U.S. Stablecoin Regulation: Balancing Innovation and Risk

The U.S. Department of the Treasury has initiated a formal process to implement the Guiding and Establishing National Innovation for U.S. Stablecoins (GENIUS) Act by soliciting public feedback through an Advance Notice of Proposed Rulemaking (ANPRM). The ANPRM, published on September 19, 2025, seeks input on how to translate the law’s framework into regulations that balance innovation with risk mitigation in the stablecoin sectortitle1^[1]. The comment period closes on October 20, 2025, aligning with the Treasury’s broader strategy to establish a comprehensive regulatory regime for payment stablecoinstitle2^[2].

The GENIUS Act, enacted on July 18, 2025, defines a payment stablecoin as a digital asset designed to maintain a stable value relative to a fixed monetary amount, such as the U.S. dollartitle2^[3]. Under the law, only “permitted payment stablecoin issuers” (PPSIs)—including subsidiaries of insured depository institutions, federal qualified issuers, or state-qualified entities—may issue stablecoins in the U.S. beginning in 2028title2^[4]. The Act also mandates reserve requirements, transparency in monthly reserve disclosures, and prohibitions on misleading marketing, such as implying government endorsement or offering interest on stablecoin holdingstitle2^[5].

The ANPRM outlines six key areas for public comment: stablecoin issuers and service providers, illicit finance, foreign payment stablecoin regimes, taxation, insurance, and economic datatitle2^[6]. For instance, it queries whether Treasury should establish safe harbors for small-scale or emergency issuances and how to define “payment stablecoin” to ensure claritytitle2^[7]. The notice emphasizes collaboration with agencies like the Federal Reserve and FDIC, which will oversee capital and liquidity requirements for PPSIstitle2^[8]. Additionally, it explores how to assess foreign regulatory regimes for comparability to U.S. standards, which would determine whether foreign stablecoins can access the domestic markettitle2^[9].

A critical focus of the ANPRM is mitigating illicit finance risks. The GENIUS Act subjects PPSIs to anti-money laundering (AML) and sanctions obligations, requiring them to develop systems to detect and report suspicious activitytitle2^[10]. The Treasury seeks input on implementing these provisions, including technical capabilities for blocking transactions involving sanctioned entitiestitle2^[11]. The notice also addresses foreign issuers, proposing criteria for designating noncompliant entities and evaluating their ability to rectify deficienciestitle2^[12].

The ANPRM’s scope reflects the Treasury’s recognition of the sector’s complexity. For example, it questions whether state-level regulatory regimes should be deemed “substantially similar” to federal standards and how to define terms like “interest” and “yield” in the context of stablecoin operationstitle2^[13]. The Stablecoin Certification Review Committee (SCRC), chaired by the Treasury Secretary, will play a pivotal role in approving state-level frameworks and evaluating risks posed by non-financial companies issuing stablecoinstitle2^[14].

With the comment period open until October 20, the ANPRM marks a pivotal step in shaping the U.S. stablecoin landscape. By prioritizing innovation while addressing consumer protection, financial stability, and national security concerns, the Treasury aims to foster a robust ecosystem for digital payments. The final regulations, expected to build on this feedback, will likely influence global stablecoin standards and the broader digital asset market.