Circle Urges "Same Activity, Same Rules" For GENIUS Act Stablecoins

Overview Of Circle's Regulatory Submission

Circle has formally submitted a comprehensive comment letter to the U.S. Department of the Treasury in response to the Advance Notice of Proposed Rulemaking concerning the GENIUS Act. This submission represents a significant step in shaping the regulatory landscape for payment stablecoins in the United States.

The filing outlines a proposed national framework designed to govern payment stablecoins, detailing how uniform regulatory requirements could effectively support three key stakeholder groups: users who rely on stablecoins for transactions, issuers who create and manage these digital assets, and intermediaries who facilitate their exchange and use across U.S. markets. By establishing clear and consistent standards, the framework aims to foster innovation while maintaining robust consumer protections.

Circle's recommendations are structured within a unified regulatory regime that accommodates both permitted U.S. issuers operating domestically and qualifying foreign issuers seeking to serve American markets. This inclusive approach ensures that consumer funds remain protected through clearly defined reserve requirements, transparent redemption processes, and comprehensive disclosure standards. Importantly, these protections are established through formal regulatory rules rather than relying on voluntary marketing claims or self-imposed standards, thereby creating enforceable obligations that all participants must meet.

Policy Principles And Supervision Framework

Circle proposes that payment stablecoins should be fully backed by a combination of cash and high-quality liquid assets, ensuring that every token in circulation has corresponding value held in reserve. These reserve assets must be kept completely separate from the issuer's operational funds and corporate capital, creating a clear firewall that protects consumer holdings even in scenarios where the issuing company faces financial difficulties.

The redemption framework calls for immediate convertibility at par value on demand, meaning users should be able to exchange their stablecoins for U.S. dollars at a one-to-one ratio without delays or penalties. To verify compliance with these standards, Circle recommends independent monthly audits conducted by qualified third-party firms, along with public disclosure reports written in plain language that allow both users and regulatory supervisors to easily verify the adequacy of backing reserves.

The company emphasizes the importance of establishing a level playing field between bank-based issuers and nonbank issuers by applying a common prudential baseline. This approach prevents regulatory arbitrage where entities might seek lighter oversight by choosing a particular corporate structure. Instead, all issuers would face equivalent standards for capital adequacy, risk management, and operational controls, ensuring that competition occurs on the basis of service quality rather than regulatory advantages.

Circle's letter advocates for a standalone issuer structure, meaning companies that issue payment stablecoins should maintain dedicated staffing, specialized systems, and appropriate governance controls specifically designed to meet their obligations under the GENIUS Act. This organizational separation helps ensure that stablecoin operations receive adequate resources and management attention, rather than being treated as a secondary business line within a larger financial services company.

Regarding international cooperation, the submission calls for establishing a reciprocal recognition path for foreign regulatory regimes that demonstrate standards equivalent to those required by the GENIUS Act. This reciprocity should include ongoing supervision to ensure that initially qualifying regimes maintain their standards over time. Circle recommends that Treasury publicly document its determinations regarding which foreign jurisdictions qualify, providing market participants with clear guidance on which cross-border issuers meet U.S. standards and can therefore serve American users.

The letter also addresses enforcement and compliance frameworks, supporting the establishment of predictable penalty structures that provide clear consequences for violations while maintaining proportionality. Circle advocates for safe harbor protections that shield issuers acting in good faith to comply with lawful government orders, recognizing that regulatory compliance sometimes requires actions that might otherwise raise legal questions. Additionally, the company emphasizes the importance of tested wind-down plans that ensure customer funds can be returned quickly and fairly, even across international borders, if an issuer must cease operations.

A key principle emphasized throughout this section is captured in Circle's statement: "Same activity, same rules—no loopholes. If a digital token walks and talks like a dollar, it should have the same obligations as a payment stablecoin under the Act." This functional approach ensures that regulatory obligations attach to economic substance rather than legal labels, preventing entities from avoiding consumer protections through creative naming or marketing strategies.

Market Use, Global Reach, And Accounting Treatment

Circle requests that the Treasury Department provide clear guidance on how permitted U.S. issuers can maintain global operations while remaining compliant with domestic regulations. This clarification is particularly important for businesses and platforms that settle transactions across multiple time zones and jurisdictions, as they require the ability to convert between dollars and stablecoin tokens seamlessly throughout the day. Without clear operational parameters, companies might face uncertainty about whether routine global business activities comply with U.S. requirements, potentially limiting the practical utility of payment stablecoins.

