MIL-OSI USA: S. 1582, GENIUS Act

Source: US Congressional Budget Office

Legislation Summary

S. 1582 would define payment stablecoin to mean a digital asset issued for a payment or settlement that is pegged to a reference asset, such as the U.S. dollar, and redeemable at a fixed amount. The act also would establish a regulatory framework for stablecoin issuers. Nonbank entities or subsidiaries of insured depository institutions could apply to become issuers; within three years of enactment only those approved issuers would be authorized to offer stablecoin. Once approved, an issuer would be subject to supervision by appropriate federal or state regulators and would be required to hold at least one dollar of permitted reserves for every dollar issued in stablecoin.

Under S. 1582, the responsible federal financial regulators would be the Federal Deposit Insurance Corporation (FDIC), National Credit Union Administration (NCUA), Office of the Comptroller of the Currency (OCC), and the Federal Reserve.

S. 1582 would permit nonbank entities with less than $10 billion in issuance to opt in to a state regulatory system, provided that the state’s system is substantially similar to its federal counterpart; state regulators could choose to cede their authority to the Federal Reserve. The act would require federal and state regulators to issue specific capital, liquidity, and risk management rules for federal and state stablecoin issuers and to report on stablecoins. The Financial Crimes Enforcement Network (FinCEN) would be required to issue anti-money-laundering rules for stablecoin issuers.

Estimated Federal Cost

The estimated budgetary effect of S. 1582 is shown in Table 1. The costs of the legislation fall within budget functions 370 (commerce and housing credit) and 750 (administration of justice).

Basis of Estimate

Enacting S. 1582 would impose additional administrative costs on the federal financial regulators, CBO estimates. We expect that during the two years after enactment, the regulatory agencies would conduct rulemaking, develop industry and examiner guidance, train examiners, and establish processes for state and federal regulation of small issuers of stablecoins. After that, the agencies would incur additional administrative costs for examinations, risk monitoring, enforcement, and certifying state regulators. Using information from the affected agencies, CBO estimates that, on average, the annual cost in 2025 of employing a financial regulatory staff member at the FDIC, NCUA, OCC, and Federal Reserve is $270,000. Costs in later years are adjusted to account for anticipated inflation.

Direct Spending

The administrative costs of the FDIC, NCUA, and OCC are classified in the federal budget as direct spending. Using information from those agencies, CBO estimates that enacting the legislation would increase gross direct spending by $77 million over the 2025-2035 period. However, OCC and NCUA collect fees from financial institutions to offset their costs; those fees are treated as reductions in direct spending. Thus, CBO estimates that, on net, enacting the legislation would increase direct spending by $47 million over the same period.

Revenues

Costs incurred by the Federal Reserve reduce remittances to the Treasury, which are recorded in the budget as revenues. CBO estimates that enacting S. 1582 would decrease revenues by $73 million over the 2025-2035 period. Changes in costs for the Federal Reserve banks have historically resulted in changes to remittances during the same year. However, since fiscal year 2023, the central bank has recorded a deferred asset to account for accrued net losses from expenses in excess of income. As a result, remittances largely have been suspended. In CBO’s projections, remittances from the Federal Reserve will generally be suspended until 2030, and until they resume, most changes in costs incurred by the system will not be recorded as changes in remittances.

Spending Subject to Appropriation

S. 1582 would require FinCEN to write anti-money-laundering rules for stablecoin issuers. That agency’s administrative costs are funded through annual appropriations. CBO estimates that implementing the provision would cost less than $500,000 over the 2025-2030 period; any related spending would be subject to the availability of appropriated funds.

Uncertainty

Chief, Finance, Housing, and Education Cost Estimates Unit

Joshua Shakin
Chief, Revenue Projections Unit

Kathleen FitzGerald 
Chief, Public and Private Mandates Unit

H. Samuel Papenfuss 
Deputy Director of Budget Analysis

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