US Treasury proposes GENIUS Act stablecoin rules ahead of January 2027

The US Treasury published proposed GENIUS Act rules on Monday, defining when a stablecoin is issued in the US and setting a January 18, 2027 effective date for federal licensing.

"These rules give businesses the regulatory certainty they need to innovate and grow in America, cement the role of the US dollar as the world's reserve currency, and keep America the crypto capital of the world," Treasury Secretary Scott Bessent said on X.

The notice of proposed rulemaking (NPRM) treats a stablecoin as issued not when tokens are technically created but at the moment of first transfer to another person. Returning a token to the issuer resets the prior issuance, making any subsequent transfer a new issuance. For individuals, physical location determines whether an issuance occurs in the US — not citizenship. A US citizen abroad receiving a token from a foreign issuer would not trigger US issuance rules. For companies, registration in the US or having a principal place of business there is sufficient.

The rules open a 60-day public comment period after Federal Register publication, with the GENIUS Act taking effect January 18, 2027. A second deadline of July 18, 2028, will bar digital asset service providers from offering or selling payment stablecoins not issued by a licensed issuer. Tether has roughly two years to bring USDT into compliance.

Foreign issuers and exchange liability

The proposal allows foreign stablecoin issuers to operate in the US if they meet Section 18(a) requirements, including regulation in their home country that the Treasury recognizes as comparable to the US regime and registration with the Office of the Comptroller of the Currency. Companies can demonstrate they did not issue in the US by showing they are located outside the country, reasonably believed recipients were outside the US, applied location verification procedures, and did not advertise in the US market.

The Treasury also proposes extending liability beyond direct issuers. Exchanges, market makers, and platforms that provide redemption, coordinate issuance stages, source first buyers, mint tokens, or enable initial distribution could be deemed participants in unlawful issuance. An exchange conducting an initial placement immediately after an unlawful issuance could face liability, though ordinary secondary-market trading generally would not.

Airdrops, bridges, and compliance timelines

Free airdrops to US users would be treated as issuance under the proposed rules, even without a token sale. The Treasury left open whether such airdrops also constitute offers to sell, and is seeking comment on how bridges and wrapped stablecoins should be treated.

Starting July 18, 2028, digital asset service providers generally cannot offer or sell payment stablecoins to US persons unless issued by a licensed issuer. For foreign stablecoins, requirements begin January 18, 2027 — providers must have the technical capability to comply with lawful US orders, including smart contract functions that allow freezing, seizing, or burning assets.

The Treasury is considering a stricter approach where any issuance or sale to a US person would be a violation regardless of whether the issuer knew the user's location, and is seeking feedback on a simplified regime for small transactions with a possible $1 million annual threshold.

The proposed framework arrives as stablecoin activity accelerates. Ripple minted 10 million RLUSD tokens on the XRP Ledger on Monday, pushing circulating supply to about 1.71 billion, with BNY Mellon serving as custody provider. The White House is scheduled to host executives from Coinbase, Ripple, Polymarket, and Gemini on Wednesday, and the CLARITY Act remains pending in the Senate. For Circle's USDC and Tether's USDT, the rules remove regulatory uncertainty that has constrained institutional participation, though compliance costs and technical requirements could reshape the competitive environment.

This article is for informational purposes only and does not constitute investment advice.