GENIUS Act & Stablecoin Payments: Merchant Guide

The GENIUS Act passed the Senate in early 2026, and for the first time, the United States has a federal framework governing stablecoin issuers. Most of the coverage so far has focused on what this means for Circle, Tether, and the banks lining up to issue their own tokens. Almost none of it addresses the question that matters to you: what does the GENIUS Act mean if you are a merchant who accepts stablecoins for payment?

The short answer is that the law does not regulate you directly. It regulates issuers. But the downstream effects on which stablecoins you accept, how you document transactions, and how you handle tax reporting are real. This article breaks down what you need to know, what you need to do, and why your choice of payment gateway matters more than ever.

What the GENIUS Act actually does

The Guiding and Establishing National Innovation for U.S. Stablecoins Act creates a two-tier licensing system for stablecoin issuers. Issuers with more than $10 billion in outstanding tokens must register with a federal regulator. Smaller issuers can opt for state-level oversight, provided their state framework meets federal minimum standards.

The main requirements for issuers include:

• 1:1 reserve backing with high-quality liquid assets (cash, short-term Treasuries, or central bank deposits)
• Monthly reserve attestations by independent auditors
• Redemption guarantees — holders must be able to redeem at par within a defined timeframe
• Compliance with AML/KYC obligations under the Bank Secrecy Act

None of these obligations fall on merchants. But they reshape the stablecoin market you operate in. Stablecoins that meet GENIUS Act standards will carry a form of regulatory legitimacy that unregulated tokens will not. For a deeper look at the bill itself, see the GENIUS Act page on Congress.gov.

Which stablecoins will be “regulated” first

Circle, the issuer of USDC, has been positioning for federal regulation for years. It already publishes monthly reserve attestations from Deloitte and holds reserves primarily in short-term Treasuries and cash at regulated banks. USDC is widely expected to be among the first stablecoins to achieve full GENIUS Act compliance.

Tether (USDT) presents a more complicated picture. Tether is incorporated offshore, and its reserve disclosures have historically been less transparent than Circle’s. Whether Tether will pursue GENIUS Act licensing — or whether it even can under the current framework — remains an open question. If you are weighing which stablecoin to prioritize, our comparison of USDT vs USDC for merchant acceptance covers the tradeoffs in detail.

Several major banks, including JPMorgan and Bank of America, have signaled interest in issuing their own stablecoins under the new framework. Within 12 to 18 months, merchants may face a market with three categories of stablecoins: federally regulated, state-regulated, and unregulated offshore tokens.

What merchants need to document

The GENIUS Act does not impose direct compliance obligations on merchants who accept stablecoin payments. You are not an issuer, a custodian, or a money transmitter (assuming you use a non-custodial gateway). However, you still operate within existing tax and financial reporting frameworks that apply to any business receiving payment in digital assets.

Transaction records

You should maintain records of every stablecoin payment you receive. At minimum, each record should include:

• Date and time of the transaction
• Amount received (in the stablecoin denomination and USD equivalent)
• The stablecoin used (USDC, USDT, DAI, etc.)
• The wallet address that received the payment
• The goods or services sold

This is not a new requirement under the GENIUS Act. It is standard practice under existing IRS guidance. But as regulatory scrutiny increases, sloppy record-keeping becomes a larger liability.

Conversion and settlement documentation

If you convert stablecoins to fiat immediately upon receipt, document the conversion rate, the platform used, and any fees incurred. If you hold stablecoins before converting, you will need to track the cost basis at the time of receipt and the fair market value at the time of conversion or disposal.

For stablecoins pegged 1:1 to USD, the cost basis calculation is straightforward in most cases. But de-peg events — however rare — can create reportable gains or losses. Your records need to capture these edge cases.

Tax implications you cannot ignore

The IRS treats stablecoins as property, not currency. This classification has not changed under the GENIUS Act, and there is no indication it will change soon. The practical consequences for merchants are well-established but frequently misunderstood.

Income recognition

When you receive a stablecoin payment, you recognize income equal to the fair market value of the tokens at the time of receipt. For a stablecoin trading at $1.00, this is functionally identical to receiving USD. You report this as ordinary business income.

