Treasury starts GENIUS Act rules: the new stablecoin playbook

What just happened, in plain English

On September 18, 2025, the U.S. Treasury kicked off formal rulemaking for the GENIUS Act by issuing an Advance Notice of Proposed Rulemaking. An ANPRM is the pregame to a draft rule. Treasury is asking targeted questions, collecting data, and signaling where it plans to go next. The agency also set a brisk clock. Comments are due within 30 days of publication in the Federal Register. See the scope and deadlines in Treasury’s announcement, including how it connects to illicit finance work, in the official release Treasury opens ANPRM on GENIUS Act.

GENIUS Act, in one page

The Guiding and Establishing National Innovation for U.S. Stablecoins Act is the first full federal framework for payment stablecoins in the United States. The law does three big things that set the baseline for rulemaking:

It defines who can issue a payment stablecoin in the United States and tightly limits what those issuers may do.
It sets the reserve, disclosure, redemption, and risk management floor for permitted issuers.
It places permitted issuers inside the Bank Secrecy Act perimeter with explicit sanctions obligations and examination.

Under the statute, permitted issuers must maintain at least 1 to 1 reserves in high quality, liquid assets such as cash, demand deposits, short dated Treasuries, and certain overnight repos, with explicit limits on rehypothecation. They must publish monthly reserve composition and have CEO and CFO certifications reviewed by a registered public accounting firm. The act also states that payment stablecoins issued by permitted issuers are not securities or commodities under federal law, and it establishes extraterritorial reach plus a federal pathway for recognizing comparable foreign regimes. For exact language on the reserve menu, certifications, and treatment provisions, see the enrolled GENIUS Act text.

What the ANPRM means for builders

Think of the ANPRM as a guided brainstorming session with consequences. Treasury will use your data and proposals to draft a Notice of Proposed Rulemaking that sets binding requirements. The questions hint at the levers Treasury may pull: in scope definitions, reporting thresholds, reserve and custody standards, and the mechanics of BSA and sanctions compliance that will shape how wallets and front ends work in practice.

Short window, long tail. After the ANPRM’s 30 days, expect a more detailed proposal late this year or early 2026, a formal comment round, and then final rules. The statute points agencies toward completing rulemaking on a one year cadence from enactment, so the working assumption is that Treasury aims to land major pieces in 2026.

The four pillars Treasury will harden

1) Reserves and redemption

Asset menu and duration. The statute lists eligible assets and a 93 day tenor cut off for most securities. Rulemaking will likely clarify whether tokenized Treasuries count at par, how reverse repos are overcollateralized, and what liquidity buffers are required during stress.
Rehypothecation and segregation. The law bans rehypothecation of reserves other than narrow liquidity and custody exceptions. Expect prescriptive controls over who can custody reserves, how sub accounts are structured, and how issuers evidence control to examiners.
Disclosures and attestation cadence. Monthly composition, geographic custody location, and CEO and CFO certifications are in the statute. Treasury could add granularity on look through for money market fund holdings and standardize redemption service levels by channel.

Why it matters: These choices will decide whether nonbank issuers can scale at bank like reliability, how much yield is left after safety buffers, and whether cross border expansion remains practical.

2) Custody and operational risk

Qualified custodians and segregation. Expect rules that mirror established custody principles. Client assets held off balance sheet, no commingling with house funds, resilient key management, and clean audit trails for onchain movements.
Business line limits. The law already narrows what a permitted issuer may do outside issuing and redeeming. Rules will likely police affiliate transactions, liquidity facilities, securities lending, and advisory arms that could bleed risk back into the reserve pool.

Why it matters: Issuers with sprawling corporate trees or those who mix market making with issuance will need to redraw org charts and shore up walls.

3) AML, sanctions, and lawful order capability

BSA treatment. Permitted issuers are financial institutions for BSA purposes. Expect customer identification, ongoing monitoring, suspicious activity reporting, travel rule compliance where applicable, and model governance for onchain analytics.
Sanctions and technical controls. The statute expects issuers to have the capability to comply with lawful orders. Rulemaking will spell out engineering standards for block, freeze, or burn actions, wallet screening, and response times to lawful process.
Exemptions that preserve peer to peer. The law explicitly protects direct transfers between individuals without an intermediary and self hosted wallets. Rules must reconcile that with sanctions and AML expectations for interfaces and providers.

Why it matters: This is where DeFi meets policy. Treasury’s choices on what counts as a digital asset service provider will decide which front ends, or even smart contract operators, carry obligations.

4) Tax and accounting touchpoints

The statute clarifies several regulatory treatments, including not treating permitted payment stablecoins as securities and easing custody accounting for client assets. Much of the practical tax story will flow from Treasury and IRS guidance. Expect requests for comment, then rules or notices, on:

Redemptions and exchanges. Whether a swap or redemption at par is a taxable event or a nonrecognition event. The answer affects consumer payments and corporate treasury operations.
Cost basis and payments. If stablecoins are used at the point of sale, what basis methods are allowed and what de minimis rules, if any, will apply for small payments.
Information reporting. How merchant acquirers, exchanges, and wallet providers should report stablecoin payment flows to taxpayers and the IRS, and how to avoid duplicative 1099s.

Why it matters: The tax answer can make the difference between stablecoins as a frictionless payment medium and stablecoins as a back office headache.

