The U.S. Department of the Treasury has initiated the process of implementing the Guiding and Establishing National Innovation for U.S. Stablecoins (GENIUS) Act, marking a significant step in the regulation of stablecoins. The Treasury has released a notice of proposed rulemaking (NPRM), which spans 87 pages, outlining how it intends to assess whether state-level stablecoin regulatory frameworks are “substantially similar” to federal guidelines. This determination is crucial, as it allows smaller stablecoin issuers with less than $10 billion in outstanding supply to opt for state regulation if these local regimes comply with or exceed federal standards.
The proposed rule articulates broad principles for this evaluation, granting states the flexibility to tailor regulations in areas such as licensing, supervision, and enforcement. Importantly, the Treasury differentiates between “uniform requirements” — which include mandates for reserve backing and anti-money laundering (AML) compliance — and “state-calibrated requirements,” where local regulators hold discretion, particularly regarding capital and risk management.
A notable aspect of the proposal is its reliance on the rules and interpretations established by the Office of the Comptroller of the Currency (OCC), indicating its pivotal role in overseeing nonbank stablecoin issuers that transition to federal oversight upon surpassing the $10 billion threshold. Furthermore, the NPRM clarifies that state frameworks can exceed federal requirements, provided they do not conflict with federal law or compromise overall comparability.
In terms of operational guidelines, the NPRM insists that state regimes must not weaken essential disclosure standards. Issuers will be mandated to publish reports on reserve composition at least monthly, aligning with federal disclosure frequencies. Similar naming restrictions will be imposed across both federal and state frameworks, ensuring that state-regulated issuers do not use prohibited terms in their stablecoin branding.
The release of the NPRM signifies the Treasury’s first official step in translating the GENIUS Act—passed in July 2025—into a functioning regulatory regime for payment stablecoins. The final rules will be established following a 60-day public comment period, allowing stakeholders to provide input on the proposed measures.
The enactment of the GENIUS Act has been described as a pivotal moment in U.S. cryptocurrency policy, introducing the first federal framework for stablecoins that mandates full reserve backing, AML compliance, and regular disclosures. The act is perceived as a means of legitimizing dollar-backed stablecoins and solidifying the United States’ position in global monetary affairs.
Since its passage, focus has shifted towards its implementation and additional legislative efforts. Treasury reports under the GENIUS Act are enhancing oversight capabilities, particularly through strategies aimed at combatting illicit financial activities and scrutinizing crypto mixers. Concurrently, tensions between banks and crypto firms, particularly concerning the yield that stablecoins can offer, have complicated progress towards a cohesive market structure. Legislative bodies are also considering complementary bills, such as the Clarity Act, aimed at delineating the jurisdictions of the SEC and CFTC, highlighting a broader movement towards a comprehensive regulatory framework for digital assets.
