Key Takeaways
Treasury has moved from asking questions to proposing text. The August 2026 notice of proposed rulemaking targets Section 3 of the GENIUS Act, the section that decides who is legally allowed to issue and distribute payment stablecoins in the United States.
Two dates now anchor the entire market. From 18 January 2027, issuing a payment stablecoin in the United States without a federal or state license is generally prohibited. From 18 July 2028, digital asset service providers generally may not offer or sell any payment stablecoin to people in the United States unless a licensed issuer created it.
The rules reach beyond U.S. borders. Treasury states that Section 3 is intended to have extraterritorial effect where a stablecoin is offered or sold to someone located in the United States, which puts offshore issuers and global exchanges directly in scope.
Stablecoin regulation in the United States has spent a year in the drafting stage. On 17 August 2026, it moved closer to something enforceable. The U.S. Department of the Treasury issued a notice of proposed rulemaking, commonly shortened to NPRM, setting out how it intends to implement Section 3 of the Guiding and Establishing National Innovation for U.S. Stablecoins Act, known as the GENIUS Act.
The proposal was scheduled for publication in the Federal Register on 18 August 2026, which starts a 60-day public comment period. Comments are submitted through Regulations.gov and are publicly viewable. This guide explains what the proposal covers, the deadlines that matter, and what remains undecided.
A Short Refresher on the GENIUS Act
The GENIUS Act was signed into law on 18 July 2025. It created the first comprehensive federal framework for payment stablecoins in the United States. The law does not cover every token that holds a steady price. It governs a narrower category.
Under the statute, a payment stablecoin is a digital asset that is designed to be used for payment or settlement, where the issuer is obligated to convert, redeem, or repurchase it for a fixed amount of monetary value, and which creates a reasonable expectation of holding a stable value. The law also states that a payment stablecoin is not a national currency, a deposit, or a security.
That definition matters. Algorithmic stablecoins that maintain a peg through code rather than a redemption obligation sit outside this framework, as do stablecoins built for purposes other than payments. Not every stablecoin issuer will be eligible to become what the law calls a permitted payment stablecoin issuer, often abbreviated as PPSI.
Why Section 3 Is the Section That Matters Most
Different parts of the GENIUS Act are being implemented by different agencies. The Office of the Comptroller of the Currency has proposed rules on capital, liquidity and risk management. FinCEN and the Office of Foreign Assets Control jointly proposed anti-money laundering and sanctions program requirements. The Federal Deposit Insurance Corporation proposed application procedures for subsidiaries of the banks it supervises.
Section 3 is different because it defines the boundary of the market itself. It sets out who may issue, offer, sell, or otherwise make available a payment stablecoin in the United States. Everything else is a rule about how a licensed business operates. Section 3 decides who gets to be in the room.
The Two Definitions at the Centre of the Proposal
Treasury's proposal focuses on interpreting two phrases that the statute uses but does not fully define. Both determine whether a business needs a license.
Phrase Being Defined | What Treasury Proposes | Who It Affects |
|---|---|---|
Issue a payment stablecoin in the United States | A stablecoin would generally be treated as issued in the United States if the issuer is located in the country at the time of issuance, or if the stablecoin is issued to a person located in the country. For individuals, location generally turns on physical presence. For companies, it generally turns on U.S. incorporation or a principal place of business in the country. | Issuers, including offshore issuers serving U.S. customers |
Offer or sell a payment stablecoin to a person in the United States | This determines when a distribution platform is treated as bringing a stablecoin into the U.S. market. Treasury says the definition is intended to clarify when and how payment stablecoins can be offered or sold in U.S. markets. | Exchanges, brokers, custodians, wallets, payment platforms |
These are not technical footnotes. A definition that captures an offshore issuer, a distributor, or a front-end interface can determine whether a token remains available in the world's largest capital market.
The Compliance Timeline
The GENIUS Act takes effect on the earlier of two triggers: 18 months after enactment, or 120 days after the primary federal payment stablecoin regulators issue final implementing regulations. Treasury has said the expected effective date is 18 January 2027. The table below sets out the sequence as it stands.
