The U.S. Treasury has proposed draft regulations under the GENIUS Act, establishing a federal framework for payment stablecoins.
The U.S. Department of the Treasury has proposed new regulations under the GENIUS Act, marking the first federal framework for payment stablecoins. This draft outlines issuer requirements, reserve mandates, and oversight mechanisms related to the issuance of digital dollars.
Overview of Proposed Regulations
The Notice of Proposed Rulemaking (NPRM) focuses on the operational aspects of the GENIUS Act, which was enacted in July 2025. It aims to clarify how the established legal framework for stablecoins—digital tokens designed for transactions—will be implemented.
These proposed regulations define payment stablecoins, outline their issuance processes, and address jurisdictional issues, specifying which entities may engage with these assets under the new rules.
Impact on Stablecoin Issuers
Under the GENIUS Act, payment stablecoins must be fully backed by reserves at a one-to-one ratio, limited to highly liquid assets such as U.S. dollars, bank deposits, and short-term treasury bonds. Issuers are also required to provide regular disclosures about reserves and undergo independent audits to ensure that users can redeem stablecoins at their face value, thus mitigating financial system risks.
It's important to note that these regulations do not offer government insurance for stablecoin holders, as clarified by the head of the Federal Deposit Insurance Corporation (FDIC), who indicated that protections similar to those for bank deposits would not apply.
Public Engagement and Future Steps
This draft is open for public comment, allowing market participants and stakeholders to provide feedback. The Treasury is moving forward with implementing the GENIUS Act, having previously proposed rules regarding the interaction between federal and state-level regulations on stablecoins.
The legislation mandates that the regulatory framework be finalized by July 18, with full implementation expected within 120 days following the release of the final rules. Additionally, the U.S. Senate is currently reviewing the CLARITY Act, which could further influence stablecoin regulation.
