The US Department of the Treasury published a notice of proposed rulemaking (NPRM) seeking public comment on regulatory criteria for state-level stablecoin governance frameworks under the GENIUS Act.
The GENIUS Act (Guiding and Establishing National Innovation for US Stablecoins Act) lets states regulate stablecoins with market capitalizations below $10 billion, provided their rules do not materially diverge from federal policy. The Treasury’s NPRM specifies baseline requirements that state frameworks must meet, including 1:1 reserve backing in cash or high-quality cash equivalents and monthly reporting obligations.
States must also align with federal anti-money laundering and sanctions regimes and must enforce a prohibition on rehypothecation — using the same asset to back multiple claims. While states may set their own liquidity, reserve, risk management, regulatory procedure, enforcement and administrative rules, those rules must be at least as protective as the federal standards; states may adopt higher financial thresholds or more restrictive requirements.
The Treasury stressed that state regimes must deliver regulatory outcomes at least as stringent and protective as the federal framework. The public has 60 days to submit comments on the NPRM. Once a stablecoin issuer’s market cap exceeds $10 billion, federal jurisdiction becomes exclusive and the issuer will be regulated at the federal level.
President Donald Trump signed the GENIUS Act into law in July. Despite the law’s passage, uncertainty remains over yield-bearing stablecoins and whether issuers can share interest with token holders — an issue that has impeded progress on the CLARITY crypto market structure bill in Congress.
Proponents, led by firms like Coinbase, argue yield-bearing stablecoins offer savers competitive alternatives to low-rate traditional accounts. Banking industry groups oppose yield-bearing stablecoins, warning they could trigger deposit outflows and erode banks’ market share.
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