The submission directly connects this operational clarity to effective liquidity management. Issuers need to understand how they can maintain sufficient reserves across different jurisdictions and time zones while meeting redemption obligations in real-time. This becomes especially complex when considering that global markets operate continuously, requiring issuers to manage dollar liquidity even when U.S. banking systems are closed. Clear regulatory guidance would help issuers design compliant operational models that serve global users without compromising the reserve backing that protects consumers.

Interoperability with regulated financial infrastructure represents another critical concern addressed in the letter. Payment stablecoins must be able to move smoothly between traditional banks, brokerage firms, and digital asset exchanges without creating fragmented liquidity pools or operational bottlenecks. Circle emphasizes that regulatory clarity should facilitate rather than hinder these connections, ensuring that payment flows remain efficient when transactions cross boundaries between different types of regulated financial institutions. This interoperability is essential for stablecoins to fulfill their potential as a bridge between traditional finance and digital asset markets.

Regarding accounting treatment, Circle makes a specific recommendation that permitted payment stablecoins should be classified as cash and cash equivalents for both accounting and tax purposes. This classification would align financial reporting practices with the economic reality of fully reserved stablecoins, which function as direct dollar substitutes rather than as speculative investments or complex financial instruments. For corporate treasurers managing company funds and external auditors reviewing financial statements, this clear classification would eliminate significant ambiguity and reduce compliance costs. Currently, the lack of clear guidance forces companies to make judgment calls about how to report stablecoin holdings, creating inconsistency across the market and potentially distorting financial analysis.

The letter concludes this section by urging Treasury to establish clear guidance that applies GENIUS Act obligations to any digital token designed to maintain a stable value for payment purposes, regardless of how that token is marketed or labeled. This includes products that might deny formal redemption rights but otherwise function economically like compliant payment stablecoins. By focusing on functional characteristics rather than legal labels, this approach ensures that consumer protection and market integrity standards apply consistently across all economically similar products, preventing regulatory arbitrage where issuers might structure products to avoid obligations while still competing in the same market space as fully compliant stablecoins.

FAQ

What is the GENIUS Act and what impact does it have on stablecoin regulation?

The GENIUS Act promotes consistent regulatory treatment for stablecoins across jurisdictions, applying the principle 'same activity, same rules'. It aims to establish uniform standards for stablecoin issuers and operations, reducing regulatory fragmentation and providing clarity for the digital asset industry globally.

Why did Circle propose the 'same activity, same rules' principle?

Circle advocated 'same activity, same rules' to ensure stablecoins receive equivalent regulatory treatment as traditional financial instruments, reducing regulatory uncertainty and promoting mainstream adoption while maintaining consistent compliance standards across jurisdictions.

What is the current regulatory framework for stablecoins in the United States?

The U.S. regulates stablecoins under existing laws through multiple agencies including SEC, CFTC, and OCC. There is no dedicated stablecoin legislation yet, so regulations for cryptocurrencies and financial instruments apply. The framework continues to evolve.

What does the 'same rules' principle in the GENIUS Act specifically refer to?

The 'same rules' principle means stablecoin issuers must comply with identical regulatory requirements as traditional financial institutions, including capital adequacy, liquidity standards, reserve asset management, and operational risk controls, ensuring consumer protection and financial stability.

Circle作为稳定币发行商，在这项立法中的利益关系是什么？

Circle seeks to strengthen regulatory standing and expand USDC adoption through favorable legislation. The company aims to leverage regulatory support to enhance market position, accelerate mainstream institutional participation, and establish itself as the default stablecoin network choice globally.

What specific impacts will this regulatory framework have on USDC and other stablecoins?

The GENIUS Act framework provides clear regulatory pathways for stablecoin issuers like Circle (USDC). It establishes reserve requirements, federal oversight for issuers exceeding $10 billion in volume, and prioritizes stablecoin holders in bankruptcy proceedings. This creates a secure, growth-friendly environment supporting responsible innovation while ensuring consumer protection and financial stability.