The U.S. Treasury has proposed its first set of rules to implement the GENIUS Act and has opened a 60-day public comment period to define how stablecoin oversight can be handled at the state level.

Under the proposal, issuers with less than $10 billion in circulating stablecoins may operate under state supervision, provided those frameworks meet a “substantially similar” standard to federal regulations. 

The proposal seeks to clarify how regulatory responsibilities will be divided as the regulation begins to take shape.

Proposed rules

Stablecoin issuers with less than $10 billion in circulation are eligible for that route, though the flexibility comes with firm guardrails. Treasury has set out non-negotiable conditions, including full 1:1 reserve backing using cash or high-quality liquid assets, along with mandatory monthly disclosures.

Compliance with federal anti-money laundering and sanctions rules remains compulsory across all jurisdictions. The proposal also reinforces a ban on rehypothecation, preventing issuers from reusing reserves to support multiple obligations.

Meanwhile, state regulators are given room to impose stricter oversight, covering liquidity thresholds, reserve requirements, risk management standards, and enforcement mechanisms. Any framework introduced at the state level must deliver outcomes that match or exceed federal protections, rather than offering a lighter alternative.

Regulators are still working through how the GENIUS framework will align with existing money transmission laws and which agencies will oversee different parts of the market. Previous consultations have already covered areas such as digital forensic tools, tax reporting, and data collection.

Concerns remain over stablecoin yields 

As previously reported by crypto.news, the legislation, signed into law by President Donald Trump in July, marked a major step in formalizing stablecoin regulation. 

However, uncertainty around yield-bearing stablecoins continues to hold back progress on the broader CLARITY market structure bill.

Some industry players argue that yield-generating stablecoins could offer higher returns than traditional savings accounts, while banking groups remain concerned about potential deposit outflows.