US and UK Payment Stablecoin Rules: A Merchant Checklist

The GENIUS Act became US law on July 18, 2025, and for the first time, the United States has a federal framework governing payment 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 GENIUS Act primarily regulates issuers, not ordinary sales of a merchant’s own goods or services. But the downstream effects on which stablecoins you accept, how you document transactions, and how you handle tax reporting are real. Other activity-based rules can still apply if you custody, exchange, transmit, or redeem assets. 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. It is general information, not legal advice.

What the GENIUS Act actually does

The Guiding and Establishing National Innovation for U.S. Stablecoins Act creates a federal and state framework for payment stablecoin issuers. It also gives the OCC authority over certain federally qualified, state-qualified, and foreign payment stablecoin issuers. The OCC published proposed implementing rules in February 2026, so merchants should distinguish enacted law from rules that are not yet final.

The main requirements for issuers include:

• 1:1 reserve backing with high-quality liquid assets (cash, short-term Treasuries, or central bank deposits)
• Reserve disclosure, reporting, examination, and audit requirements
• Redemption policies and procedures designed to support redemption at par
• Compliance with AML/KYC obligations under the Bank Secrecy Act

These obligations primarily fall on issuers. 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. The OCC’s GENIUS Act rulemaking summary also states that the Act takes effect on the earlier of 18 months after enactment or 120 days after primary federal regulators issue final implementing rules.

Which stablecoins will be “regulated” first

Circle, the issuer of USDC, has been positioning for federal regulation for years. It publishes weekly reserve information and monthly third-party assurance. Those disclosures can support issuer due diligence, but they do not by themselves establish final GENIUS Act status.

Tether (USDT) is issued outside the United States and publishes circulation and reserve information. Its treatment should be checked against current foreign-issuer requirements rather than predicted from its location. If you are weighing which stablecoin to prioritize, our comparison of USDT vs USDC for merchant acceptance covers the tradeoffs in detail.

Merchants may eventually face a market with federally regulated, state-regulated, and qualifying foreign payment stablecoin issuers. Before enabling a token, record the issuing legal entity, reserve disclosures, redemption terms, supported jurisdiction, and the date of your review.

How the UK approach differs

The United Kingdom is following a different timetable: final FCA issuer and custody rules apply from October 25, 2027, while HM Treasury says stablecoins are not currently regulated specifically for payment transactions. For a UK-facing checkout, map every provider and track the UK payment-services consultation.

What merchants need to document

The GENIUS Act’s main obligations apply to payment stablecoin issuers, not ordinary receipt for a merchant’s own goods or services. However, using a non-custodial gateway does not automatically determine your legal classification. You still operate within existing sanctions, consumer, tax, and financial reporting frameworks that apply to your business.

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:

• Reduced gateway custody risk. If your gateway provider faces regulatory action, it does not hold a merchant balance for later withdrawal.
• Narrower custody surface. You are receiving payments, not using a financial intermediary that custodies assets. This can simplify the activity map, but it does not automatically keep you out of the money transmission framework or decide other obligations.
• 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. 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 that provide current regulator, reserve, and redemption information. Do not label USDC, USDT, or another token compliant based only on expectations. Evaluate each issuer based on its legal entity, reserve transparency, redemption terms, and the markets you serve. See our fee comparison between stablecoins and credit cards to understand the cost considerations.

2. Use a non-custodial gateway

Reduce unnecessary custody exposure by choosing a gateway that does not hold your funds. This is not just a security decision — it is a compliance decision. It is not a blanket compliance exemption. 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, while checking primary regulator sources and tracking UK payment reform separately.

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 an issuer framework intended to make payment stablecoins more predictable. Exact obligations still depend on the activities, providers, customers, and jurisdictions involved.

Regulated stablecoins backed by audited reserves are intended to reduce your exposure to de-peg events, but audited reserves do not guarantee that result. Federal oversight of issuers does not establish that the tokens you accept will be redeemable at par when you need to convert. Actual redemption still depends on the issuer, reserve liquidity, and terms. And the regulatory clarity itself may remove a major objection for enterprise buyers and B2B partners asked to pay in crypto.

For context on how stablecoins have performed during market stress, historical resilience is not proof of future stability. The GENIUS Act reinforces the thesis that stablecoins are becoming infrastructure for payments, but it does not make them risk-free or eliminate speculative use.

The merchants who move early — building controlled payment stacks while competitors wait for perfect clarity — may capture the cost savings and customer demand that come with stablecoin payments. Do not claim compliance before checking the current framework. Document issuer and provider reviews, and recheck the rules before launch.

Your keys, your revenue

Aurpay is a non-custodial payment gateway that does not hold a merchant balance for later withdrawal. Customer payments route directly to your wallet. Just crypto payments, direct to your wallet. Aurpay does not automatically convert stablecoins to fiat or deposit proceeds into a bank account. Review Aurpay’s payment options.