US Treasury Unveils Proposed Stablecoin Rules Under GENIUS Act

The US Treasury Department on Monday released a proposed rule setting out how stablecoin issuers and digital asset service providers would meet key requirements of the GENIUS Act. The Notice of Proposed Rulemaking centers on Section 3, clarifying when a payment stablecoin is deemed "issued in the United States" and when a platform is considered to "offer or sell" a stablecoin to a person located in the country. The proposal is slated to be published in the Federal Register on Aug. 18, triggering a 60-day public comment period. Treasury said a stablecoin would generally be treated as issued in the US if the issuer is located in the country at the time of issuance, or if the token is issued to a recipient located in the US. For individuals, Treasury would generally look to physical presence. For companies, US incorporation or having a principal place of business in the US would typically determine location. Foreign issuers could avoid being treated as issuing in the US if they reasonably believe recipients are outside the country, maintain controls designed to prevent issuance to people located in the US, and refrain from targeting US users through advertising or solicitation. The GENIUS Act is expected to take effect on Jan. 18, 2027. From that date, companies generally would be barred from issuing payment stablecoins in the US without authorization under a federal or state regulatory regime, with exceptions for qualifying foreign issuers. Starting July 18, 2028, digital asset service providers would generally be prohibited from offering or selling stablecoins to people located in the US unless the stablecoins were issued by a permitted payment stablecoin issuer or a qualifying foreign issuer. Treasury also said foreign issuers would need the technological capability to comply with lawful US orders and applicable reciprocal arrangements. Treasury outlined examples of activity that could amount to offering or selling a stablecoin in the US, including directly soliciting US users, advertising that a stablecoin is available to them, responding to purchase inquiries from people in the country, and assisting users in bypassing location controls such as IP address checks. Platforms could benefit from protection if they reasonably believe the customer is outside the US, maintain controls designed to prevent sales to people in the country, and avoid advertising or solicitation aimed at US users. The proposal would also exempt certain direct person-to-person transfers and transactions involving self-custody wallets from Section 3 prohibitions. Treasury is seeking industry input on how the framework should apply to a range of activities, including airdrops, stablecoin buybacks, wrapped tokens, blockchain bridges, market makers, and transfers to exchanges or liquidity providers. The proposal forms part of the broader GENIUS Act rollout. Treasury, FinCEN and OFAC in April proposed rules addressing anti-money laundering and sanctions compliance obligations for permitted stablecoin issuers. Signed into law in July 2025, the GENIUS Act requires payment stablecoins to hold reserves backing outstanding tokens on a one-to-one basis using eligible assets, including cash, deposits and short-term US Treasury securities.