Treasury opens US stablecoin issuance to foreign issuers that comply

What happened

The United States Department of the Treasury issued a notice of proposed rulemaking on 17 August 2026 implementing section 3 of the GENIUS Act, and it was published in the Federal Register the following day at 91 FR 53368, twenty-four pages under regulation identifier 1505-AC95 and docket TREAS-DO-2026-0496, signed by Rachel Miller, executive secretary, and filed for public inspection at 8.45 am on 17 August. Comments are due by 19 October 2026. Treasury Secretary Scott Bessent said in the department's release that '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', and that the department welcomes input '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'. The proposal would create a new part 1523 of title 12 of the Code of Federal Regulations, with five sections and an appendix of four worked interpretations, and asks eighty-seven questions. It defines issue as the first transfer by the issuer, directly or indirectly and including by crediting an account, that results or will result in someone other than the issuer having the right to use, transfer or redeem the coin, so that a stablecoin minted into the issuer's own treasury is not yet issued while one minted straight into a holder's wallet is, and a transfer out after a redemption is a fresh issuance. It defines located in the United States for an individual by physical presence, carving out non-residents who are only temporarily present and excluding residents who are temporarily abroad, and for a company by incorporation or principal place of business. Peer-to-peer transfers without an intermediary, transfers between an individual's own accounts at the same parent company across borders, and transactions through a software or hardware wallet that facilitates a person's own custody are exempt.

Why it matters

Three provisions decide the shape of the market rather than describing it. The first is that Treasury reads section 18(a) to mean that a foreign issuer meeting its conditions, which include a comparability determination by the Secretary and registration with the Comptroller of the Currency, may issue payment stablecoins in the United States, and not merely have them reach American holders through the secondary market. The narrower reading was available and Treasury declined it, partly on the text of section 18(a) and section 4(a)(12)(C) and partly on the ground that forcing foreign issuance through intermediate steps would obscure key steps from regulators and create an uneven playing field that discourages innovation here. The second is proposed section 1523.2(d)(3), which makes acting as market maker for a newly issued payment stablecoin, distributing it, or otherwise making it available for secondary trading an example of participating in an unlawful issuance for the purposes of the criminal penalty in section 3(f), a fine of up to $1m for each violation, five years, or both. That moves the criminal perimeter from the issuer to the plumbing around it. The third is the pair of offshore carve-outs at sections 1523.2(c) and 1523.3(e), which turn geographic exclusion into a defence with conditions: a reasonable belief that the recipient is not in the United States, policies and controls that are implemented rather than merely adopted and that are reviewed as the market and the technology move, and no advertising or solicitation that could reasonably be expected to have the effect of targeting anyone here. The mirror of that is proposed section 1523.3(d)(4), under which advising a purchaser how to evade location checks is itself an offer. The number the industry will look for is in the analysis rather than the rule. Treasury says it considered a longer transition of about thirty-six months with a safe harbour letting unregistered foreign-issued stablecoins below roughly $1bn of US-held capitalisation continue, and rejected it on the ground that the delayed consumer protection benefits would exceed the transition costs saved.

What is not settled

Nobody has walked through the door Treasury opened. No jurisdiction has a comparability determination and no foreign issuer is registered with the Comptroller, so the reading of section 18(a) is for now a description of a route rather than of a market. The detailed regulatory impact analysis is not in the notice and is to be posted to the docket separately, which means the cost and benefit estimates summarised in a paragraph cannot yet be checked against their own workings. Treasury asks in terms whether it should abandon this approach for one modelled on Regulation S under the Securities Act, which would replace the residency and domicile test with an offshore transaction framework and change who counts as located in the United States. Question 52 asks whether a service provider should have to examine or audit the smart contracts behind a foreign stablecoin and verify that seize, freeze and burn functions exist and work, and whether such a requirement would in practice bar any coin whose code is not fully open source. The accounting and margining rules in section 3(g), and the marketing penalties in section 4(e)(3), are outside this proposal. And the timetable is tight in a way the notice does not discuss: the Act's expected effective date is 18 January 2027, the prohibition on offering unlicensed coins to persons here does not bite until 18 July 2028, and CoinDesk reports that the one-year deadline Congress set for these regulations passed last month without them.