Treasury Proposes Rule Defining Legal Boundaries for Payment Stablecoin Issuance in U.S.
The Treasury Department proposed a rule defining when issuing, offering, or selling a payment stablecoin in the United States is unlawful under the GENIUS Act, implementing statutory prohibitions that restrict issuance to permitted payment stablecoin issuers and qualifying foreign issuers.
Under the proposal, a person would be treated as issuing a payment stablecoin in the United States if, at the time of issuance, either that person or the recipient is located in the country. A foreign issuer could issue here only if it registers with the OCC and the Treasury Secretary determines that its home-country regime is comparable to the GENIUS Act framework. The Treasury Department conceded that its reading is contested, noting the provision is captioned as a limitation rather than a prohibition, and asked commenters whether its interpretation is the best one.
The GENIUS Act is expected to take effect January 18, 2027, 18 months after enactment, at which point the restriction on foreign-issued payment stablecoins would become applicable. Beginning July 18, 2028, digital asset service providers would be prohibited from offering or selling payment stablecoins to persons in the United States unless the stablecoins are issued by a permitted payment stablecoin issuer. The proposal would allow digital asset service providers to rely on a foreign issuer's representation that it can comply with lawful orders and reciprocal arrangements, as long as the provider conducts reasonable due diligence and does not know or have reason to know the representation is false.
The proposal follows an earlier Treasury rulemaking establishing how federal regulators will review state stablecoin regulatory regimes. The proposed rule would also establish safe harbors for certain transactions and clarify that a payment stablecoin issuer may simultaneously be considered a digital asset service provider.
Comments are due 60 days after the proposal's publication in the Federal Register, scheduled for August 18, 2026.