US Treasury Proposes GENIUS Act Rules for Stablecoin Issuers

Treasury announced the proposal on August 17, with the Notice of Proposed Rulemaking published in the Federal Register on August 18. The rule focuses on Section 3 of the Guiding and Establishing National Innovation for U.S. Stablecoins Act, or GENIUS Act, which establishes the basic restrictions governing who may issue, offer and sell payment stablecoins in the U.S. market.

The Treasury proposal seeks to clarify two issues that will be particularly important for stablecoin companies and digital-asset platforms: when an issuer should be considered to have issued a stablecoin “in the United States,” and when an exchange or other service provider should be considered to have offered or sold a stablecoin to a person located in the country.

Under the proposed framework, a stablecoin would generally be treated as issued in the United States if, at the time of issuance, either the issuer is located in the country or the token is issued to a person located there. Treasury is also proposing specific examples of activities that could constitute an offer or sale to a U.S. person, including direct solicitation, advertising a token as available to U.S. customers and responding to purchase requests from persons located in the United States.

These definitions matter because they determine when a company becomes subject to the licensing and compliance framework established by the GENIUS Act.

The Act is currently expected to become effective on January 18, 2027. From that point, a person generally may not issue a payment stablecoin in the United States unless it qualifies as a permitted payment stablecoin issuer or falls within an applicable foreign-issuer exception or safe harbor.

January 18 is the expected effective date because it falls 18 months after the law was enacted on July 18, 2025. However, the statute technically provides that the Act takes effect on the earlier of that date or 120 days after the primary federal payment stablecoin regulators issue the relevant final implementing regulations.

Foreign stablecoin issuers face a separate set of requirements. Under the proposed rule, digital asset service providers generally could not offer, sell or otherwise make available a foreign-issued payment stablecoin in the United States unless the issuer has the technological capability to comply with lawful U.S. orders and agrees to comply with applicable reciprocal arrangements between the United States and its home jurisdiction.

Treasury is proposing that exchanges and other digital asset service providers may rely on representations made by foreign issuers regarding those capabilities, but only after conducting reasonable due diligence. A platform could not rely on such a representation if it knows, should know or has reason to believe that the foreign issuer cannot or will not comply.

This part of the proposal could be particularly important for large offshore stablecoin issuers such as Tether. Treasury does not specifically name Tether or USD₮ in the NPRM, but the final interpretation of the foreign-issuer provisions could determine how offshore stablecoins are distributed and supported in the U.S. market.

A second major deadline arrives on July 18, 2028. From that date, digital asset service providers generally will be prohibited from offering or selling a payment stablecoin to a person located in the United States unless it was issued by a permitted payment stablecoin issuer or by a qualifying foreign payment stablecoin issuer that satisfies the conditions established under the GENIUS Act.

The new proposal builds on a broader consultation process that began in September 2025, when Treasury issued an Advance Notice of Proposed Rulemaking asking the industry and public for input on the implementation of the new stablecoin framework.

Stakeholders now have another opportunity to comment on the more detailed Section 3 proposal. According to the Federal Register, comments must be submitted by October 19, 2026.

The rulemaking process is already running behind the timetable originally established by Congress. Section 13 of the GENIUS Act required the Treasury Secretary, primary federal payment stablecoin regulators and state payment stablecoin regulators to promulgate implementing regulations within one year of enactment. That deadline passed on July 18, 2026, while several important elements of the framework, including the current Section 3 rules, remain at the proposal stage.

The government has nevertheless advanced several other parts of the regulatory system during 2026. In April, FinCEN and OFAC proposed rules implementing the GENIUS Act's anti-money laundering, counter-terrorist financing and sanctions requirements for permitted payment stablecoin issuers.

The next major proposal arrived in June, when FinCEN and federal banking regulators outlined customer identification requirements for permitted payment stablecoin issuers. The GENIUS Act treats these issuers as financial institutions for purposes of the Bank Secrecy Act, bringing them under requirements involving customer identification, suspicious-activity monitoring, sanctions compliance and other controls traditionally associated with regulated financial institutions.

The treatment of stablecoin rewards is also developing alongside implementation of the GENIUS Act. The law itself prohibits permitted and qualifying foreign stablecoin issuers from paying holders interest or yield solely for holding, using or retaining a payment stablecoin.

However, the Senate version of the Digital Asset Market Clarity Act addresses how third-party platforms may reward stablecoin users. The current Senate Banking Committee draft would prohibit digital asset service providers from paying interest or yield solely for holding a payment stablecoin, while allowing certain activity-based incentives connected with payments, transfers, wallet use, loyalty programs, providing liquidity and other specified activities.

The distinction has become one of the important issues at the intersection of the GENIUS Act and broader U.S. crypto market-structure legislation. FORECK.INFO previously examined the legislative timetable and unresolved negotiations in its CLARITY Act update.

H.R. 3633 has not yet cleared the Senate. Majority Leader John Thune filed cloture on the motion to proceed before the August recess, and the Senate schedule now shows that the cloture motion will ripen on September 15 at 2:15 p.m. This is a procedural step toward consideration of the legislation rather than a final vote on passage.

For the stablecoin industry, the Treasury proposal therefore represents another important piece of a regulatory framework that is gradually moving from legislation into operational rules. The most consequential questions now concern exactly how the United States will define domestic issuance, how offshore stablecoins will qualify for U.S. distribution, and what compliance obligations exchanges and other intermediaries will face when making those assets available to American customers.