{"id":65132,"date":"2025-09-12T08:00:00","date_gmt":"2025-09-12T13:00:00","guid":{"rendered":"https:\/\/taxprocenter.proconnect.intuit.com\/?p=65132"},"modified":"2025-09-04T12:57:24","modified_gmt":"2025-09-04T17:57:24","slug":"the-genius-act-and-the-new-cryptocurrency-rules","status":"publish","type":"post","link":"https:\/\/accountants.intuit.com\/taxprocenter\/tax-law-and-news\/the-genius-act-and-the-new-cryptocurrency-rules\/","title":{"rendered":"The GENIUS Act and the new cryptocurrency rules"},"content":{"rendered":"\n

On July 18, 2025, when the bipartisan Guiding and Establishing National Innovation for U.S. Stablecoins (GENIUS) Act<\/a> was enacted into law, it became the most significant national law to date in the digital assets industry. Since then, this law has prompted many questions about what it is about, and how it will affect tax year 2025 tax planning and compliance.<\/p>\n\n\n\n

The law primarily focuses on stablecoins that are meant to have an underlying asset from which it derives value, different from a standard cryptocurrency that may not have an underlying value tied to anything.<\/p>\n\n\n\n

The good news:<\/strong> This law does not change how the IRS taxes cryptocurrency<\/a> as intangible property, but it does introduce new regulatory and reporting requirements for brokers and cryptocurrency traders.<\/p>\n\n\n\n

What is a stablecoin?<\/strong><\/p>\n\n\n\n

Similar to a money market fund that invests in short-term, low-risk debt, a stablecoin seeks to keep its value tied to something more \u201cstable\u201d for those who are more risk adverse or need to keep their funds tied to something less volatile than a cryptocurrency such as Bitcoin or Ethereum. <\/p>\n\n\n\n

The GENIUS Act defines a stablecoin as \u201c … a digital asset. It is designed to be used as a means of payment or settlement, and the issuer is obligated to convert, redeem, or repurchase for a fixed amount of monetary value, not including a digital asset denominated in a fixed amount of monetary value. The Act represents that such issuer will maintain, or create the reasonable expectation that it will maintain, a stable value relative to the value of a fixed amount of monetary value.\u201d<\/p>\n\n\n\n

Tax pros need to know that a stablecoin is a type of cryptocurrency that acts like digital money used to pay for things. The companies that issue them must exchange it back for real money at a set, predictable rate, and claim they\u2019ll keep its value steady compared to regular money. It is not actual money, or a stock, bond, or other investment security that would be subject to wash sale rules. Instead, stablecoin is meant to act like a digital version of a US dollar with a stable value, and the assumption that you\u2019ll always be able to cash it out at the promised rate.\u00a0<\/p>\n\n\n\n

What regulatory requirements now exist?<\/strong><\/p>\n\n\n\n

The GENIUS Act now requires stablecoin issuers to maintain specific reserves to buy back stablecoins that are held in highly liquid assets, such as cash, on a 1:1 basis. If an issuer sells $1 million in stablecoins, they must hold $1 million in cash or other liquid assets in order to be ready to buy back any stablecoin at a moment\u2019s notice.<\/p>\n\n\n\n

Issuers are now required to publish monthly the amount they have in reserve, undergo monthly external audits, and certify reserve accuracy. In addition, issuers are now treated as financial institutions, and must implement standard procedures such as anti-money laundering programs and due diligence. They are neither allowed to pay interest on stablecoins, nor can they market suggesting that their product is government backed or legal tender.<\/p>\n\n\n\n

How does this affect my clients?<\/strong><\/p>\n\n\n\n

While the GENIUS Act primarily provides regulatory guidance, many crypto investors will have questions about how this impacts their tax reporting requirements.<\/p>\n\n\n\n