The U.S. Treasury Department on April 1 published an 87-page notice of proposed rulemaking (NPRM) to implement the GENIUS Act — the first federal stablecoin law, signed July 18, 2025. The rule establishes principles for determining whether state-level stablecoin regimes are "substantially similar...
"Stablecoins represent a revolution in digital finance. The dollar now has an internet-native payment rail that is fast, frictionless, and free of middlemen." — Scott Bessent, U.S. Secretary of the Treasury
The U.S. Treasury Department on April 1 published an 87-page notice of proposed rulemaking (NPRM) to implement the GENIUS Act — the first federal stablecoin law, signed July 18, 2025. The rule establishes principles for determining whether state-level stablecoin regimes are "substantially similar" to the federal framework, a threshold that allows issuers with under $10 billion in outstanding tokens to remain under state supervision.
The rulemaking arrives nine months before a hard July 18, 2026 deadline for finalized regulations across the OCC, FDIC, and Treasury. It lands in a market where stablecoin capitalization has grown to approximately $320 billion, Tether has launched a separate U.S.-compliant token (USAT) through a federally chartered bank, and Circle has secured conditional OCC approval for a national trust bank charter. The regulatory architecture taking shape will determine whether the next phase of stablecoin growth is led by crypto-native issuers, incumbent banks, or state governments.
The economic implications extend beyond compliance. Stablecoin transaction volumes reached a record $15.6 trillion in Q3 2025 alone. The question now is how value flows — in fees, reserves yield, and infrastructure costs — will be redistributed under a federalized regime.
The Guiding and Establishing National Innovation for U.S. Stablecoins Act passed the Senate 68-30 on June 17, 2025, cleared the House 307-122 on July 11, and was signed into law on July 18, 2025. It represents the first federal legislation governing payment stablecoins in U.S. history.
Core provisions:
The law governs a market that has grown from approximately $200 billion at passage to roughly $320.5 billion as of mid-March 2026, according to DefiLlama data.
The 87-page NPRM, published in the Federal Register on April 3 under docket number 2026-06489, addresses the Act's most consequential implementation question: what "substantially similar" means in practice.
Treasury proposed two categories of state-level requirements:
Uniform Requirements. These mirror federal standards with no state-level discretion. They include:
State-Calibrated Requirements. States retain discretion in areas such as:
According to the ABA Banking Journal, the proposal would give states "wide latitude" to set stablecoin regulation, provided outcomes are "equally stringent" to federal requirements. State frameworks may exceed federal requirements but cannot conflict with federal law or undermine overall comparability.
The public comment period runs 60 days from Federal Register publication (April 3), closing in early June 2026. Treasury has indicated it intends to finalize the rule before the statutory July 18, 2026 deadline.
Three federal agencies are simultaneously building the regulatory architecture for bank-issued stablecoins, all targeting the same one-year anniversary of the GENIUS Act's signing:
| Agency | Action | Date | Status | |--------|--------|------|--------| | FDIC | Proposed rule for bank subsidiary stablecoin issuance | December 16, 2025 | Comment period closed Feb. 17, 2026 | | OCC | Proposed rulemaking for OCC-supervised entities | February 25, 2026 | Comment period open | | Treasury | NPRM on state-federal "substantially similar" standard | April 1, 2026 | Comment period open (60 days) |
The FDIC's December proposal established application procedures for FDIC-supervised insured depository institutions seeking to issue payment stablecoins through subsidiaries. The rule requires evaluation based on financial condition, governance, risk management, and compliance capabilities.
The OCC's February proposal covers issuance by entities under its jurisdiction, including national banks and federal savings associations. In 2025, the OCC received 14 de novo charter applications for limited-purpose national trust banks — nearly matching the total from the prior four years combined, according to Sidley Austin. On December 12, 2025, the OCC granted conditional approval to five national trust bank charter applications from institutions proposing digital asset products and services.
All three agencies face a compressed timeline. Final rules must be in place by July 18, 2026. Delays risk creating a regulatory vacuum in which issuers hold GENIUS Act obligations without clear compliance pathways.
The stablecoin market is splitting into three distinct issuer categories under the GENIUS Act framework:
Crypto-Native Issuers (Federal Track)
Circle, the issuer of USDC (~$78 billion market cap), received conditional OCC approval in December 2025 to establish First National Digital Currency Bank, N.A. — a federally regulated national trust bank that would manage the USDC reserve. Circle conducted its NYSE IPO on July 6, 2025, under the ticker CRCL. The stock surged nearly 750% in its opening weeks, according to TradingKey, reflecting market confidence in the regulated-issuer thesis.
