The US Department of the Treasury has opened a public comment period on a proposed rule that would shape how states regulate smaller stablecoin issuers under the GENIUS Act.
The proposal is Treasury’s first rulemaking step under the law, and it would let issuers with no more than $10 billion in consolidated outstanding issuance choose a state-level regulatory regime if that regime is substantially similar to the federal framework.
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Treasury said the public will have 60 days to submit comments after the proposal appears in the Federal Register. Those comments will be posted publicly through Regulations.gov, which means the next phase of the law’s rollout is now open to industry, state regulators, and other market participants.
The proposal matters because it draws a line between smaller and larger issuers. Under the framework, issuers below the $10 billion mark may stay under state supervision, but only if the state rules produce outcomes that closely match federal standards. Once an issuer moves past that level, federal oversight becomes the main path under the law.
GENIUS Act Stablecoin Rules Set the Floor for State Oversight
The GENIUS Act requires Treasury to set broad principles for deciding whether a state framework is “substantially similar” to the federal one.
In the proposal, Treasury says a state regime includes state statutes, regulations, and enforceable guidance related to payment stablecoins.
The proposed rule also makes clear that states cannot take a lighter approach on core protections. Treasury says the state framework must stay consistent with the federal system in all substantive respects for the law’s uniform requirements. It also says states cannot materially narrow, condition, or limit those requirements compared with the federal framework.
At the same time, the proposal leaves room for states to be stricter. Treasury says state regimes may differ on some state-calibrated requirements, including capital and related thresholds, as long as they still meet the Act’s baseline protections and remain at least as protective as the federal structure. That means states can add tighter limits, but not weaker ones.
Stablecoin Reserve Rules and Monthly Reports Stay Central
One key part of the proposed stablecoin regulations is reserve backing. Treasury’s draft says a state regime may allow reserve assets beyond those listed in the Act only if the OCC has approved them as similarly liquid federal government issued assets. In practice, that keeps reserve quality tied closely to federal standards.
The proposal also keeps the ban on rehypothecation in place. In simple terms, that means a stablecoin issuer cannot reuse the same backing assets to support other claims, except where the law specifically allows certain repurchase agreement treatment. Treasury says the state framework must prohibit rehypothecation in line with the Act and the federal model.
Monthly reporting remains another fixed requirement. Treasury’s draft says state regimes must require and accept monthly certifications tied to the accuracy of the issuer’s monthly report. The form may vary from the federal version, but the obligation itself must stay in place.
The proposal also says anti money laundering and sanctions compliance cannot be cut out of the state framework, because doing so would undercut the law’s purpose.
Stablecoin Yield Debate Still Hangs Over the CLARITY Act
The new Treasury proposal arrives while the broader stablecoin debate in Washington remains unsettled. The GENIUS Act was signed into law by President Donald Trump on July 18, 2025, establishing the first federal framework for payment stablecoins in the United States.
However, the fight over yield-bearing stablecoins has not ended. A recent update on the CLARITY Act debate said Senators Thom Tillis and Angela Alsobrooks announced a bipartisan compromise after disagreement over stablecoin yield had delayed Senate movement on the bill since January.
That same update said the draft compromise would ban passive yield, meaning a holder could not earn a return simply by keeping a stablecoin in a wallet.
It also said activity based rewards tied to payments, transactions, subscriptions, loyalty programs, or platform use could still be allowed if they do not become economically equivalent to a bank deposit.
That leaves the Treasury rulemaking moving forward on state oversight while Congress continues to wrestle with how far stablecoin products can go on yield.
Tatevik Avetisyan is an editor at Kriptoworld who covers emerging crypto trends, blockchain innovation, and altcoin developments. She is passionate about breaking down complex stories for a global audience and making digital finance more accessible.
📅 Published: April 2, 2026 • 🕓 Last updated: April 2, 2026
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