The U.S. Treasury Department has issued a Notice of Proposed Rulemaking governing state oversight of stablecoin issuers under the GENIUS Act, according to a report from Consumer Finance Monitor.

The proposed rule is the first implementing action under the stablecoin framework enacted in 2025 and addresses the procedure by which state regulators can supervise issuers below the law's $10 billion circulation threshold. Issuers above that ceiling fall under federal supervision through the Office of the Comptroller of the Currency.

The NPRM raises immediate questions for issuers, exchanges, and state banking departments.

What does the NPRM cover?

The statute permits qualified state regimes to supervise stablecoin issuers up to the $10 billion cap, provided Treasury determines those regimes are "substantially similar" to the federal framework. The proposed rule is expected to detail the application and approval process for states seeking certification, the criteria Treasury will apply to determine substantial similarity, and the supervisory expectations applicable to state-chartered issuers.

Reserve composition, redemption rights, capital and liquidity requirements, examination frequency, and consumer-protection standards are likely among the topics on which Treasury is soliciting comment. The comment window formally opens with publication in the Federal Register.

State supervisors pursuing certification will need to demonstrate examination capacity, an enforcement record, and statutory authority over reserve custody and redemption.

Who is affected?

The rule's downstream effects extend beyond stablecoin issuers. Custodial wallet providers, money-transmitter license holders, retail broker-dealers operating in digital assets, and the major exchanges that list or quote stablecoins against fiat and crypto pairs will each need to reassess counterparty exposure once the state-federal split is operationalized.

State banking departments in jurisdictions weighing a stablecoin supervisory pathway face separate decisions. Several states that have passed digital-asset legislation since 2023 will need to evaluate whether their statutes, examination resources, and consumer-protection enforcement records satisfy the federal "substantial similarity" test. State regulators that pursue approval will commit examination staff and enforcement resources for the duration of any issuer's presence under the $10 billion cap.

What are the implementation timelines?

Treasury's NPRM initiates the formal rulemaking clock for the state-supervision pathway under the GENIUS Act. Final rules typically follow several months after comment closes, depending on the volume and complexity of submissions. The OCC and the Federal Deposit Insurance Corporation are expected to issue companion rulemakings covering the federal-permit pathway for issuers above the $10 billion threshold.

Industry participants are likely to focus comment letters on several operational questions:

• The transition regime for issuers already operating under state money-transmitter licenses at the time of certification
• The treatment of algorithmic stablecoins and non-USD-pegged tokens under the federal-versus-state framework
• Whether Treasury will grandfather existing issuer approvals in certified states
• The interplay between state supervisory findings and federal enforcement authority when a state-chartered issuer approaches or crosses the $10 billion cap

What changes for payments and exchange infrastructure?

The final rule will tighten operational expectations for issuers and their banking partners. Banks serving stablecoin issuers under both pathways will be expected to apply enhanced due diligence on reserve custody and on attestation frequency. Card networks and payment processors that have integrated stablecoin rails over the past 18 months will need to update onboarding procedures to reflect the new issuer-classification regime.

Compliance teams at the largest issuers are likely to begin mapping their reserve and custody arrangements against the proposed framework even before the comment period closes, in anticipation of the final rule's substantive requirements.

Treasury's action is the first concrete step in translating the GENIUS Act's framework into operational regulation. The comment period, once opened, will shape the supervisory architecture that U.S. stablecoin issuers operate under for the foreseeable future.