Date | Event | Status |
|---|---|---|
18 Jul 2025 | GENIUS Act signed into law | Completed |
18 Aug 2025 | Treasury request for comment on detecting illicit activity in digital assets | Completed |
19 Sep 2025 | Treasury advance notice of proposed rulemaking, drawing roughly 450 comments | Completed |
Dec 2025 | FDIC proposed rule on application provisions | Proposed |
Mar 2026 | OCC proposed rule on issuance, capital, liquidity and risk management | Proposed |
Apr 2026 | FinCEN and OFAC joint proposed rule on AML and sanctions compliance programs | Proposed |
Apr 2026 | Treasury proposed rule on state regimes that are substantially similar to the federal framework | Proposed |
17 Aug 2026 | Treasury proposed rule implementing Section 3 | Comment period open |
18 Jan 2027 | Expected effective date. Issuing a payment stablecoin in the U.S. without a license is generally prohibited | Scheduled |
18 Jul 2028 | Digital asset service providers generally may not offer or sell payment stablecoins to persons in the U.S. unless issued by a licensed issuer | Scheduled |
One point is often misread. The one-year deadline the statute set for agencies to finalise regulations passed in July 2026 without final rules in place. That did not change the effective date or invalidate the law. It means the industry is working against statutory deadlines while the detailed rules are still being written.
Foreign Issuers and the Question of Reach
Treasury has stated that Section 3 is intended to have extraterritorial effect where the conduct involves the offer or sale of a payment stablecoin to a person located in the United States. In practice, that means a company with no U.S. office can still fall within the framework.
The proposal addresses foreign-issued payment stablecoins directly. Digital asset service providers generally would not be able to make those tokens available to U.S. persons unless the foreign issuer meets two conditions.
The issuer has the technological capability, and is willing, to comply with the terms of any lawful order from U.S. authorities, such as an order to seize, freeze, burn, or prevent transfers of the stablecoin.
Any applicable reciprocal arrangement between the United States and the issuer's home jurisdiction is in place.
This is the mechanism that will decide the U.S. availability of large offshore stablecoins. It is worth stressing that the outcome for any specific issuer is not yet determined. The proposal sets the test. Licensing decisions come later, through the relevant federal or state regulator.
What It Means for Exchanges, Wallets and Payment Platforms
The 2028 date is the one that reshapes distribution. From that point, the legal question for a platform is not only whether it is licensed, but whether every stablecoin it lists was issued by a permitted issuer or a qualifying foreign issuer.
Practically, that pushes platforms toward a listing review process built around issuer status rather than token popularity. Expect regional restrictions, delistings for U.S. users, and clearer disclosure about which tokens are covered by the federal framework.
Penalties
The statute is not advisory. It makes it unlawful for anyone other than a permitted payment stablecoin issuer to issue a payment stablecoin in the United States. Reported penalties for violations include fines of up to 1 million dollars and imprisonment of up to five years.
Market Context: Reading the Growth Forecasts Carefully
Coverage of stablecoin regulation is frequently paired with large market forecasts. These are estimates produced by banks and officials, not settled facts, and they vary widely. They are included here for context only.
Source | Widely Reported Estimate | Horizon |
|---|---|---|
Reported market size | Roughly 310 to 320 billion dollars in total stablecoin market capitalisation during 2026 | Current |
JPMorgan | 500 to 600 billion dollars | By 2028 |
Standard Chartered | Around 2 trillion dollars | By 2028 |
Citi (base case) | Around 1.9 trillion dollars, with a higher bull case | By 2030 |
U.S. Treasury Secretary Scott Bessent | Publicly suggested figures in the 2 to 3 trillion dollar range | By 2028 to 2030 |
Crypto University does not endorse any of these figures or treat them as forecasts of value. The relevant educational point is narrower: dollar-denominated stablecoin reserves are typically held in cash and short-term U.S. government debt, so the size of this market has become a live topic in monetary and fiscal policy discussion, not only in crypto. A quick overview of deeper detail on Compare Places to Buy Stablecoins Worldwide.
What Is Still Unsettled
This is a proposal, not a final rule. It currently binds nobody. Comments can change the text before it is finalised.
Licensing outcomes for specific issuers, including large offshore issuers, have not been decided.
Reciprocal arrangements with foreign jurisdictions are referenced by the framework but are still being developed.
How the stablecoin regime interacts with existing securities law is addressed in the proposal but remains an active area of debate.
The broader market structure legislation covering other digital assets is on a separate and slower track.
How to Follow or Participate in the Process
Locate the notice in the Federal Register once published. Proposed rules are numbered and dated, which makes them easy to cite accurately.
Read the preamble first. Agencies explain their reasoning and list the specific questions they want answered, which is usually more informative than the regulatory text.
Note the comment deadline. This proposal has a 60-day window from Federal Register publication.
Submit comments through Regulations.gov. Submissions are public, so treat anything you write as a permanent published record.
Watch for the final rule. Agencies must respond to significant comments, and the final text can differ from the proposal.
