Summary

The U.S. Treasury Department published a notice of proposed rulemaking implementing section 3 of the GENIUS Act — the first comprehensive federal regulatory framework for payment stablecoins, enacted July 18, 2025. The proposal establishes definitions and prohibitions around who may issue, offer, sell, or otherwise make available payment stablecoins in the U.S., how foreign issuers can reach U.S. customers, and safe harbors. Comments are due by October 19, 2026, and the law is expected to be effective January 18, 2027.

Key Facts

• Treasury proposed Part 1523 to implement §3 of the GENIUS Act (published Aug 18 in Federal Register)
• Core prohibition: unlawful for anyone other than a permitted payment stablecoin issuer (or compliant foreign issuer) to issue a stablecoin in the U.S.
• "Issue" defined as the first transfer of a newly minted token to an outside party for circulation or redemption
• Digital asset service providers (DASPs) face two tiers: (1) from July 18, 2028, must only offer/sell stablecoins from permitted issuers; (2) from the Act's effective date (Jan 18, 2027), foreign issuers must show ability/will to comply with lawful orders and reciprocal arrangements
• DASPs may rely on a foreign issuer's representation after conducting "reasonable due diligence"
• Key exemptions/safe harbors: peer-to-peer transfers between individuals; same-parent interaccount transfers; self-custody wallets; comparable foreign regime (registered with OCC); pending-application waivers; de minimis and unusual/exigent-circumstances safe harbors
• "Reasonable belief" safe harbor for foreign issuers: not located in U.S., reasonable belief customers outside U.S., controls to avoid serving U.S. residents, no U.S.-targeted advertising
• Treasury deliberately did NOT adopt securities-law frameworks like Regulation S; payment stablecoins are not securities or commodities
• Written comment period ends October 19, 2026
• GENIUS Act expected effective January 18, 2027 (statutory outside date; agencies unlikely to finalize all rules in time)
• Follows Treasury's ANPRM (Sept 2025) and interagency rulemaking from OCC, FDIC, NCUA, Federal Reserve
• Secretary Bessent: rules needed to "cement the role of the U.S. dollar as the world's reserve currency"

Why It Matters

This Treasury rulemaking is the operational backbone of the GENIUS Act, determining precisely when a stablecoin is "issued," who must be a permitted issuer, and the obligations of exchanges and other DASPs. Its treatment of foreign issuers (like Tether) and its deliberate departure from securities law shape the competitive structure of the stablecoin market. The proposed "reasonable belief" safe harbors and broad definition of digital asset service provider have significant compliance implications for the entire industry.

Sources

• https://thefederalregister.org/documents/2026-16796/genius-act-regulations-on-payment-stablecoin-issuance-offer-and-sale
• https://www.jdsupra.com/legalnews/treasury-proposes-rules-to-implement-3-1129959/
• https://www.jonesday.com/en/insights/2026/08/us-treasury-proposes-genius-act-rules-for-stablecoin-issuance-offer-and-sale
• https://www.coindesk.com/policy/2026/08/17/u-s-treasury-department-proposes-genius-act-stablecoin-rule