The US Treasury proposed regulations on 17 Aug setting out who may issue, offer and sell payment stablecoins in the United States. The proposal implements section 3 of the GENIUS Act, which established the basic market framework but left Treasury to define key terms and spell out how its restrictions would apply in practice, particularly to foreign-issued stablecoins and the platforms that make them available to US users.
Treasury Sets Rules for Foreign Stablecoins Under GENIUS Act
17 August 2026 - 20:47 UTC
By Isabelle Castro
Spanning five sections, the proposal marks a key implementation step for the GENIUS Act, the 2025 law creating the first federal framework for payment stablecoins, ahead of its January 2027 effective date. The rules are not final and Treasury is seeking public feedback before issuing the version that companies will ultimately have to follow.
The full terms
After the law takes effect, US platforms would be barred from offering foreign-issued stablecoins such as Tether's market-leading USDT unless the issuer can comply with lawful US orders and reciprocal arrangements. According to the proposed rules, an exchange could rely on the issuer's assurance that it can freeze, seize or burn tokens when required, but only after conducting reasonable due diligence on that claim.
From July 2028, the bar would rise further. A foreign issuer would generally need to come from a jurisdiction whose stablecoin regime Treasury deems comparable with the US framework and register with the Office of the Comptroller of the Currency (OCC) for its tokens to continue being offered in the US.
The proposal also defines several terms that will determine how the GENIUS Act works in practice. A stablecoin would count as issued when it is first transferred to someone who can use, transfer or redeem it, so tokens that are minted but remain in the issuer's own treasury would not yet count as issued.
Treasury also defines who is "located in the United States," helping determine when offshore transactions become subject to US rules. It confirms the restrictions can apply to foreign activity involving US customers and that stablecoin issuers can also be treated as digital asset service providers, meaning they may have to comply with both sets of obligations under the law.
Sales and offers were given its own section. Soliciting US customers, advertising a coin as available to them or agreeing to sell it would all count as an offer or sale. The proposal also creates a safe harbour for firms that make a genuine effort to keep US customers out. If they screen customers, block US access and avoid targeting US users, they would not be liable simply because a transaction with a US customer slipped through.
Issuing stablecoins without a licence carries up to $1mn per violation and five years in prison. Treasury said the penalties could also apply to market makers and platforms that knowingly help distribute or list an unlawfully issued stablecoin.
The proposal puts 87 questions out for public comment over 60 days, covering issues including offshore transactions, due diligence, safe harbours and compliance costs. The rules would not apply to some direct crypto activity, including peer-to-peer transfers between individuals and transactions through software or hardware wallets used for self-custody.
Catching up
Announcing the proposed rules, Treasury Secretary Scott Bessent said Treasury was "moving quickly to implement that framework" and called for industry feedback as regulators work towards final rules.
The proposal addresses one of the gaps Senator Elizabeth Warren flagged to Bessent in October 2025. The Massachusetts Democrat argued that section 3 could leave a loophole allowing stablecoins such as Tether's USDT to continue circulating through decentralized finance and among US users without complying with the GENIUS Act's requirements. The proposal clarifies how foreign-issued stablecoins can be offered and sold in the US, but does not directly regulate decentralized finance.
Tether has already created a separate US-regulated option. The company launched USAT through Anchorage Digital Bank in January, giving it a US stablecoin that can comply with the GENIUS Act without changing USDT. But adoption has been limited. As of 17 Aug, USAT had a market capitalization of about $185mn, compared with roughly $183bn for USDT and about $71bn for Circle's USDC.
Stablecoin provisions in the GENIUS Act have also complicated Congress's broader crypto agenda. The CLARITY Act, which would create a wider regulatory framework for digital assets, spent months stalled in the Senate partly over a separate GENIUS Act provision that banks say lets exchanges and other intermediaries pay rewards on stablecoin holdings even though issuers themselves cannot pay interest.
The bill remains in the Senate. Majority Leader John Thune has filed a cloture motion, setting up a procedural vote on 15 Sept that requires 60 votes to limit debate and allow the legislation to move towards a final floor vote.
