The GENIUS Act grants regulatory agencies authority to impose penalties including fines, operational restrictions, and license revocations for non-compliant stablecoin issuers. It establishes mandatory quarterly attestations and annual third-party audits to verify reserve adequacy, with public disclosure requirements for transparency. These mechanisms aim to prevent scenarios where stablecoins lack sufficient backing during market stress.
Enforcement prioritizes consumer protection through redemption guarantees, requiring issuers to maintain 1:1 reserves in high-quality liquid assets. The legislation creates a special examination unit within banking regulators to conduct periodic reviews of stablecoin operators. Violations could trigger criminal referrals for fraudulent activities involving reserve misrepresentation.
The Act includes whistleblower provisions and public complaint channels to identify non-compliance early. Implementation will involve coordinated oversight between the Treasury Department and state regulators, though jurisdictional boundaries remain under negotiation. These measures seek to balance innovation with financial stability concerns.
