U.S. Treasury Releases First GENIUS Act Proposed Rule on State Oversight for Stablecoins

On April 1, 2026, the U.S. Department of the Treasury published its first notice of proposed rulemaking (NPRM) under the Guiding and Establishing National Innovation for U.S. Stablecoins (GENIUS) Act, launching a 60-day public comment period. The proposal sets out how Treasury plans to assess whether state regulatory frameworks for payment stablecoin issuers are "substantially similar" to the federal standards created by the GENIUS Act. If a state regime is certified, smaller issuers would be able to choose state supervision in place of federal rules. Signed into law on July 18, 2025, the GENIUS Act establishes baseline requirements for U.S. stablecoins, including 1:1 reserve backing with liquid assets, monthly disclosures, and compliance with anti-money laundering and sanctions obligations. The statute also directs Treasury to use notice-and-comment rulemaking to develop overarching principles for evaluating state regimes against the federal framework. Under Section 4(c)(1), issuers with total outstanding issuance of $10 billion or less may opt into a qualifying state regime. Certification requires approval by the relevant interagency body that the state framework meets or exceeds the standards in Section 4(a). Even under state oversight, issuers remain subject to core federal expectations, including 100% reserves in high-quality liquid assets, on-demand redemption at par, Bank Secrecy Act registration, AML/CFT and sanctions compliance, and public disclosures. The NPRM follows a September 2025 advance notice and invites comments within 60 days of publication in the Federal Register. Submissions and related materials will be available on regulations.gov and are expected to influence the final rule. Market context underscores the focus on smaller issuers. As of April 1, 2026, the stablecoin market totals $310 billion, spanning 391 coins and more than $97 billion in 24-hour trading volume, according to CoinGecko. Tether (USDT) and USDC lead with $184 billion and $77 billion, respectively, both above the $10 billion threshold, leaving the proposed state pathway primarily aimed at smaller participants. Treasury and other agencies continue work on the broader GENIUS Act framework, with the OCC, FDIC, and NCUA pursuing additional rulemakings. Full implementation is expected in late 2026 or early 2027, a timeline that could expand consumer protections and market stability while supporting adoption and new digital-asset use cases. Disclaimer: This content is provided for informational and educational purposes only and does not constitute financial advice. Coin Edition is not responsible for any losses arising from use of referenced content, products, or services. Readers should exercise caution before taking actions related to any company.