Holding and conversion

If you hold stablecoins and their value fluctuates — even by fractions of a cent — you may realize a capital gain or loss when you eventually convert or spend them. In practice, these amounts are negligible for stablecoins that maintain their peg. But the reporting obligation exists, and the IRS expects compliance.

The IRS published updated guidance on digital asset reporting in its FAQ on virtual currency transactions. If you accept stablecoins at any volume, review this guidance or consult a tax professional familiar with digital assets.

Form 1099-DA

Starting in tax year 2026, brokers and certain digital asset platforms are required to issue Form 1099-DA for reportable transactions. If you use a custodial exchange to convert stablecoins, you may receive this form. If you use a non-custodial gateway and self-custody your funds, you are responsible for your own reporting — but you also avoid the counterparty risk that comes with custodial platforms.

Why non-custodial gateways simplify compliance

Here is where the choice of payment infrastructure directly affects your regulatory exposure. Custodial gateways hold your funds on your behalf. Under evolving AML regulations, custodial providers may be classified as money services businesses, which subjects them — and potentially their merchants — to additional reporting requirements.

A non-custodial payment gateway never takes possession of your funds. Payments flow directly from the customer’s wallet to yours. This architecture has three compliance advantages:

• No counterparty risk. If your gateway provider faces regulatory action, your funds are not at risk because they were never held by the provider.
• Simplified regulatory classification. You are receiving payments, not using a financial intermediary that custodies assets. This keeps you out of the money transmission framework.
• Clear audit trail. On-chain transactions from customer wallet to merchant wallet create an immutable record that simplifies both tax reporting and any future compliance inquiries.

This distinction will become more important as the GENIUS Act’s secondary regulations take shape. The law directs federal regulators to issue additional rules for entities that “facilitate” stablecoin transactions. Non-custodial gateways, by design, minimize the facilitation surface area.

Building a compliance-ready payment stack

You do not need to wait for every regulation to finalize before accepting stablecoins. But you should build your payment infrastructure with compliance in mind from day one. Here is a practical checklist:

1. Choose regulated stablecoins

Prioritize stablecoins from issuers pursuing GENIUS Act compliance. USDC is the safest bet today. As bank-issued stablecoins enter the market, evaluate them based on reserve transparency and redemption terms. See our fee comparison between stablecoins and credit cards to understand the cost savings at stake.

2. Use a non-custodial gateway

Avoid unnecessary regulatory exposure by choosing a gateway that does not hold your funds. This is not just a security decision — it is a compliance decision. Compare your options in our 2026 crypto payment gateway comparison.

3. Automate record-keeping

Use accounting integrations or export tools to capture every transaction with the data fields listed above. Manual tracking does not scale, and gaps in your records create audit risk.

4. Consult a digital asset tax professional

General accountants may not understand the nuances of stablecoin taxation. Find a CPA or tax attorney with specific digital asset experience. The cost is minor compared to the risk of misreporting.

5. Monitor regulatory developments

The GENIUS Act is a starting point, not the finish line. Secondary rulemaking, state-level variations, and potential IRS updates will continue through 2026 and beyond. Stay informed through industry associations and your gateway provider’s compliance updates.

The bigger picture: regulation as a growth catalyst

Many merchants view regulation with anxiety. That reaction is understandable but misplaced in this context. The GENIUS Act does not restrict merchants from accepting stablecoins. It creates a framework that makes stablecoins safer and more predictable for everyone in the payment chain.

Regulated stablecoins backed by audited reserves reduce your exposure to de-peg events. Federal oversight of issuers means the tokens you accept are more likely to be redeemable at par when you need to convert. And the regulatory clarity itself removes a major objection that enterprise buyers and B2B partners have cited when asked to pay in crypto.

For context on how stablecoins have already proven their resilience during market stress, see our analysis of stablecoins as a safe haven beyond Bitcoin and gold. The GENIUS Act reinforces the thesis that stablecoins are becoming infrastructure, not speculation.

The merchants who move early — building compliant payment stacks while competitors wait for perfect clarity — will capture the cost savings and the customer base that comes with accepting the next generation of digital dollars. The regulatory framework is here. The question is whether you are ready to use it.

Your keys, your revenue

Aurpay is the non-custodial payment gateway that never holds your funds. No counterparty risk. No withdrawal delays. Just crypto payments, direct to your wallet. Learn more about Aurpay.