US Treasury Invites Input on Stablecoin Regulation
US Treasury has opened a 60-day public comment period on stablecoin regulation under the GENIUS Act, running until October 17. The initiative seeks practical input on using application programming interfaces (APIs), artificial intelligence (AI), digital identity verification and blockchain monitoring to enhance anti-money laundering (AML) and sanctions compliance. This stablecoin regulation review will influence standard-setting for APIs and AI in transaction monitoring, digital identity tools for KYC and blockchain analytics for tracing illicit flows. The Treasury will assess the effectiveness, costs, privacy and cybersecurity implications of these technologies. The GENIUS Act also mandates strict reserve requirements for payment stablecoin issuers and aligns federal and state regulatory frameworks while enforcing existing AML and sanction laws. Final rules will take effect 18 months after the Act’s enactment or 120 days after Treasury and Federal Reserve publish regulations, whichever is sooner. Traders should prepare for increased compliance costs and operational changes that may affect market liquidity and volumes in the short term, while potentially strengthening market integrity over the long term.
Neutral
While the GENIUS Act consultation signals heightened oversight and potential compliance costs for stablecoin issuers, it focuses on preserving market integrity without undermining dollar pegs. Traders may see short-term impacts on liquidity and trading volumes as issuers adapt to new reserve and reporting requirements, but stablecoin prices should remain stable. Over the long term, clearer regulation is likely to support confidence in stablecoins, maintaining their utility in crypto markets.