Treasury’s first GENIUS rule tightens Washington’s grip on who can scale stablecoins

Treasury’s first proposed rule under the GENIUS Act does more than outline stablecoin supervision, as it shows where control sits as the market scales: states may license issuers early, but Washington sets the terms that matter once stablecoins become large enough to matter to the dollar system. Treasury's first proposed GENIUS rule landed on April 1 as a notice of proposed rulemaking. The text inside it builds the operational architecture for US stablecoin governance, addressing which institutions may issue payment stablecoins, under what conditions, and at what scale before federal oversight becomes mandatory. Why this matters: Treasury is drawing a harder line between small issuers and systemically relevant ones. That matters because stablecoins are no longer a niche crypto product. They are becoming part of dollar payments, liquidity, and treasury infrastructure, which means the rules now shape who can scale, who gets squeezed, and how concentrated the market may become. By defining when a state licensing regime qualifies as “substantially similar” to the federal framework, Treasury is now defining those terms. The stablecoin market already holds roughly $316 billion, with USDT accounting for about 58% of the supply, per DeFiLlama. Retail-sized volume for USDC , USDT, and PYUSD grew from $500 million to $69.8 billion between 2019 and 2025. FSOC's 2025 annual report described the GENIUS framework as a federal prudential system designed to onshore stablecoin innovation, protect holders in the event of insolvency, and support the US dollar's international role. Treasury's NPRM now shows how that prudential vision operates on the ground. Related Reading Trump signs GENIUS Act into law, activating America's first regulatory framework for stablecoins In addition to sign the stablecoin framework into law, Trump vowed to approve the market structure bill next. Jul 18, 2025 · Gino Matos The hidden fight over who governs The Treasury chairs the interagency review committee that certifies state stablecoin regimes, which includes leadership from the Fed and the FDIC. That committee's judgment rests on the “substantially similar” test, and Treasury's proposal defines that test to include the GENIUS Act itself, as well as the implementing regulations and interpretations issued by federal agencies over time. Treasury says that substantial similarity would be hard to administer, and state and federal standards could “starkly deviate.” As OCC , Treasury, the Fed, FinCEN, and OFAC add implementing rules, the standard Washington uses to measure states shifts with them. State regimes approved today must track a benchmark that Washington keeps building. Treasury organizes the rule around two categories. The first, called uniform, covers the parts that establish trust in the instrument itself: reserve assets, redemption, monthly reserve publication, limits on rehypothecation, accountant examinations, BSA/sanctions compliance, lawful-order capability, and core activity limits. State implementation of each uniform requirement must be consistent with the federal framework “in all substantive respects,” with no material deviations in definitions or scope. For BSA and sanctions specifically, states must cross-reference federal rules directly, with no room for state-drafted substitutes. The second category allows calibration around some capital, liquidity, reserve diversification, risk management, applications, licensing, and certain redemption mechanics. Treasury still constrains that room, and state choices in the flexible bucket must produce outcomes “at least as stringent and protective” as the federal framework. For example, a state may allow additional reserve assets only if the OCC has already approved them as similarly liquid federal government-issued assets. That is federal pre-clearance administered through state paperwork. Category Requirement area Treasury standard State discretion Why it matters Uniform Reserve assets Must align with the federal framework in all substantive respects No material deviation Defines trust in the stablecoin itself Uniform Redemption Must track the federal baseline closely No narrower state substitute Protects holders’ ability to redeem Uniform Monthly reserve publication Must match federal expectations Very limited room to vary Supports transparency and market confidence Uniform Limits on rehypothecation Must conform to the federal framework No meaningful carve-out Prevents riskier use of backing assets Uniform Accountant examinations Must be consistent with federal requirements Little to no variation Standardizes verification of reserves Uniform BSA / AML / sanctions States must cross-reference federal rules directly No state-drafted alternative Keeps compliance under national control Uniform Lawful-order capability Must track federal expectations Minimal discretion Preserves enforcement and legal access Uniform Core activity limits Must align with the federal framework No material diverg