Treasury Consults on GENIUS Act State Stablecoin Rules

The U.S. Treasury has launched a 60-day public consultation to define how GENIUS Act stablecoin regulation will work at the state level. The proposal clarifies when states can supervise issuers and how state rules must align with federal standards. A major eligibility threshold is size: issuers with under $10 billion in circulating stablecoins may qualify for state oversight only if state frameworks are “substantially similar” to federal rules. The Treasury also sets hard guardrails for stablecoin regulation, including full 1:1 reserve backing with cash or high-quality liquid equivalents, and mandatory monthly disclosures. Across all jurisdictions, anti-money-laundering and sanctions compliance remain non-negotiable. The proposal also reiterates a ban on rehypothecation, meaning stablecoin reserves cannot be reused to support multiple obligations. States may impose stricter liquidity, reserve, risk-management, enforcement, and administrative requirements, but cannot weaken protections versus the federal regime. A key wildcard is yield-bearing stablecoins. The issue could stall the CLARITY market-structure bill: token makers argue yield products may compete with traditional savings, while banks warn about deposit outflows. For traders, this is a near-term predictability boost for compliant issuers, but ongoing yield-policy uncertainty keeps volatility risk elevated for stablecoin-linked markets.