US Treasury Seeks Input on Stablecoin Tracking Tools Under GENIUS Act
The U.S. Treasury has opened a public comment window through October 17 to evaluate novel stablecoin monitoring tools as required by the GENIUS Act. The consultation will assess the effectiveness, cost, privacy and cybersecurity risks of systems designed to track illicit stablecoin activity. Feedback will inform proposed rules expected in early 2026, with final regulations by mid-2026 and enforcement from 2027.
Under the GENIUS Act, issuers must comply with lawful orders to seize, freeze, burn or block stablecoin transfers. Stablecoin issuers are also poised to become major buyers of U.S. Treasury bills, with Tether ranking as the 18th largest T-bill holder in Q2. Meanwhile, the banking lobby’s Bank Policy Institute has urged Congress to close interest-payment “loopholes” on payment stablecoins, warning of a potential $6.6 trillion shift from bank deposits to digital dollars that could strain bank lending. This public consultation aims to balance innovation, market stability and regulatory oversight of digital assets.
Neutral
The Treasury’s call for public input under the GENIUS Act signifies an important step toward clearer stablecoin regulation. While enhanced monitoring tools and lawful-order provisions may bolster long-term market integrity and user confidence, the move does not introduce immediate restrictions or bans that could destabilize trading. Historically, regulatory consultations—such as the EU’s MiCA framework—have provided markets with clearer guidelines, supporting sustainable growth. In the short term, traders may see neutral impact as the industry adjusts to consultation details. Over the long term, defined rules could reduce illicit activity, increase institutional adoption of stablecoins, and modestly strengthen market resilience.