The U.S. Department of the Treasury has unveiled a draft of regulations aimed at implementing the GENIUS Act, which is the first federal law governing payment stablecoins. This document outlines the requirements for issuers, reserves, and oversight related to the issuance of digital dollars.
Details of the Treasury's Proposal
The published Notice of Proposed Rulemaking (NPRM) focuses on the execution of the third section of the GENIUS Act. It is designed to clarify how the legally established framework for stablecoins—digital tokens primarily intended for payments and transactions—will function in practice.
Signed into law in July 2025, the GENIUS Act established a federal regulatory framework for the issuance of payment stablecoins in the U.S. The Treasury is now shifting from legislative principles to specific requirements for market participants.
The proposed regulations address the definition of payment stablecoins, their issuance processes, and the jurisdictional and oversight issues. Essentially, the regulator is delineating which companies will be permitted to engage with such assets under the new framework.
Implications for Issuers
The GENIUS Act imposes stringent requirements for the backing of payment stablecoins, mandating that they be fully supported by reserves at a one-to-one ratio. The list of acceptable assets is limited to highly liquid instruments, including U.S. dollars, bank deposits, and short-term treasury bonds.
The law also requires regular disclosures regarding reserves and independent audits of the data. A primary goal of this regulation is to ensure that users can redeem stablecoins at face value, thereby reducing risks to the financial system.
However, these new regulations do not imply government insurance for such assets. The head of the Federal Deposit Insurance Corporation (FDIC) previously stated that stablecoin holders would not receive protections akin to those for bank deposits.
Next Steps: Public Discussion
The document released is still a draft and not the final rules. The U.S. Treasury has initiated a comment period for market participants and other stakeholders to provide feedback.
This initiative represents another step in the implementation of the GENIUS Act. In April, the Treasury had already proposed rules concerning the interaction between the federal framework and state-level stablecoin regulations.
The deadline set by current legislation for issuing the regulatory framework for the GENIUS Act was July 18. The regulatory regime is expected to be fully operational no later than 120 days after the final rules are published.
Additionally, it is worth noting that the U.S. Senate is currently reviewing the CLARITY Act, a bill that outlines the structure of the digital asset market, which may also impact stablecoin regulation.