On April 1, 2026, the US Department of the Treasury officially released the first Notice of Proposed Rulemaking (NPRM) for the "Guiding and Establishing the National Innovation for US Stablecoins Act" (GENIUS Act), marking the start of the rulemaking and implementation phase for this landmark stablecoin legislation, which was signed into law in July 2025.
The core objective of this NPRM is to establish a set of "broad principles" for determining whether state-level stablecoin regulatory regimes are "substantially similar" to the federal regulatory framework. This determination directly affects whether payment stablecoin issuers with less than $10 billion in assets can opt for state-level oversight instead of being subject to comprehensive federal regulation.
The Treasury has opened a 60-day public comment period, during which industry participants, regulators, and other stakeholders can submit feedback after the NPRM is officially published in the Federal Register. As the first Treasury rule proposal under the GENIUS Act, its final version will have a structural impact on the landscape of the US stablecoin market.
Regulatory Crossroads: Legislative Timeline and Rulemaking Process
The legislative journey of the GENIUS Act began on May 1, 2025, when the draft was introduced in the Senate. On June 17, the Senate passed it by a vote of 68 to 30, and the House approved it the same day by a vote of 308 to 122. The President signed it into law on July 18.
Following enactment, the Treasury released its first request for comments on digital forensics tools and stablecoin-related topics in August 2025, followed by an Advance Notice of Proposed Rulemaking in September, seeking broad input on implementation details, tax issues, and information collection.
By 2026, the rulemaking process had clearly accelerated. In February, the Office of the Comptroller of the Currency (OCC) issued its own NPRM. On April 1, the Treasury released the first GENIUS Act NPRM, while the Federal Deposit Insurance Corporation (FDIC) and the National Credit Union Administration (NCUA) were simultaneously advancing their respective rulemaking efforts.
According to the Act’s implementation schedule, the final rules are expected to take effect around November 2026—18 months after the GENIUS Act was signed, or 120 days after the main regulatory agencies complete their rulemaking, whichever comes first. This means stablecoin issuers can anticipate a comprehensive federal and state regulatory framework by late 2026 or early 2027.
The Dual-Track Technical Core: The $10 Billion Threshold and "Substantially Similar" Standard
The GENIUS Act establishes a dual-track regulatory framework for payment stablecoin issuers. All issuers must comply with core federal standards: maintaining 1:1 reserve backing with highly liquid assets, redeeming at par value on demand, adhering to Bank Secrecy Act (BSA) anti-money laundering requirements, and publishing monthly reserve reports.
At the regulatory level, Section 4(c) of the Act allows "state-qualified issuers" to choose state-level oversight, provided that the state’s regulatory framework is certified by the Treasury as "substantially similar" to the federal framework. However, this option is only available to issuers with outstanding issuance not exceeding $10 billion. Once an issuer surpasses this threshold, it must transition to federal oversight, obtain federal approval to remain under state regulation, or pause issuance.
The Treasury’s NPRM further clarifies the principles for determining "substantial similarity," distinguishing between two categories of requirements:
| Requirement Type | Specific Content | State Flexibility |
|---|---|---|
| Uniform Requirements | Reserve asset composition and custody, on-demand redemption rights, monthly disclosures, BSA/AML and sanctions compliance | Must be fully consistent with the federal framework; no adjustments allowed |
| State-Adjustable Requirements | Capital adequacy, liquidity standards, reserve asset diversification, interest rate risk management | States may adjust based on local conditions, but the final regulatory outcome must be at least as stringent as the federal framework |
Additionally, states may impose extra regulatory requirements, provided they do not conflict with federal law or diminish overall similarity.
The $10 billion threshold reflects a tiered regulatory approach by lawmakers: smaller issuers are viewed as lower risk and less likely to impact financial stability, so they can remain under state supervision. In contrast, larger issuers, due to their systemic importance, must be directly regulated at the federal level. This design preserves room for state-level innovation while providing a clear "upgrade" path for issuers as they scale.
However, the rigidity of this threshold also presents potential challenges. Issuers nearing the $10 billion mark may deliberately limit issuance to avoid triggering federal oversight, which could inadvertently stifle organic market growth.
Industry Sentiment: Core Debates and Divergent Views
Industry perspectives on this NPRM coalesce around several key issues:
Concern 1: Practicality of the State Regulatory Path
State regulatory coalitions such as the Conference of State Bank Supervisors (CSBS) have voiced initial concerns, primarily that the Treasury’s interpretation of "substantially similar" may be too stringent, causing many state regimes to be deemed non-compliant and prematurely pushing smaller issuers into the costlier federal regulatory track.
Concern 2: Desire for Clearer Rules
The industry broadly hopes the Treasury will provide more quantifiable standards for "substantial similarity" in the final rules, rather than relying on broad, principle-based descriptions. Ambiguity increases compliance complexity and uncertainty for issuers operating across multiple states.
Concern 3: Challenges of Multi-Agency Coordination
Currently, the OCC, FDIC, and NCUA are each developing GENIUS Act-related rules within their jurisdictions. While parallel rulemaking supports specialization, it may also lead to overlapping or conflicting regulations, requiring issuers to navigate compliance with multiple federal agencies.
