The U.S. Treasury released a sweeping proposed rulemaking on April 1, 2026, to implement the GENIUS Act. The 87-page document opens a 60-day public comment period before final rules are issued. That final deadline falls in July 2026, one year after the law was enacted. This is the first concrete federal action to operationalize the GENIUS Act since Congress passed it. The Treasury’s proposal, paired with a separate OCC rulemaking filed in the Federal Register on March 2, 2026, signals that implementation is moving quickly.
The GENIUS Act, short for Guiding and Establishing National Innovation for U.S. Stablecoins, was signed into law on July 18, 2025. It passed the Senate 68-30 and the House 308-122. It is the first comprehensive federal law governing payment stablecoins in U.S. history. The market it now regulates exceeds $200 billion in total capitalization.
The 1:1 Reserve Requirement
The central rule is straightforward. Every permitted stablecoin issuer must hold reserves that back outstanding tokens on a full 1:1 basis. For every dollar of stablecoin in circulation, issuers must hold one dollar in qualifying reserve assets. There is no fractional-reserve exception. This applies at all times.
The list of qualifying reserve assets is narrow. Eligible holdings include U.S. currency and balances held at Federal Reserve Banks, demand deposits at federally insured institutions, short-term U.S. Treasury securities with 93-day maturity or less, overnight repurchase agreements collateralized by qualifying Treasuries, and government money market funds invested entirely in those same assets. Issuers cannot hold longer-dated bonds, corporate debt, or other higher-risk instruments as qualifying reserves. Additionally, issuers must maintain a liquidity backstop covering one full year of operating expenses.
Rehypothecation of reserves is prohibited under nearly all conditions. Reserve assets must be segregated and cannot be commingled with other company assets. Importantly, the rules explicitly prohibit issuers from paying interest or yield to stablecoin holders. The law treats stablecoins as payment instruments, not investment products.
Who Must Comply
The GENIUS Act creates a new legal category: the Permitted Payment Stablecoin Issuer, or PPSI. Only a U.S.-formed PPSI may legally issue a payment stablecoin once the law’s effective date arrives. Three issuer types qualify. First, subsidiaries of insured depository institutions may apply to their primary federal regulator. Second, non-bank entities may seek a federal charter directly through the OCC. Third, state-licensed entities may issue stablecoins if their home state framework is “substantially similar” to the federal rules.
Smaller issuers with less than $10 billion in outstanding supply may opt into state-level regulation, provided that state meets the federal similarity threshold. Issuers above that threshold fall under direct federal oversight. Non-financial public companies, such as large tech firms, face additional scrutiny. They require unanimous approval from a new Stablecoin Certification Review Committee composed of Treasury, the Federal Reserve, and the FDIC before they may issue. The law’s effective date will be the earlier of January 18, 2027, or 120 days after final rules are issued.
Disclosure, Audit, and Compliance Requirements
Compliance obligations under the proposed rules extend well beyond reserve holding. Issuers must publish monthly public disclosures detailing their reserve composition. Each disclosure requires certifications from both the CEO and CFO. Annual independent audits to verify reserve adequacy are also mandatory.
The GENIUS Act treats all permitted issuers as financial institutions under the Bank Secrecy Act. That designation triggers AML and CFT program requirements, customer identification protocols, suspicious transaction reporting, and economic sanctions compliance. Issuers must also build the technical capacity to block or freeze transactions when required by law enforcement. The Brookings Institution has noted that this AML framework is more demanding than those applied to traditional payment services, given the bearer-like nature of tokenized instruments.
Industry Positioning
Reactions across the industry split along predictable lines. Circle, issuer of USDC, is openly supportive. The company IPO’d in June 2025 and has framed the GENIUS Act as validating its long-standing approach to regulated, fully-reserved stablecoin issuance. Circle reported $1.25 billion in revenue for the first half of 2026, with 95.5% of that income derived from Treasury interest on its reserve holdings.
Tether took a different approach. Rather than contesting the framework, it launched a new product called USAT, a U.S.-domestic dollar-backed token issued through Anchorage Digital Bank. USAT is designed to operate within GENIUS Act requirements. The move separates Tether’s existing USDT, which operates outside U.S. jurisdiction, from a new compliant product aimed at the domestic market.
Law enforcement officials have raised concerns about the law’s gaps. New York Attorney General Letitia James and Manhattan DA Alvin Bragg have both warned that the GENIUS Act does not include clear language compelling issuers to return stolen funds to fraud victims. They have also flagged that foreign issuers like the original Tether entity can potentially operate in U.S. markets without meeting core verification requirements. Senator Jack Reed introduced legislation in February 2026 to close that loophole, though it has not advanced.
What Happens Next
The comment window is now open. For the Treasury’s April 1 filing, public comments are due approximately 60 days from the Federal Register publication date, putting the deadline in early June 2026. The OCC’s March 2 rulemaking had a separate comment deadline of May 1, 2026. Both processes will inform the final rules that all primary federal regulators, including the OCC, FDIC, Federal Reserve, NCUA, and Treasury itself, must finalize by July 18, 2026.
Once final rules are published, the law activates 120 days later, unless the 18-month mark from enactment arrives first. That sets a hard outer deadline of January 18, 2027. Issuers that do not hold a valid PPSI designation by that date will be prohibited from issuing payment stablecoins. The 60-day comment window is the public’s best opportunity to shape how those rules are written.
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