The US Treasury on August 17, 2026, proposed rules that define when a payment stablecoin is issued “in the United States” and when it is offered or sold to “a person in the United States.” Those two lines decide which issuers must hold a federal or state license under the GENIUS Act, the federal payment stablecoin law signed on July 18, 2025. The notice of proposed rulemaking (NPRM) implements section 3 of the Act. It adds no prudential requirements to those already in the statute. It sets the law’s scope.
“President Trump and Congress delivered the GENIUS Act, establishing a landmark framework and clear rules of the road for payment stablecoins, and Treasury is moving quickly to implement that framework,” Treasury Secretary Scott Bessent said. “Treasury welcomes input from stakeholders as we work 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.”
Issuing without a license becomes a crime in January 2027
Under the GENIUS Act, a payment stablecoin is a digital asset designed to be used for payment or settlement, whose issuer commits to keep its value stable against an official currency. The 2025 law requires issuers to back their tokens in full, with one dollar of reserve assets for every dollar of tokens outstanding. Section 3 adds a market-access rule. Starting January 18, 2027, only entities holding a federal or state license may issue a payment stablecoin in the US. Violations carry a fine of up to $1 million and up to five years in prison, Accounting Today reported.
- Where a token is issued. The proposal sets the criteria under which a token counts as issued in the US. That brings its issuer under the licensing regime wherever it is incorporated.
- What counts as distribution. The proposal defines what constitutes an offer or sale to a US person. That obligation falls on trading platforms rather than on issuers.
- How foreign tokens are treated. The proposal sets the conditions under which a stablecoin issued outside the US can still be distributed to US residents.
Territorial reach is the hardest question
The problem the proposal tries to solve comes from the nature of a token on a distributed ledger, which moves regardless of borders. An issuer incorporated outside the US can end up with its tokens held and traded by US residents without ever marketing to them. The NPRM handles this in two steps. It defines the act of issuance, which binds the issuer, and then the act of offering or selling, which binds the distributor, called a digital asset service provider in the statute.
The distribution prong has the clearest extraterritorial effect. Starting July 18, 2028, a digital asset service provider may no longer offer or sell a payment stablecoin to a person in the US unless a licensed issuer issued it. For a foreign-issued token, the proposal makes distribution depend on two cumulative conditions, The Block and Accounting Today reported. The issuer must have the technological capability to comply with a lawful US order, including a freeze or a block. And its home jurisdiction must be covered by a reciprocal arrangement. This foreign-issuer test applies from the Act’s effective date, not from 2028.
A second GENIUS Act rulemaking follows the spring AML proposal
The August 17 proposal is not the first rule implementing the GENIUS Act. FinCEN, Treasury’s financial intelligence unit, and OFAC, its sanctions office, jointly proposed a rule to counter illicit finance, published in the Federal Register on April 10, 2026, with comments due by June 9, 2026. That first proposal covered the anti-money laundering, counterterrorist financing, and sanctions compliance programs issuers must maintain, including the ability to block, freeze, and reject certain transactions. The two rules split the work. The first says what a licensed issuer must do. The second says who needs a license.
The rules land on a market already dominated by two tokens
The timetable forces issuers to choose a legal structure. The capital needed for a US charter, where reserves are held, and which jurisdictions to issue from stop being optimization questions and become conditions for market access. That timetable explains the charter applications several issuers have filed since early summer 2026.
| Party | New obligation | Effective date |
|---|---|---|
| Payment stablecoin issuer | Federal or state license to issue in the US | January 18, 2027 |
| Foreign issuer | Ability to carry out a US order, plus a reciprocal arrangement | January 18, 2027 |
| Digital asset service provider | Ban on offering or selling unlicensed tokens to a US person | July 18, 2028 |
The proposal arrives in a highly concentrated market. Total stablecoin market capitalization was about $308 billion on August 13, 2026, and nearly 99.5% of it was denominated in dollars, according to data published by Reap. Tether (USDT) accounted for about 59% and USD Coin (USDC) for about 23%. The licensing regime will therefore apply first to a de facto duopoly.
Comments are due October 19, 2026. They are expected to focus on the territorial nexus tests, which will determine the fate of non-US issuers.