New CPC Report Analyzes Proposal by Federal Agencies Related to the 2025 GENIUS ACT
Washington, D.C. – In July 2025, the GENIUS Act, a Federal law regulating payment stablecoins went into effect. This new form of currency is being offered by services such as PayPal, Apple Pay, and Google Play, and in the future, will be issued by banks, bank card companies, and major retailers. In October 2025, the Consumer Policy Center (CPC) published a report concluding that the new law included far fewer consumer protections than provided for other payment methods such as checks, credit cards, and debit cards.
As recently as March 2026, Federal agencies have proposed rules related to the implementation of the 2025 law. The 376-page proposal by the U.S. Office of the Comptroller of the Currency (OCC) was the most extensive and would have the greatest impact on consumers. It is the main focus of a new, more extensive CPC report – The Genius Act At Six Months: Proposed Stablecoin Regulations Still Fall Short On Consumer Protection – that also reviews the law’s weaknesses, industry comments on the proposed rules, new research exposing the weakness of the law’s bankruptcy provisions, and new developments in the payment stablecoin industry, among other issues.
Both reports were written by Mark Budnitz, an emeritus law professor and CPC senior fellow. His new report found that some concerns raised by the 2025 report were addressed by the OCC but others were not. Said Budnitz: “No matter how favorable to consumers the agencies’ final regulations may be, they cannot cure the fundamental deficiencies in the Act that make payment stablecoins a risky choice for consumers.”
Pluses and Minuses of OCC’s Proposed Regulations
Redemption of Payment Stablecoins: The Act requires that an issuer’s redemption policy establish “procedures for timely redemption.” The OCC proposes requiring issuers to redeem consumers’ payment stablecoins within two business days. The final regulations should define “business days” so it is the same for all issuers and consumers.
Website Disclosures: The Act requires issuers to establish “conspicuous procedures” for redemption. In addition, the issuer must “conspicuously disclose in plain language all fees associated with purchasing or redeeming the payment stablecoins.” The OCC proposes requiring issuers to make these disclosures “in a format” that is readily noticeable, understandable and “segregated from other information.” The final regulations should also define “conspicuous” and specifically prohibit web design techniques that interfere with disclosures.
Payment of Interest or Yield: The Act prohibits issuers from paying interest or yield, including rewards. Banks and non-banks have very different positions on whether to enforce the prohibition against affiliates and third-parties. The OCC proposes prohibiting issuers from paying interest or yield. But the OCC makes this a rebuttable presumption that issuers could try to overcome. The rebuttable presumption standard creates confusion and uncertainty. Consumers need to know who can pay interest and yield.
Fundamental Flaws in the New Law
Among the flaws in the Act and proposed regulations that are discussed in the updated report are the following:
- No consumer protection for unauthorized use. Scammers steal consumers’ payment accounts to an alarming extent and AI offers them powerful new tools. While federal law protects consumers who pay using a credit or debit card, the GENIUS Act provides no protection for unauthorized use.
- No required error resolution procedure. Consumers need a mandated procedure they can use when there is unauthorized use or an error in their account. Unlike the law for other payment systems, the Act does not require issuers to establish a procedure that requires issuers to investigate consumer complaints.
- No limitations on fees and other charges. The Act includes no limitations on fees and other charges issuers and others involved in payment stablecoin transactions may impose. This could make it very costly for consumers to redeem payment stablecoins for real money they need to pay for essential goods and services.
- Insufficient consumer disclosures. Although the Act includes some disclosures in regard to redemption, it fails to require the disclosure of other vital information and does not prohibit unfair and deceptive conduct related to disclosures or to methods of obtaining consumer consent.
- Consumers have no right to sue issuers and others for violations of the Act. The Act does not grant consumers the right to sue. Consequently, they must rely on state and federal agencies to enforce the law. It is doubtful those agencies have the experience, resources, and political will to strongly enforce the very limited consumer rights in the Act.
- Unclear whether state and federal consumer protection laws apply. The lack of clarity in the Act may result in court decisions depriving consumers of the strong protection provided in consumer protection laws that are badly needed since the Act gives them such inadequate protection.
