The U.S. Department of the Treasury has published a notice of proposed rulemaking (NPRM) asking for public comment on baseline regulatory criteria for state-level stablecoin frameworks under the GENIUS Act (Guiding and Establishing National Innovation for US Stablecoins Act). The NPRM outlines minimum standards states must meet to supervise stablecoins with market capitalizations below $10 billion while remaining consistent with federal policy.
Key requirements in the Treasury’s proposal include 1:1 reserve backing in cash or high-quality cash equivalents and monthly reporting obligations for issuers. State regimes must also comply with federal anti‑money laundering and sanctions requirements and must prohibit rehypothecation — the practice of using the same asset to back multiple claims. While states may set their own rules on liquidity, reserves, risk management, regulatory procedures, enforcement and administration, any state standards must be at least as protective as the federal baseline. States are permitted to adopt higher financial thresholds or more restrictive requirements if they choose.
The Treasury emphasized that approved state frameworks must deliver regulatory outcomes that are no less stringent or protective than the federal standard. The NPRM opens a 60‑day public comment period for stakeholders to submit feedback. Under the GENIUS Act, once a stablecoin issuer’s market capitalization 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 that legislation, significant questions remain about yield‑bearing stablecoins — specifically whether issuers can pass interest or yield to token holders. That unresolved issue has been a sticking point in broader congressional efforts on crypto market structure, including the stalled CLARITY bill.
Advocates, including major crypto firms such as Coinbase, argue yield‑bearing stablecoins would give savers competitive alternatives to low‑rate traditional accounts. Banking industry groups counter that such products could prompt deposit outflows and reduce banks’ market share.
This article was produced in line with Cointelegraph’s Editorial Policy; readers are encouraged to verify the information independently. Read the Editorial Policy at https://cointelegraph.com/editorial-policy