The Treasury's new proposal aims to clarify definitions and jurisdictions outlined in the recently completed stablecoin law by Congress.
By Jesse Hamilton|Edited by Nikhilesh De27 min ago2 min readMake preferred on ShareShare this articleCopy linkX (Twitter)LinkedInFacebookEmailMake preferred on The U.S. Treasury Department has introduced a key proposal for stablecoin issuers under the GENIUS Act. (Jesse Hamilton/CoinDesk)SummaryShow- The Treasury Department has unveiled its first significant proposal for implementing the GENIUS Act, marking a crucial step towards the establishment of U.S. stablecoin regulations.
- Despite surpassing the one-year deadline for rule implementation, the administration is progressing to finalize regulations for U.S. stablecoin issuers.
In a notable advancement, the U.S. Department of the Treasury has proposed federal definitions regarding the issuance of U.S. stablecoins as part of the Guiding and Establishing National Innovation for U.S. Stablecoins (GENIUS) Act. This comes as the deadlines stipulated in the law are approaching.
The Treasury is one of several governmental bodies tasked with establishing regulations necessary for the law to take full effect, which also involves banking and market regulators.
Secretary of the Treasury Scott Bessent stated on Monday that the administration is committed to swiftly implementing these rules "to provide the regulatory certainty that businesses require to innovate and grow in America, reinforce the U.S. dollar's status as the world’s reserve currency, and maintain America’s position as the global leader in crypto," according to a statement.
The proposal indicates that the department aims to approach stablecoins as a distinct sector while also referencing established securities laws, given their "longstanding legal frameworks that govern the issue, offer, and sale of other financial instruments, including offshore activities."
Nonetheless, the proposal emphasizes that "Treasury believes the Act demonstrates a clear intent for payment stablecoins to function effectively for payments and settlements, including internationally, and applying traditional investment regulations to payment stablecoins may hinder that objective."
This recent action follows the Treasury's advance notice of the rule released in September last year, which was anticipated to adhere to a tight timeline. The public and the expanding stablecoin industry now have a 60-day window to submit comments, and the Treasury is expected to take several months to review these before finalizing the rule.
The proposed rule includes numerous questions regarding the interpretation of the law that need to be addressed prior to final approval. The stablecoin sector will closely monitor how foreign issuers, including the prominent firm Tether, are treated. The deadline for responses is set for mid-October.
The law's target to implement its rules within one year was missed last month, and the next significant date is the law's effective implementation, scheduled for January 18. It is improbable that all regulations will be finalized by that time, as new regulations typically allow for a transition period for the industry to adapt.
The GENIUS implementation process operates alongside Congressional efforts to pass the Digital Asset Market Clarity Act, which could amend certain parts of GENIUS, particularly regarding the treatment of rewards programs for stablecoin users on exchanges. However, the Clarity Act's progress is uncertain after it failed to initiate key votes earlier this month, just before the Senate adjourned for its August recess.
Read More: Tether's USDT hits 2-year countdown threatening its position on U.S. crypto platforms
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