US Treasury proposes GENIUS Act stablecoin rules, defining for the first time who can issue a payment stablecoin

The US Treasury Department on August 17, 2026, proposed the first formal set of rules to implement the GENIUS Act, the federal law governing stablecoins. For the first time in actual rule language, the proposal spells out what it means to issue a US payment stablecoin and which businesses fall under the law's reach, offering the clearest signal yet that regulators are trying to translate the act's broad text into workable, day-to-day compliance standards for the industry.

At the heart of the proposal is a set of definitions that establish when stablecoin activity requires federal or state licensing. The rule defines when an issuer is considered to be operating within the United States and covers offers and sales made to people inside the country. It also establishes federal definitions for stablecoin issuers, drawing a clearer line around who is subject to oversight and who is not under the new framework.

One of the most consequential clarifications concerns how these tokens are classified. According to the proposal, payment stablecoins will not automatically be treated as securities, with the distinction drawn based on their payment and settlement functions. That determination matters enormously for the industry, since it shapes which regulator has authority and what compliance obligations issuers must meet as the market moves toward mainstream adoption.

A timeline toward 2027

The proposal sets a firm calendar for the industry. Beginning January 18, 2027, the expected effective date of the GENIUS Act, companies will generally be unable to issue payment stablecoins domestically without appropriate federal or state licensing. The formal rulemaking itself arrives after Treasury missed an original one-year deadline in July 2026, underscoring how complex translating the legislation into detailed rules has proven to be.

The tightening does not stop there, but extends further into the future. Under a provision tied to July 2028, digital asset providers will generally not be able to sell stablecoins to US persons unless those assets are issued by licensed companies. The phased approach gives issuers and platforms a runway to adapt, while making clear that unlicensed stablecoins will eventually be squeezed out of the US market entirely.

Before any of this becomes final, the public will have a chance to weigh in. Treasury has opened a comment period of 60 days following publication in the Federal Register, inviting feedback from banks, crypto companies and other stakeholders. The responses are likely to shape the final contours of the rules, particularly on the more contentious points where the proposal leaves specifics unresolved for now.

Foreign issuers and Tether

The proposal reserves particular attention for stablecoins issued outside the United States. Under the draft rules, providers cannot distribute foreign-issued stablecoins unless the foreign issuers are able to comply with lawful US orders and operate under reciprocal arrangements. This effectively extends the reach of US oversight beyond domestic borders, a point of significant consequence for globally used tokens.

Regulators signaled that they will pay especially close attention to foreign stablecoin issuers, singling out industry leader Tether as a focus. As the largest stablecoin by circulation, Tether sits at the center of questions about how the GENIUS Act framework will apply to offshore issuers whose tokens are widely held and traded by American users, making its treatment a key test of the new regime.

What officials say

Treasury Secretary Scott Bessent framed the move as delivering on a broader political mandate, saying the department is implementing the framework established by President Donald Trump and Congress. He tied the rulemaking directly to the administration's stated goal of turning legislative intent into concrete regulatory action, positioning the proposal as a milestone in the government's crypto agenda rather than a standalone technical step.

Bessent also cast the rules in strategic terms for the wider economy. He said the aim is to provide the regulatory certainty businesses need to innovate and grow in America, to cement the role of the US dollar as the world's reserve currency, and to keep the United States, in his words, the crypto capital of the world. The framing ties stablecoin policy to dollar dominance and to competition with other jurisdictions.

The bigger picture

While the stablecoin framework advances, the broader effort to regulate crypto markets has stalled. The CLARITY Act, which would govern market structure by deciding which tokens are commodities versus securities and which regulators supervise exchanges and brokers, failed to move to key votes before lawmakers left for their August recess, and its passage before 2027 now appears unlikely. The result is a lopsided landscape, in which the dollar-pegged tokens people trade with are being defined faster than the assets they trade against, leaving a significant piece of the regulatory puzzle unresolved for the months ahead.