The U.S. Treasury Department on April 1 published its first notice of proposed rulemaking (NPRM) under the GENIUS Act, establishing principles for determining whether state-level stablecoin regulatory regimes are "substantially similar" to the federal framework. The rule creates a dual-track syst...
"The GENIUS Act provides the fast-growing stablecoin market with the regulatory clarity it needs to grow into a multitrillion-dollar industry." — Scott Bessent, U.S. Secretary of the Treasury
The U.S. Treasury Department on April 1 published its first notice of proposed rulemaking (NPRM) under the GENIUS Act, establishing principles for determining whether state-level stablecoin regulatory regimes are "substantially similar" to the federal framework. The rule creates a dual-track system: issuers above $10 billion in outstanding supply fall under direct federal (OCC) supervision; those below may opt into state regulation, provided their state's regime passes certification.
The rulemaking arrives as the stablecoin market reaches $317 billion in total supply, with monthly transaction volume of $7.5 trillion in March — exceeding the U.S. Automated Clearing House (ACH) network for the second consecutive month. Beneath the headline growth, a structural rebalancing is underway: Tether's USDT contracted by approximately $3 billion in Q1 2026, its first quarterly decline since the FTX collapse in late 2022, while Circle's USDC expanded to $77.5 billion on the strength of MiCA compliance positioning. The convergence of regulatory implementation and market reconfiguration marks the most consequential period for dollar-denominated digital payments infrastructure since the GENIUS Act was signed in July 2025.
The NPRM, published in the Federal Register on April 3 as document 2026-06489, establishes a two-tier regulatory architecture for payment stablecoin issuers. Under the GENIUS Act — signed into law on July 18, 2025 — issuers with consolidated outstanding issuance exceeding $10 billion must operate under federal supervision through the OCC. Those below the threshold may elect state-level regulation.
Treasury received 333 public comments on its September 2025 advance notice of proposed rulemaking (ANPRM). A recurring concern from state regulators: parity with federal enforcement authority. The final NPRM attempts to address this by granting states "wide latitude" in structuring oversight, while maintaining strict uniformity on prudential safeguards.
The comment period runs 60 days from Federal Register publication. Based on the April 3 publication date, comments close on or around June 2. The full framework is expected to take effect by November 2026, according to Treasury's implementation timeline.
The rule's definition of "federal regulatory framework" extends beyond the GENIUS Act's statutory text. Treasury's interpretation encompasses OCC regulations and interpretations published in the Federal Register, Treasury's Bank Secrecy Act (BSA) and sanctions compliance rules, and the Federal Reserve's anti-tying provisions. This broad definition anchors state regimes firmly to federal standards, even as states retain design flexibility.
The NPRM divides regulatory requirements into two categories, establishing different levels of state flexibility for each.
Uniform requirements demand strict consistency across all jurisdictions. These include: reserve composition standards, the prohibition on rehypothecation of reserves, BSA and sanctions compliance, and the ban on paying interest or yield directly on stablecoin balances. States cannot deviate on these provisions.
State-calibrated requirements allow design flexibility. States may structure their own approaches to reserve asset eligibility, liquidity and reserve diversification, redemption limitations, capital standards, operational risk management, and permissible activities. States must "meet or exceed" federal prudential requirements in these areas.
The practical latitude, however, is narrower than it appears. According to analysis by Ledger Insights, the state-calibrated flexibility remains "fairly narrow" in application. Every stablecoin in circulation must be backed dollar-for-dollar by eligible reserves held separately from the issuer's own funds. Eligible reserves are limited to U.S. cash, insured bank deposits, certain short-term Treasury notes, government money market funds, and "any other similarly liquid Federal Government-issued asset approved by the OCC," plus tokenized versions thereof.
A newly constituted Stablecoin Certification Review Committee — chaired by Treasury and drawing participation from the Federal Reserve, FDIC, NCUA, and OCC — will evaluate each state's submitted framework before granting certification. No state has yet received certification under the new standard.
As of April 5, 2026, the aggregate stablecoin market stands at $317 billion, according to CryptoTimes, with $1.36 billion in net weekly inflows. The top five issuances by market capitalization:
| Stablecoin | Market Cap | Q1 Change | |---|---|---| | USDT (Tether) | $184.08B | -$3B (~-1.6%) | | USDC (Circle) | $77.50B | +$2B (~+2.6%) | | USDS (Sky) | $8.92B | +9.56% weekly | | USDe (Ethena) | $5.88B | -0.26% weekly | | DAI (MakerDAO) | $4.69B | +2.99% weekly |
The top five control approximately 87% of total supply.
Tether's Q1 contraction — from approximately $187 billion in early January to $184 billion — represents the most substantial quarterly reduction since the FTX collapse in November 2022. The primary driver: the EU's Markets in Crypto-Assets (MiCA) regulation. Tether has declined to bring USDT into compliance with MiCA's reserve, governance, and transparency requirements. Major exchanges including Binance, Coinbase, Kraken, OKX, Bitstamp, and Crypto.com have either delisted or restricted USDT access for European users.
USDC has positioned itself as the compliant alternative. Circle's supply expanded approximately 5% in February alone, reaching $75.7 billion before climbing further to $77.5 billion by early April. The divergence between the two dominant issuers — USDT contracting, USDC gaining — marks a structural shift in market composition not seen since 2022.
