Treasury published a Notice of Proposed Rulemaking on August 17 to implement Section 3 of the GENIUS Act — the first concrete regulatory action from any agency since a seven-agency backlog caused a missed July 18 rulemaking deadline. By defining what it means to issue, offer, and sell payment stablecoins in the United States, the NPRM establishes the jurisdictional gatekeeper that will determine which entities need federal or state licenses. The framework centers on one strategic choice: Treasury studied securities-law regimes as a reference, then rejected them.
The Treasury press release is explicit about why. The agency believes the GENIUS Act reflects a legislative intent for payment stablecoins to serve as “an effective means of payment and settlement, including across borders, and application of traditional investment rules to payment stablecoins may frustrate that goal.” By decoupling stablecoins from securities-law regimes, Treasury is positioning them as dollar infrastructure — payment plumbing, not speculative instruments.
Treasury Secretary Bessent framed the move in geopolitical terms:
Treasury is moving quickly to provide the regulatory certainty businesses need to innovate and grow in America, cement the role of the U.S. dollar as the world’s reserve currency, and keep America the crypto capital of the world.
The statement draws a line from stablecoin regulation to dollar hegemony — a framing that makes the definitional choice politically load-bearing, not just administratively convenient.
The practical consequences of that choice are significant. If stablecoins are payment instruments, not investment products, then SEC-style disclosure and investor protection frameworks do not automatically apply. Yield programs — the arrangement where exchanges share reserve interest with stablecoin holders — sit in a different regulatory lane than they would under securities classification. That distinction matters enormously for firms like Circle and Tether, and for exchanges building rewards products around stablecoin balances.
The biggest unresolved question is foreign issuers. The NPRM, filed as Federal Register document 2026-16796 and available on regulations.gov, requires that foreign entities possess the technological capability to comply with lawful U.S. orders and will comply with reciprocal arrangements between the United States and the issuer’s home jurisdiction. Starting January 18, 2027, no person may issue a payment stablecoin in the U.S. without a license. Starting July 18, 2028, service providers may not offer any payment stablecoin to U.S. persons unless issued by a licensed entity. For Tether — which just completed its first Big Four audit — the definitions of “offer” and “sell” will determine whether USDT can remain available on U.S. platforms without structural changes.
As CoinDesk reported, the NPRM poses dozens of interpretive questions that must be resolved before finalization. The 60-day comment period runs through mid-October, leaving roughly three months for Treasury to digest industry feedback, reconcile the questions, and issue a final rule before the January 18 effective date. For an NPRM of this scope, that timeline is unusually tight.
Further complicating the picture is the CLARITY Act, which could amend portions of the GENIUS Act — notably its treatment of rewards programs. The legislation failed key votes before the Senate’s August recess, and Polymarket odds for year-end passage sit at a record-low 31%. Treasury cannot wait for Congress. It is building the regulatory architecture with the statute it has.
Compliance costs will fall unevenly. Domestic issuers with existing banking relationships face a manageable transition. Foreign issuers and unlicensed platforms face a steeper climb: they must either obtain GENIUS Act licenses or exit the U.S. market by July 2028. The Treasury’s definitional framework is the first brick in a wall that will ultimately determine who can participate in the U.S. stablecoin market and on what terms.