Concern 4: Legislative Gap for Yield-Bearing Stablecoins
Notably, the GENIUS Act does not address yield-bearing stablecoins. This omission has become a key obstacle to broader market structure legislation in Congress, often referred to as the Clarity Act.
Examining the "Substantially Similar" Standard
The Treasury’s NPRM anchors the "substantially similar" assessment to rules and interpretations issued by the OCC. The document explicitly states that federal benchmarks are largely modeled on the OCC’s regulatory framework for non-bank stablecoin issuers.
This narrative choice merits close analysis. Using the OCC framework as the benchmark effectively places the OCC at the center of the stablecoin regulatory regime. While the Act distributes regulatory responsibilities across several federal agencies, setting the OCC’s standards as the technical benchmark means they serve as the measuring stick for state regulatory regimes.
The logic is clear: only with a well-defined, actionable federal benchmark can the "similarity" of state regimes be meaningfully assessed. However, this raises a counterpoint: if the OCC’s own standards are still under development (its NPRM was only released in February 2026), does the "substantially similar" assessment currently have a sufficiently clear reference point?
During the 60-day comment period, the Treasury is expected to receive substantial feedback urging further clarification of the federal benchmark or the creation of a more flexible, multi-agency coordination mechanism. While the final rules may incorporate some of this input, the core framework—anchored to OCC standards—is likely to remain.
Industry Impact Analysis: Who Benefits and Who Faces Pressure
As of April 1, 2026, the global stablecoin market stands at approximately $310 billion, covering 391 tokens. Tether (USDT) has a market cap of about $184 billion, while USDC stands at $77 billion—both well above the $10 billion threshold.
For large issuers (over $10 billion): Leading stablecoins like USDT and USDC can no longer opt for state regulation and must submit to direct federal oversight. This entails meeting all compliance requirements from agencies such as the OCC and FDIC, including stricter capital standards, annual GAAP financial audits (conducted by registered public accounting firms), and monthly reserve report certifications by the CEO/CFO. While compliance costs will rise significantly, these issuers will also gain regulatory certainty at the federal level, facilitating deeper partnerships with traditional financial institutions.
For small and mid-sized issuers (below $10 billion): These issuers gain strategic flexibility. Remaining under state supervision offers a more adaptable regulatory environment, especially regarding capital and reserve management. However, this is contingent on the state’s regulatory regime passing the "substantially similar" certification. Mature frameworks, such as New York’s NYDFS, are more likely to qualify, while states with less developed regimes face challenges.
For state regulators: The NPRM effectively launches a "regulatory competition." States must assess the gap between their stablecoin regimes and federal standards and proactively adjust during or after the 60-day comment period. States that secure Treasury certification will attract more stablecoin projects, reaping tax and employment benefits.
For federal regulators: The roles of the OCC, FDIC, and NCUA are further reinforced. Multi-agency coordination will become the norm for stablecoin oversight, and the consistency of rules across agencies will directly affect market efficiency.
Scenario Analysis: Three Possible Evolution Paths
Based on the current NPRM and industry feedback, three potential scenarios may unfold:
Scenario 1: Flexible Coordination
The Treasury incorporates industry feedback into the final rules, interpreting the "substantially similar" standard more flexibly and allowing more state regimes to qualify. A federal-state coordination mechanism is established, providing a "one-stop" compliance channel for multi-state issuers. The final rules take effect as scheduled in November 2026.
→ In this scenario, small and mid-sized issuers retain broad options, the state regulatory system is preserved and optimized, and overall compliance costs remain manageable.
Scenario 2: Strict Uniformity
The Treasury maintains a strict interpretation of "substantially similar," resulting in most state regimes being deemed non-compliant. Issuers below $10 billion face limited choices, are forced into federal oversight, or must partner with large financial institutions. The final rules may be delayed until early 2027.
→ Here, industry concentration could rise rapidly, squeezing out smaller issuers. However, federal regulatory uniformity would support long-term market integrity.
Scenario 3: Legislative Supplement
During the NPRM comment period, Congress advances broader market structure legislation such as the Clarity Act, addressing yield-bearing stablecoins and other issues not covered by the GENIUS Act. New legislation could influence the final content of the Treasury’s rules, delaying the process until the second half of 2027.
→ In this scenario, market uncertainty persists for a longer period, complicating compliance planning for issuers, but the eventual regulatory framework will be more comprehensive.
Conclusion
The Treasury’s release of the GENIUS Act NPRM marks a pivotal shift in US stablecoin regulation—from legislative blueprint to actionable rules. The $10 billion threshold and "substantially similar" standard form the two pillars of the dual-track system, and their final definitions will profoundly shape competition in the stablecoin market.
The 60-day public comment period is a critical window for industry stakeholders to influence the rulemaking process. From state regulators and stablecoin issuers to compliance service providers and end users, every piece of feedback could affect the final direction of the rules. Whether the final framework leans toward flexible coordination or strict uniformity, one message is clear: the US stablecoin regulatory regime is rapidly taking shape, and industry participants must prepare their strategies accordingly.