Summary
The Section 3 proposal does not change what a stablecoin is. It changes who is permitted to create one and who is permitted to hand one to a person in the United States. Two dates carry that change: 18 January 2027 for issuance, and 18 July 2028 for distribution. Between now and then, the definitions in this proposal will determine how much of the existing global stablecoin market can legally serve U.S. users. Anyone using, building on, or holding dollar-denominated stablecoins should be following the rulemaking rather than the commentary around it.
Frequently Asked Questions
Is the GENIUS Act already in force?
The law was enacted on 18 July 2025, but its operative requirements take effect later. Treasury has indicated an expected effective date of 18 January 2027, or 120 days after the primary federal regulators issue final implementing rules if that comes sooner.
Does this proposed rule apply to me as an ordinary stablecoin holder?
The obligations fall on issuers and on digital asset service providers such as exchanges and payment platforms, not on individual holders. The practical effect for users is likely to show up in which stablecoins remain available on U.S.-facing platforms.
Are USDT and USDC automatically covered?
The framework applies to payment stablecoins as defined by the statute, and licensing determinations for individual issuers have not been made. Whether any specific token remains available to U.S. users will depend on the final rules, the issuer's licensing status, and, for foreign issuers, compliance capability and reciprocal arrangements.
What is the difference between an ANPRM and an NPRM?
An advance notice of proposed rulemaking asks open questions before an agency has drafted rules. A notice of proposed rulemaking contains actual proposed text and is a later, more developed stage. Treasury issued an ANPRM in September 2025 and this NPRM in August 2026.
Are algorithmic stablecoins covered by the GENIUS Act?
The GENIUS Act governs payment stablecoins, which are defined around a redemption obligation for a fixed amount of monetary value. Stablecoins that maintain a peg purely through code-based supply mechanisms, and stablecoins designed for non-payment purposes, generally fall outside this particular framework.
Can a state regulator license a stablecoin issuer instead of a federal one?
The GENIUS Act includes an opt-in model. Issuers below a stated size threshold may elect state supervision where the state regime has been certified as substantially similar to the federal framework. Treasury proposed the principles for making that assessment in a separate rulemaking earlier in 2026.
What happens if the rules are not finalised in time?
The statutory effective dates are set by the law itself, not by the rulemaking schedule. The agency deadline for final regulations passed in July 2026 without completed rules. Agencies typically build transition periods into final rules, but the statutory dates remain the reference points.
Related Terms to Learn Next
Term | Why It Matters |
|---|---|
Permitted Payment Stablecoin Issuer (PPSI) | The statutory category for a legally licensed issuer. Whether an entity qualifies as a PPSI determines whether its token can be distributed to U.S. users after the deadlines. |
Digital Asset Service Provider (DASP) | The category covering exchanges, brokers, custodians and payment platforms. The 2028 distribution prohibition is written around this term. |
Notice of Proposed Rulemaking (NPRM) | The formal stage of U.S. administrative law where an agency publishes draft rules for public comment before finalising them. |
Reserve Requirements | The GENIUS Act framework requires payment stablecoins to be backed by qualifying reserve assets on a one-to-one basis, with periodic disclosure obligations. |
Extraterritoriality | The principle that a national law can apply to conduct outside its borders when that conduct reaches persons inside them. It is the reason offshore issuers are in scope. |
Sources
U.S. Department of the Treasury, press release and notice of proposed rulemaking on GENIUS Act Section 3 implementation, 17 August 2026, home.treasury.gov
U.S. Department of the Treasury, Advance Notice of Proposed Rulemaking, GENIUS Act Implementation, Federal Register, 19 September 2025 (90 FR 45159)
FinCEN and OFAC, joint proposed rule on permitted payment stablecoin issuer AML and sanctions compliance program requirements, Federal Register, April 2026
Office of the Comptroller of the Currency, Bulletin 2026-3, GENIUS Act Regulations: Notice of Proposed Rulemaking, occ.gov
Federal Deposit Insurance Corporation, proposed rule on GENIUS Act application provisions, Federal Register, 19 December 2025
Guiding and Establishing National Innovation for U.S. Stablecoins Act, Public Law 119-27, codified at 12 U.S.C. 5901 to 5916
Federal Reserve Bank of St. Louis, Regulated Payment Stablecoins Become a Reality in the U.S., December 2025
Bank for International Settlements, Working Paper No. 1270, Stablecoins and safe asset prices
Contemporaneous reporting on the 17 August 2026 proposal, including Accounting Today, PYMNTS and Crypto Briefing
Editorial note: This article is educational and informational. It is not legal, tax, investment or financial advice. Regulatory positions described here are proposals and may change before they are finalised. Market size figures are widely reported estimates, not verified totals. Readers with compliance obligations should consult qualified counsel.
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