Treasury Issues First GENIUS Act Rule Proposal for State Stablecoin Oversight

The US Department of Treasury issued a notice of proposed rulemaking on April 1, 2026 outlining principles for determining whether state-level stablecoin regulatory regimes are “substantially similar” to the federal framework established by the GENIUS Act, allowing smaller issuers with less than $10 billion in outstanding supply to opt for state oversight.

The 87-page proposal opens a 60-day public comment period and represents the first regulation Treasury has proposed to implement the Guiding and Establishing National Innovation for US Stablecoins Act, which was enacted in July 2025.

Treasury Proposal Defines Substantial Similarity Standard for State-Level Regulation

The proposed rule establishes broad-based principles for evaluating whether state regulatory regimes meet the GENIUS Act’s requirement for substantial similarity to the federal framework. Under the law, stablecoin issuers with consolidated total outstanding issuance not exceeding $10 billion may choose state-level regulation provided the state regime meets or exceeds federal standards.

The Treasury draws a distinction between “uniform requirements” such as reserve backing and anti-money laundering compliance, where federal standards must be met, and “state-calibrated requirements” where local regulators retain discretion, including capital and risk management standards. State frameworks may exceed federal requirements as long as they do not conflict with federal law or undermine overall comparability.

The proposal anchors the federal benchmark largely to rules and interpretations issued by the Office of the Comptroller of the Currency, signaling the OCC’s central role in overseeing nonbank stablecoin issuers that transition to federal supervision after crossing the $10 billion threshold. State regimes would be barred from weakening core disclosure standards, with issuers required to publish reserve composition reports at least monthly—matching federal frequency requirements.

GENIUS Act Implementation Advances as Broader Crypto Legislation Stalls

The NPRM marks Treasury’s first formal step in translating the GENIUS Act into an operational regulatory regime for payment stablecoins. The agency previously issued a request for comment on digital forensic tools and stablecoins in August 2025 and an advance notice of proposed rulemaking seeking broad input on implementation in September 2025.

Top US banking regulators, including the Federal Deposit Insurance Corporation and the Office of the Comptroller of the Currency, have also published notices of proposed rulemaking related to GENIUS Act implementation. The Federal Register will accept public comments on Treasury’s proposal for 60 days following publication.

The GENIUS Act established the first federal framework for stablecoins, requiring full reserve backing, anti-money laundering compliance, and regular disclosures. The law is widely seen as legitimizing dollar-backed stablecoins while reinforcing US monetary dominance. However, the legislation did not include guidelines for yield-bearing stablecoins, a topic that has become a roadblock as Congress attempts to pass broader market structure legislation including the CLARITY Act.

Federal Oversight Threshold and State-Federal Coordination

The proposal clarifies that federal law remains the baseline, noting that any future legislation passed by Congress governing stablecoin issuers would automatically apply to state-regulated firms unless explicitly stated otherwise. The $10 billion threshold determines whether issuers may remain under state oversight or must transition to federal supervision.

Naming restrictions would apply across both frameworks, preventing state-regulated issuers from using prohibited terms in stablecoin branding. Treasury reports issued under the GENIUS Act are expanding oversight tools, including measures targeting illicit finance and crypto mixers.

The NPRM states that the Treasury will establish broad-based principles for determining whether a state-level regulatory regime is substantially similar to the federal regulatory framework, as directed by the GENIUS Act. Members of the public will have 60 days to respond to the Treasury’s NPRM after publication in the Federal Register.

FAQ

What does the Treasury’s GENIUS Act rule proposal address?

The proposal establishes principles for determining whether state-level stablecoin regulatory regimes are “substantially similar” to the federal framework. This determination allows smaller stablecoin issuers with less than $10 billion in outstanding supply to opt for state regulation rather than full federal oversight.

What is the $10 billion threshold in the GENIUS Act?

Stablecoin issuers with consolidated total outstanding issuance of $10 billion or less may choose regulation under a state-level regime if that regime is substantially similar to the federal framework. Issuers exceeding this threshold must transition to federal supervision under rules anchored to Office of the Comptroller of the Currency standards.

How can the public participate in the rulemaking process?

The Treasury’s notice of proposed rulemaking opens a 60-day public comment period following publication in the Federal Register. Interested stakeholders may submit comments on the proposed principles for determining substantial similarity between state and federal stablecoin regulatory frameworks.