Stablecoins and the National Bank Note Precedent: The GENIUS Act in Historical Perspective
Stephan Luck
Digital currencies have expanded at a remarkable pace in recent years. In July 2025, Congress enacted the “Guiding and Establishing National Innovation for U.S. Stablecoins Act” (the GENIUS Act), which for the first time establishes a comprehensive federal regime for stablecoin issuance. This essay situates stablecoins in historical context by comparing them with national bank notes, a privately issued money that circulated in the United States from 1863 to 1935.
Stablecoins are digital instruments engineered to hold a stable face value by maintaining a peg to a reference asset such as the U.S. dollar. They seek to marry the technological strengths of decentralized payment infrastructures—including digital ledgers or blockchains for recording transfers and tokenization for representing conventional assets—with the convenience and familiarity of traditional money.
The GENIUS Act provides fiat-redeemable stablecoins with a clear legal base in the United States. Under the statute, permitted payment stablecoin issuers (PPSIs)—which can include federally regulated banks, approved nonbank entities, and qualifying state-chartered firms—are allowed to issue payment stablecoins. These stablecoins must be fully, one-for-one backed by high-quality liquid assets such as U.S. currency, short-dated Treasury securities, unsecured balances held at commercial banks, or similar cash equivalents. Issuers are prohibited from paying interest or offering yield on stablecoin balances. Holders benefit from priority claims on the underlying reserves in the event of the issuer’s bankruptcy, and to enhance market discipline and transparency, issuers must publish monthly public reports on reserve composition and sufficiency.
Although stablecoins may appear new, they echo a much earlier period of U.S. monetary history. Between 1863 and 1935, “national bank notes” were a widely used form of privately issued currency backed by federal government debt. The National Banking Acts of 1863 and 1864 created the framework for these instruments. Notes were issued by national banks—commercial banks that operated under federal charters.
The mechanics of note issuance were
