Seth C. Orenberg, a professor at the University of New Hampshire Franklin Pierce School of Law, told the New Hampshire Stable Token Study Commission on Nov. 12 that two pieces of federal action are reshaping how states can participate in the fast‑developing stablecoin market. "On the one hand, we have the Genius Act," Orenberg said. "And then we have the Clarity Act, which is in some ways its big brother."

Orenberg described the GENIUS Act as a banking and payments statute that defines a "payment stable token" as a blockchain‑recorded digital asset designed primarily for payments or settlement, redeemable for a fixed amount of a national currency and intended to maintain stable value. "A payment stable token...has to be used primarily for payments or the settlement of transactions and its central purpose must be to function like digital cash," he said.

Why it matters: under the GENIUS framework, states face three discrete policy choices. Orenberg said they can 1) do nothing and host federally qualified issuers; 2) build the legal and supervisory infrastructure to become a state‑certified regulator able to license issuers up to a $10,000,000,000 outstanding cap; or 3) experiment with state‑backed issuance — a legal gray area that some states (notably Wyoming) are attempting to exploit.

Orenberg flagged six baseline obligations likely to be central to rulemaking for covered payment stablecoins: full (100%) reserve backing by high‑quality liquid assets, monthly transparency reporting on reserves, restrictions on paying yield to holders, segregation of reserve assets, clear redemption rights at face value, and anti‑money‑laundering/Bank Secrecy Act compliance.

He summarized the state certification path: a state submits statutes, regulations and a supervisory plan to the U.S. Department of the Treasury; Treasury reviews for "substantial similarity" to the federal baseline; and, if certified, the state can license and examine issuers up to the statutory cap. Orenberg noted the $10,000,000,000 threshold is arbitrary but practical: "Any state qualified issuer with more than 10,000,000,000 in outstanding payment stablecoins must transition to federal supervision within 360 days," he said.

Commissioners pressed on open questions. Andy Schwab asked whether the GENIUS prohibition on yield to holders allows indirect reward mechanisms through intermediaries or decentralized finance rails. Orenberg responded: "I can't, actually. I don't think that the statute answers that definitively...I imagine those will come up a bit more in rulemaking." Jim Kish raised the distinction between tokenized deposits (backed by demand deposit accounts) and other reserve models; Orenberg urged regulators to focus on function over label and stressed the technical examination capacity needed to verify white papers and smart contract code.

Next steps: Orenberg recommended a phased approach for states — assessment, coordinated liaison with federal agencies and peer states, then execution if policy makers choose to build infrastructure. He noted the GENIUS Act’s effective window (roughly 18 months after enactment) creates a near‑term timeline for states that want to be first movers.

The commission will consider Orenberg’s recommendations as it develops its final report and next meeting dates.