Total stablecoin supply rose approximately $8 billion across Q1, meaning USDC's gain and contributions from smaller issuers more than offset Tether's decline.
Stablecoin transaction volume overtook the U.S. ACH network for the first time in February 2026, when monthly volume reached $7.2 trillion compared to ACH's $6.8 trillion. In March, stablecoin volume climbed further to $7.5 trillion, matching or exceeding ACH again, according to Artemis data cited by FX Leaders.
Q1 2026 aggregate stablecoin transaction volume totaled approximately $28 trillion. Stablecoin-denominated trades accounted for 75% of total crypto trading volume during the quarter — the highest share on record.
The volume figure requires context. Gross transfer volume in the week ending April 5 stood at $1.96 trillion, but "real payments between users" — stripping out wash trading, bot activity, and internal transfers — amounted to approximately $508 billion, per CryptoTimes data. The gap between gross and net volumes underscores the continued prevalence of non-economic transactions on stablecoin rails.
Even adjusted, the net figures represent meaningful payment infrastructure. Stablecoins are expected to represent 3% of all U.S. dollar payments in 2026 and 10% by 2031, according to BVNK's global stablecoin regulation analysis.
While Treasury defines state-level frameworks, the OCC has processed a surge of federal charter applications. According to FinTech Weekly reporting, eleven companies filed for or received OCC national trust bank charter approvals within an 83-day window in early 2026.
Conditional approvals granted: Circle, Ripple, BitGo, Paxos, Fidelity Digital Assets, Bridge (Stripe's stablecoin subsidiary, approved ~February 12), Protego (early February), and Crypto.com (February 23). Applications from Coinbase and World Liberty Financial remain pending. Morgan Stanley and Payoneer also filed applications during the same period.
The OCC's parallel NPRM, published March 2, 2026, creates a comprehensive federal framework for issuing, redeeming, and managing payment stablecoins. It imposes reserve, capital, redemption, and reporting requirements on banks, nonbanks, and certain foreign issuers. The OCC comment period closes May 1, 2026.
Under the GENIUS Act's structure, national banks that currently conduct stablecoin activities directly will be required to establish dedicated subsidiaries for issuance. Three categories of permitted payment stablecoin issuers (PPSIs) exist: subsidiaries of insured depository institutions approved by their primary federal regulator, federal qualified issuers approved by the OCC, and state-qualified issuers approved by their state regulator.
Wyoming has moved furthest among states in establishing independent stablecoin infrastructure. The state's Frontier Stable Token (FRNT) — originally designated WYST — launched on Avalanche in January 2026 via the Wyoming Stable Token Commission, with reserves managed by Franklin Templeton.
FRNT operates on seven blockchains: Arbitrum, Avalanche, Base, Ethereum, Optimism, Polygon, and Solana. It carries a 102% reserve requirement under Wyoming state law, backed by short-duration U.S. Treasuries and cash. It became available for purchase on Kraken as of January 7, 2026, with a Visa-enabled spending card through a Rain partnership.
FRNT is the first state-issued stablecoin in the United States. Its significance under the Treasury's new framework: Wyoming will be among the first states seeking certification that its regulatory regime is "substantially similar" to the federal standard. New York's Department of Financial Services — which has operated its BitLicense and trust company charter framework since 2018 — is another likely early applicant.
California's DFAL licensing regime, effective July 1, 2026, will require all digital asset operators in the state to be licensed by the Department of Financial Protection and Innovation. Its certification under the GENIUS Act framework remains an open question.
The Treasury NPRM explicitly includes a ban on paying interest or yield directly on stablecoin balances among its uniform requirements — states cannot deviate. However, the broader political question of stablecoin yield persists in the parallel CLARITY Act negotiations in Congress.
Coinbase Chief Legal Officer Paul Grewal told Fox Business in early April that he expects a CLARITY Act deal on stablecoin yields imminently, stating: "I'm very confident we're going to see progress. The reason for that is we need to finish the job."
The proposed compromise language would ban yield based solely on stablecoin balances but permit yield derived from activities — a distinction that has not satisfied all parties. The American Bankers Association formally rejected a White House compromise on March 5, arguing it would allow crypto firms to operate deposit-like products without corresponding bank regulatory obligations.
The resolution of the yield question will determine whether the stablecoin market's economic model remains primarily fee-based (transactions, redemptions) or expands into a yield-bearing instrument competing more directly with bank deposits and money market funds. With stablecoin issuers collectively holding more U.S. Treasuries than most sovereign nations, the systemic implications of this decision extend well beyond the crypto sector.
The Treasury's April 1 NPRM converts the GENIUS Act from legislation into operational regulation. The dual-track framework creates a defined pathway for both federal and state-supervised stablecoin issuance, with a comment period closing in early June and full implementation expected by November 2026.
The market the rule will govern is materially different from the one that existed when the GENIUS Act was signed nine months ago. USDT's first quarterly contraction since 2022, driven by MiCA enforcement in Europe, has begun redistributing market share toward USDC and smaller issuers. Transaction volume has overtaken the ACH network. Eleven entities have raced for federal charters. Wyoming has launched a state-issued token.
The 60-day comment window will test whether the "substantially similar" standard is workable — whether it provides enough flexibility for states like Wyoming and New York to maintain their existing frameworks while meeting Treasury's uniformity requirements. The outcome will determine the regulatory architecture for a market that now moves more dollar-denominated value monthly than the backbone of U.S. electronic payments.