The U.S. Treasury Department has put forward a detailed proposal to define who counts as a stablecoin issuer under the new federal law, pushing forward on the GENIUS Act stablecoin rule even as key deadlines slip past the calendar. The move, unveiled Monday, sets the stage for a 60-day public feedback window before regulators attempt to lock in a final version of the rule that will govern how payment stablecoins operate inside the United States.
Key takeaways
Treasury proposed federal definitions for stablecoin issuers under the GENIUS Act, marking the first major implementation step for the law.
A 60-day public comment period is now open before the department moves toward a final rule.
Payment stablecoins won’t automatically be treated like securities, since Treasury says they serve payment and settlement functions.
Foreign issuers, including Tether, are expected to face close scrutiny over how the rules apply to companies operating outside the U.S.
The law’s one-year rulemaking deadline passed in July, with a January 18 effective date still looming.
U.S. Treasury Proposes Federal Definitions for Stablecoin Issuers
Treasury’s proposal spells out, for the first time in formal rule language, what it actually means to issue a U.S. payment stablecoin and which businesses fall under the law’s reach. It’s the clearest signal yet that regulators are trying to translate the GENIUS Act’s broad text into workable, day-to-day compliance standards for an industry that has been operating with limited federal guardrails.
Treasury Secretary Scott Bessent framed the effort as part of a broader push for regulatory certainty, saying the administration is working “to provide the regulatory certainty businesses need to innovate and grow in America, cement the role of the U.S. dollar as the world’s reserve currency, and keep America the crypto capital of the world.”
Distinction Between Payment Stablecoins and Securities
One of the proposal’s central moves is drawing a firm line between stablecoins used for payments and instruments traditionally regulated as securities. Treasury said it studied established securities laws as a reference point, given their “longstanding legal regimes that address the issue, offer, and sale of other financial instruments, such as securities, including offshore activities.” Even so, the department made clear it does not intend to simply copy those rules onto stablecoin issuers.
Focus on Payment and Settlement Functions
Why does that distinction matter? Because it determines how strictly issuers get regulated, and whether cross-border payment activity gets bogged down in investment-style compliance. Treasury argued that the GENIUS Act “evinces a clear intent for payment stablecoins to serve as an effective means of payment and settlement, including across borders,” adding that applying traditional investment rules too rigidly “may frustrate that goal.” In other words, the department is trying to build a framework tailored to how stablecoins actually get used, rather than forcing them into a securities-shaped box.
Public Comment Period and Regulatory Process
The proposal opens a 60-day window for stablecoin issuers, financial firms, and the public to weigh in before Treasury drafts a final rule, a process that will likely stretch on for months after comments close. This step follows an advance notice the department issued back in September 2025, which laid the early groundwork for Monday’s more detailed proposal.
60-Day Comment Window Opens
Once the comment period wraps up, Treasury faces the harder task of reviewing feedback and answering the dozens of interpretive questions embedded in the proposal itself. Each of those questions needs a resolution before the rule can be finalized, and the department has set a deadline in mid-October for responses on some of the more pressing issues.
Questions Raised on Foreign Issuers and Compliance
This is where things get complicated for the biggest names in the stablecoin market. Treasury is expected to pay particularly close attention to foreign stablecoin issuers, including industry leader Tether, since the department still has to decide exactly how domestic requirements apply to companies based outside U.S. borders. That question carries real weight for the market: Tether alone represents a massive share of global stablecoin circulation, and any federal stance on foreign issuers could reshape how those tokens are treated on U.S.-facing platforms.
Implementation Timeline and Congressional Context
The rulemaking clock has already run out once, and a second deadline is closing in fast. The GENIUS Act originally called for agencies to finish key rules within one year of passage, but that target came and went in July without full implementation. The next fixed point on the calendar is the law’s effective date, expected by January 18, and it looks increasingly unlikely that every rule will be buttoned up by then.
Missed July Deadline and January 18 Effective Date
Regulators typically build in transition periods when new rules land after a law’s effective date, giving industry players time to adjust rather than face immediate enforcement. That pattern seems likely to repeat here, given how much groundwork Treasury still has to cover on definitions, foreign issuer treatment, and compliance timelines before the rule is truly finished.
Overlap with Digital Asset Market Clarity Act
Adding another layer of uncertainty, Treasury’s rulemaking is unfolding at the same time Congress is weighing the Digital Asset Market Clarity Act, legislation that could rewrite portions of the GENIUS Act itself, including how reward programs for stablecoin holders on exchanges get treated. That bill, however, is on shaky footing after the Senate failed to begin key votes before heading into its August recess. The overlap leaves Treasury in an awkward position: finalizing detailed rules under a law that lawmakers might still amend before the ink dries.
For an industry that has spent years asking for regulatory clarity, this stretch offers a mixed picture. Treasury’s proposal signals real movement toward a workable federal framework, but the combination of missed deadlines, unresolved questions about foreign issuers, and pending congressional changes means the rules governing payment stablecoins are still very much a work in progress.
FAQ
What are the key features of the U.S. Treasury’s proposed stablecoin rule under the GENIUS Act?
The Treasury’s proposal defines stablecoin issuers and distinguishes payment stablecoins by their payment and settlement functions, excluding them from traditional securities rules.
How long is the public comment period for the GENIUS Act stablecoin rule proposal?
The proposal opened a 60-day public comment period for stakeholders to submit feedback before the Treasury finalizes the rule.
Will foreign stablecoin issuers like Tether be affected by the new GENIUS Act rules?
Yes, the Treasury plans to closely review foreign stablecoin issuers, including Tether, to determine how federal requirements apply to them.
What is the timeline pressure facing the GENIUS Act stablecoin rule implementation?
The July 2026 deadline to finalize rules was missed, but the law’s effective date remains January 18, 2027, with some rules likely unfinished by then.
Article produced with the assistance of artificial intelligence and reviewed by the editorial team.