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On August 18, the U.S. Department of the Treasury published a notice of proposed rulemaking to implement Section 3 of the Guiding and Establishing National Innovation for U.S. Stablecoins Act (GENIUS Act). The proposal would establish rules governing who may issue payment stablecoins in the United States and when digital asset service providers may offer, sell, or otherwise make payment stablecoins available to U.S. persons. Comments are due October 19, 2026.
The proposal provides detailed interpretations of several statutory concepts, including when a payment stablecoin is considered “issued” and when a person is considered “located in the United States.” Specifically, the proposal would:
- Define when issuance occurs. A payment stablecoin generally would be considered issued upon its first transfer by the issuer that gives another person the right to use, transfer, convert, redeem, or repurchase the stablecoin. A subsequent transfer following redemption or reacquisition by the issuer generally would constitute a new issuance.
- Establish a U.S. nexus for issuance. An issuance generally would occur in the United States if the issuer is located in the United States or the stablecoin is issued to a person located in the United States. Foreign issuers could receive protection for certain transactions where they reasonably believe recipients are outside the United States and maintain appropriate controls.
- Clarify restrictions on digital asset service providers. Beginning July 18, 2028, providers generally could not offer or sell payment stablecoins to persons located in the United States unless the stablecoin was issued by a permitted issuer or a qualifying foreign issuer.
- Address foreign-issued stablecoins. Providers offering foreign-issued stablecoins would need to conduct reasonable due diligence before relying on an issuer’s representation that it can and will comply with lawful orders and applicable reciprocal arrangements.
Putting It Into Practice: The proposal is another significant step toward implementing the GENIUS Act’s federal stablecoin framework, (previously discussed here). The proposed geographic standards and due diligence provisions may be particularly important for issuers, exchanges, custodians, and other digital asset service providers operating across jurisdictions. Market participants should review customer-location controls, onboarding procedures, marketing practices, and arrangements involving foreign-issued stablecoins as Treasury continues implementing the GENIUS Act.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
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