Bank-Affiliated Issuers (Federal Track)
JPMorgan, Bank of America, and any FDIC-insured institution can now apply to issue their own dollar tokens. Bank of America announced shortly after the GENIUS Act's passage that it would enter the market, citing the regulatory certainty provided by the law. Charles Schwab, which manages $11.9 trillion in client assets, announced on April 3, 2026 plans to launch spot bitcoin and ether trading in H1 2026 — a parallel move that signals deepening TradFi engagement with digital assets.
State-Supervised Issuers (State Track)
Issuers with under $10 billion in outstanding supply can opt for state-level supervision if their state's regime passes Treasury's "substantially similar" test. This creates a potential pathway for smaller, regionally focused issuers. States with existing digital asset frameworks — New York (BitLicense), Wyoming (custom crypto statutes), and others — will need to demonstrate comparability with federal standards.
Wyoming launched the Frontier Stable Token (FRNT) on January 7, 2026 — the first fiat-backed stablecoin issued by a U.S. state government. Initial sales reached $1.5 million within the first week.
Key parameters:
The GENIUS Act's definition of "person" explicitly excludes state governments from federal stablecoin regulations. This grants Wyoming — and any state that follows — sovereign immunity from federal oversight of state-issued digital currencies. As noted by Columbia Law School's CLS Blue Sky Blog, this exemption raises "important issues of federalism" and creates a regulatory category that exists outside the GENIUS Act's dual-track framework entirely.
North Dakota has explored a similar initiative with its proposed Roughrider Coin. The question of whether state-issued stablecoins will proliferate — and whether they create systemic fragmentation risk — remains unresolved.
Tether, which controls approximately 60% of the stablecoin market with USDT (~$187 billion), has adopted a bifurcated approach to GENIUS Act compliance.
On January 27, 2026, Tether launched USAT (USA₮) — a U.S.-regulated, dollar-backed stablecoin issued by Anchorage Digital Bank, N.A., an OCC-regulated federally chartered digital asset bank. USAT is designed for full GENIUS Act compliance and targets U.S.-regulated capital markets.
USDT continues to operate globally as a "foreign stablecoin" under the GENIUS Act's foreign issuer provisions, which allow non-U.S. tokens to be offered domestically through digital asset service providers, subject to Treasury's determination of comparable home-jurisdiction regulation.
According to CCN, USAT and USDC are GENIUS Act-compliant stablecoins, while USDT is not — at least not under the domestic issuer framework. Tether is pursuing a reciprocity pathway for USDT, but the GENIUS Act does not require Tether to provide the same level of reserve accounting for its offshore token as it does for U.S.-domiciled issuance.
Senator Jack Reed (D-RI) in February 2026 sought to close what he called an "alarming loophole" in the GENIUS Act related to foreign issuer provisions, though no amendment has advanced.
The two-token strategy allows Tether to retain its global dominance while establishing a compliant beachhead in the U.S. market. The economic question is whether institutional capital will concentrate in USAT and USDC — where reserve transparency is mandatory — or continue to flow through USDT, where disclosure requirements are less stringent.
The GENIUS Act reshapes how economic value is generated and captured in the stablecoin ecosystem. Under the pre-regulatory regime, stablecoin issuers captured the full yield on reserve assets (primarily U.S. Treasuries) while distributing zero yield to token holders. Tether reported $13 billion in profits in 2024 — almost entirely from reserve yields.
The GENIUS Act's yield ban codifies this dynamic: issuers retain reserve income, holders receive none. This concentrates value at the issuer layer rather than the token-holder layer. Circle has publicly discussed redistribution models with platform partners (Coinbase receives a share of USDC reserve yield), but the law does not mandate any pass-through.
For banks entering the market, the calculus differs. Bank-issued stablecoins generate value primarily through transaction fee capture, cross-border payment rails, and customer retention — not reserve yield alone. The institutional stablecoin economics resemble correspondent banking more than money-market fund management.
Key value flow dynamics under the new regime:
The Treasury's April 1 rulemaking marks the beginning of the end of regulatory ambiguity for U.S. stablecoins. Within 108 days, three federal agencies must finalize rules governing a $320 billion market that is growing by roughly $5 billion per month.
The outcome will determine the competitive structure of the issuer market. Circle and Tether's USAT have first-mover advantage under the federal track. Banks, with their existing regulatory relationships and customer bases, may enter as late but formidable entrants — Bank of America's announcement signals intent, even if no bank-issued stablecoin has yet reached market. State-supervised issuers face an uncertain pathway: Treasury's "substantially similar" standard must be defined, tested, and adjudicated before the state track becomes operational.
The most significant unresolved question is whether the GENIUS Act's foreign issuer provisions and state-government sovereign exemption create regulatory arbitrage opportunities that undermine the framework's intended uniformity. Senator Reed's proposed amendment has not advanced. Wyoming's FRNT exists in a legal gray area. Tether's USDT continues to operate globally with less stringent disclosure requirements than its domestic counterpart.
For now, the comment period is open. The market is watching.