecoins (SCS) issued in Singapore that are pegged to SGD or a G10 currency (including USD). To obtain the “MAS-regulated” label once the framework is law, an issuer must meet strict requirements: 100% reserves in the peg currency (cash/equivalents/3-month government debt), segregation of reserve accounts, monthly independent attestations (published), annual audits, minimum base capital and liquidity buffers, restrictions on unrelated commercial businesses, and prescribed redemption timelines (redemption at par within five business days). MAS has also limited multijurisdictional issuance for MAS-recognised SCS at the initial stage.

Why this matters for banks:

• Singapore is positioning itself as a trusted on-shore hub — banks with custody, custodial KYC, treasury and repo desks can be critical reserve custodians or settlement partners.

• Clear operational requirements: reserves, attestations, segregation and redemption timelines mean banks must adapt custody and reporting processes if they plan to provide services to MAS-regulated issuers.

• Market labeling: only MAS-recognised tokens can use the “MAS-regulated” label — banks should treat that label as a strong safety signal for payment acceptance and counterparty risk decisions.
  
  

Practical implications & recommended next steps for banks

1. Understand your regulatory reach — Map your group’s activities (custody, treasury, issuer, custody-as-service, market-making, settlement) to GENIUS/MiCA/MAS obligations and identify where additional licences will be needed. (U.S. GENIUS and EU MiCA have specific issuer/authorization gates; MAS requires recognition for the label.)

2. Reserve custody readiness — Upgrade custody controls for segregated reserve accounts, daily valuations, monthly attestations and auditor interfaces. MAS and GENIUS both expect segregated reserves and regular public reporting.

3. AML/KYC & sanctions — Ensure your AML transaction monitoring and sanctions screening program can expand into token flows; GENIUS expressly brings BSA obligations to stablecoin issuers and service providers.

4. Partnership & go-to-market strategy — Decide whether you wish to build this capability in-house, hope to acquire a firm that can support stablecoin operations, or begin a process to vet a partner that can help bring your vision to life.

5. Supervisory engagement plan — Proactively engage your primary regulator(s) to clarify expectations (cross-border issues are still being resolved for EMTs/foreign issuers under MiCA and GENIUS).

Final takeaways

Regulation has arrived — but it’s not uniform. The U.S. GENIUS Act establishes a federal, bank-friendly framework prioritizing reserve transparency, insolvency protections and BSA compliance; the EU’s MiCA creates an EU-wide authorization and disclosure regime that sits alongside existing payment/e-money rules; and MAS offers a high-trust, tightly specified framework for SCS issuers focused on full reserve backing and strong disclosure. For banks, these regimes create both new risks (compliance, operational, legal) and clear commercial opportunities (reserve custody, settlement, issuance via bank subsidiaries and service offerings). Start by mapping your exposures and commercial plans to these frameworks today and build a cross-functional team (legal, compliance, treasury, operations, tech) to move from awareness to execution. 

This post is provided for informational purposes only and does not constitute legal advice. Readers should consult their own legal counsel regarding any legal matters or requirements relevant to their specific situation. Paxos makes no representations or warranties regarding the legal accuracy, completeness, or suitability of the information contained herein.

Works Referenced 

• Sidley Austin LLP. The GENIUS Act: A Framework for U.S. Stablecoin Issuance. July 2025. https://www.sidley.com/en/insights/newsupdates/2025/07/the-genius-act-a-framework-for-us-stablecoin-issuance

• Willkie Farr & Gallagher LLP. The GENIUS Act: A New Pathway for Stablecoin Issuance. July 2025. https://www.willkie.com/publications/2025/07/the-genius-act-a-new-pathway-for-stablecoin-issuance

• Vedder Price. The GENIUS Act: Stablecoin Regulation Enters the Federal Framework. July 2025. https://www.vedderprice.com/the-genius-act-stablecoin-regulation-enters-the-federal-framework

• Latham & Watkins. The GENIUS Act of 2025: Stablecoin Legislation Adopted in the US. July 2025. https://www.lw.com/en/insights/the-genius-act-of-2025-stablecoin-legislation-adopted-in-the-us

• Wiley Rein LLP. Building a Digital Asset Regulatory Framework: The GENIUS Act and Next Steps. July 2025. https://www.wiley.law/alert-Building-a-Digital-Asset-Regulatory-Framework-The-GENIUS-Act-and-Next-Steps

• European Banking Authority. “Asset-referenced and E-money Tokens (MiCA).” EBA – Regulation and Policy, www.eba.europa.eu/regulation-and-policy/asset-referenced-and-e-money-tokens-mica. Accessed [today’s date]. European Banking Authority

• MSI Global Alliance. “Singapore Finalises New Regulatory Framework for Stablecoin.” MSI Global Alliance, 3 June 2024, www.msiglobal.org/resource/singapore-finalises-its-new-regulatory-framework-for-stablecoin.html. Accessed [today’s date]. msiglobal.org

• “Text - S.394 - 119th Congress (2025-2026): GENIUS Act of 2025.” Congress.gov, Library of Congress, www.congress.gov/bill/119th-congress/senate-bill/394/text. Accessed [today’s date]. congress.gov

• Morgan, Lewis & Bockius LLP. “Monetary Authority of Singapore Finalises Stablecoin Regulatory Framework.” LawFlash, 22 Aug. 2023, MorganLewis.com. Morgan Lewis

• The White House. “Fact Sheet: President Donald J. Trump Signs GENIUS Act into Law.” 18 July 2025, whitehouse.gov. The White House

• Za, Valentina. “EU Commission Investigates Depth of EU Safety Net for Stablecoin Holders.” Reuters, 23 Jan. 2025, reuters.com. Reuters