Treasury Issues First GENIUS Act Rulemaking to Define State Stablecoin Supervision Standards

The US Department of the Treasury released its first Notice of Proposed Rulemaking (NPRM) under the Guiding and Establishing National Innovation for U.S. Stablecoins (GENIUS) Act on April 1, 2026, setting out an 87-page framework that will determine which state-level stablecoin oversight regimes qualify as equivalent to the federal standard [1][2]. The rule, codified in a new Subchapter C to Title 12 of the Code of Federal Regulations, draws a hard line between issuers below and above $10 billion in outstanding circulation, assigns the Stablecoin Certification Review Committee a central gatekeeping role, and gives states a comment window closing June 2, 2026 [2].

The $10 Billion Threshold and the State Election

The GENIUS Act, enacted July 18, 2025, allows issuers organized under state law to remain under state supervision provided their outstanding stablecoin balance does not exceed $10 billion on a consolidated basis [1]. Treasury's NPRM formalizes this bifurcation: below the threshold, an issuer qualifies as a state qualified payment stablecoin issuer and may apply to operate under its home state's regime; above the threshold, the issuer must transition to supervision by the Office of the Comptroller of the Currency (OCC) or cease issuance [1][2]. The NPRM does not address mechanisms for issuers to deliberately structure themselves beneath the threshold to avoid federal jurisdiction, a gap flagged by legal analysts following the proposal's release [2].

For a state to offer the election, two conditions must be satisfied. First, the state must certify that its own regime is "substantially similar" to the federal framework. Second, the Stablecoin Certification Review Committee, chaired by the Treasury Secretary, must reach a unanimous determination that the state regime "meets or exceeds" the standards and requirements of the Act [1]. That unanimity requirement imposes a high bar on state qualification and gives any single member of the committee veto power over a state's pathway.

What "Substantially Similar" Actually Means

The most legally significant position in the NPRM is Treasury's rejection of the argument that only the bare text of the GENIUS Act should serve as the federal benchmark [1]. Treasury proposes that the federal regulatory framework includes four components: the GENIUS Act itself; OCC regulations and formal interpretations published in the Federal Register; Treasury regulations and guidance implementing Bank Secrecy Act (BSA), sanctions, and technology compliance requirements under sections 4(a)(5) and 4(a)(6); and Federal Reserve Board rules implementing the Act's anti-tying provisions under section 4(a)(8) [2]. This approach anchors the comparison to a living ruleset that will evolve alongside agency interpretations, not merely the statutory text enacted in 2025.

The NPRM divides all requirements into two categories: uniform and state-calibrated. Uniform requirements are those where the Act grants no substantive discretion to states; examples include one-to-one reserve backing, the approved list of reserve assets, monthly reserve disclosures, BSA and sanctions obligations, and specific naming and marketing restrictions [1]. States must align with these in substance, though they retain flexibility over procedural details such as data formats or internal reporting timelines [1].

State-calibrated requirements cover areas where the Act expressly contemplates regulatory tailoring: capital adequacy, liquidity thresholds, reserve asset diversification and deposit concentration limits, interest rate risk management, and broader operational risk management [1]. States may design their own standards in these areas, provided the outcomes are at least as stringent and protective as the federal baseline. States cannot be more permissive than the OCC on reserve asset eligibility; they may be more conservative [1].

GENIUS Act Regulatory Framework at a Glance

FDIC Follows with Operating Standards for Bank-Issued Stablecoins

Six days after Treasury's NPRM, the Federal Deposit Insurance Corporation (FDIC) approved its own proposed rule on April 7, 2026, establishing operating standards for payment stablecoins issued by subsidiaries of FDIC-supervised institutions, specifically state non-member banks and state-chartered savings associations [3]. Under the FDIC framework, insured institutions cannot issue stablecoins directly; issuance must flow through an approved subsidiary designated as a Permitted Payment Stablecoin Issuer (PPSI) [3].

"would implement many provisions of the GENIUS Act and offer added clarity on the agency's stance toward stablecoins and tokenized deposits" - FDIC Chairman Travis Hill [3]

The FDIC proposal sets a redemption standard of two business days, requires monthly reserve examinations conducted through an engagement letter with a registered public accounting firm, and mandates custody and asset segregation policies [3]. Capital rules are tailored to cover both the subsidiary issuer and the parent bank. Deposits held as stablecoin reserves would not qualify for pass-through deposit insurance to stablecoin holders [3]. The FDIC is soliciting responses to 144 specific questions, covering topics ranging from permissible subsidiary activities and capital treatment methodology to pass-through deposit insurance eligibility and whether stablecoin holders should be permitted to earn yield [3].

Compliance Timeline and Outstanding Questions

Treasury's NPRM aligns with the GENIUS Act's internal regulatory deadline of July 18, 2026, one year after enactment, by which final rules must be substantially in place [1]. The compliance deadline for issuers is set for January 2027, giving regulated entities roughly six months from anticipated finalization to achieve conforming status [2].

Several unresolved questions remain in the record. The NPRM does not specify how Treasury will monitor state regimes over time once certified, nor does it articulate conditions under which a certification could be withdrawn [2]. Treasury has separately requested comment on the degree of flexibility states should retain and on practical criteria for assessing substantial similarity in areas where statutory text is ambiguous [2]. The proposal's Appendix A maps each statutory requirement from section 4(a) to either the uniform or state-calibrated category, giving state regulators a working reference as they assess their existing frameworks against the federal baseline [2].

The simultaneous release of the Treasury NPRM and the FDIC operating standards proposal signals a coordinated regulatory push to operationalize the GENIUS Act ahead of the July 2026 statutory deadline, with the OCC's March 2, 2026 proposed implementation rule forming the third pillar of what is emerging as a multi-agency stablecoin supervisory architecture [1].

References

[1] Consumer Financial Services Law Monitor (April 8, 2026): https://www.consumerfinancialserviceslawmonitor.com/2026/04/treasury-proposes-genius-act-principles-for-acceptable-state-stablecoin-regimes/

[2] Money Laundering News (April 6, 2026): https://www.moneylaunderingnews.com/2026/04/treasury-issues-nprm-on-state-oversight-of-stablecoin-issuers-under-the-genius-act/

[3] Genfinity (April 7, 2026): https://genfinity.io/2026/04/07/fdic-genius-act-stablecoin-proposal-operating-standards/