Sector by sector: who wins, who pivots

Issuers

U.S. bank affiliated and state chartered trust issuers are positioned to scale. They already run tight asset liability frameworks and can meet disclosure and attestation cadence without major reinvention.
Global offshore issuers will face a choice. The statute has extraterritorial reach and, after transition periods, U.S. digital asset service providers will only be able to offer payment stablecoins from permitted issuers or from foreign regimes Treasury deems comparable. That nudges offshore players to localize licensing, rework reserves, and build lawful order tooling. For market backdrop, see how competitive dynamics are shifting in Tether brings USAT stateside.
Transparency becomes table stakes. The mandatory monthly breakdown, tenor reporting, and restrictions on reserve reuse will compress the advantage of opaque models and reward issuers who have lived like money funds for years.

Exchanges and brokerages

Listing risk changes shape. Once compliance dates hit, offering non permitted payment stablecoins to U.S. customers becomes a regulatory liability. Expect proactive offboarding or geofencing during transition.
Onchain analytics and sanctions controls become a competitive feature. The winners will be platforms that pair low friction onboarding with robust BSA and sanctions operations that withstand exam scrutiny. For how adjacent market structure is evolving, see the generic rules for spot altcoin ETFs.

DeFi and wallets

Front end responsibilities rise. If your interface routes orders or facilitates redemptions with an issuer, you may be characterized as a service provider under future rules. Expect to document sanctions screening, blocklist handling, and suspicious activity reporting pathways where a human is in the loop.
Protocol design incentives shift. Pools that assume any flavor of dollar token will rethink compositions to favor permitted payment stablecoins. Composability remains, but risk premiums widen for non permitted coins.

Big retailers and fintechs

Private label and co branded stablecoins become viable. With a federal playbook, retailers and fintechs can partner with bank or trust issuers to launch narrow purpose tokens for loyalty, settlement, and working capital workflows.
Settlement compression and fee economics improve. Next day or intraday onchain settlement with permitted rails can reduce interchange like frictions. The tradeoff is customer identification and sanctions vetting obligations that come with operating at scale inside the regulated perimeter. For timing and adoption risks across consumer rails, track the Solana ETF verdict in October as a signal of broader risk appetite in the U.S. market.

The global contrast: U.S. flexibility vs U.K. caps and EU structure

United Kingdom. The Bank of England has proposed user holding limits for systemic stablecoins, with reported caps in the tens of thousands of pounds for individuals and higher for businesses. The goal is to limit rapid deposit outflows from banks while new payment systems scale. That could be transitional, but it would change how wallets and payment providers design limits and KYC. The U.S. approach focuses on reserves, redemption, and compliance capability rather than hard caps on users.
European Union. MiCA created structured regimes for e money and asset referenced tokens, with strict issuer governance, reserve quality, and redemption rights. It does not cap user holdings. MiCA also built a passportable supervisory framework that is more prescriptive on marketing and disclosures but conceptually aligned with GENIUS on reserves and consumer protection. The practical difference is that U.S. rules will tilt more to principles and supervisory discretion, while MiCA leans into detailed rulebooks and national competent authority oversight.

Takeaway: If you want to build large scale consumer rails, the U.S. path is shaping up as permissive but supervised. The U.K. path is cautious with potential caps that limit scale until the Bank is comfortable. The EU path is structured but predictable for passporting across the bloc.

What to do before the rules harden

The ANPRM’s short fuse is not a reason to wait. It is the moment to bank credibility with regulators and buy yourself optionality.

Submit targeted comments with data. Answer Treasury’s questions with numbers. Redemption volumes by channel, queue dynamics during stress, reserve laddering that balances liquidity and yield, failure modes you have mitigated. Make it easy to cite you.
Rebuild reserves to the statute. Move longer dated paper out of the ladder. Standardize overnight repos and reverse repos that are centrally cleared. Document liquidity lines and who controls them.
Clean up custody. Segregate client assets, document key ceremonies, and commission SOC 2 and penetration tests. Ensure operational playbooks for freezes and lawful process are rehearsed and time stamped.
Stand up sanctions ready engineering. Wallet screening, address clustering, alert triage, and escalation flows should be documented and tested. Build a controlled process for block, freeze, or burn events that ties to ticketing and legal sign off.
Map the tax surface area now. For consumer products, build basis tracking and lot selection. For merchant products, add ledger attributes that separate stablecoin settlement from fiat receivables and inventory. For treasurers, model possible nonrecognition treatment for redemptions and the implications if the IRS goes the other way.
DeFi interfaces should modularize compliance. Geofence where necessary, consider optional allowlist or identity attestations for higher risk actions, and make stablecoin selection configurable so you can rotate to permitted tokens without ripping out core logic.
Retailers and fintechs should pilot narrow corridors. Start with closed loop or semi open loop use cases where AML and sanctions obligations are easiest to meet, then expand once issuer partnerships and KYC scaffolding are battle tested.

Near term timeline and open questions

Now through October. The ANPRM comment period runs for 30 days after Federal Register publication. Treasury is also collecting input on innovation in illicit finance detection on a parallel track. Coordination with banking regulators and FinCEN will shape the first NPRM.
Late 2025 to 2026. Expect an NPRM with concrete reserve, custody, and BSA standards, followed by a final rule in 2026.

Open questions to watch:

Foreign recognition. Which jurisdictions will Treasury deem comparable for issuer passporting, and how quickly will those determinations arrive.
Service provider perimeter. How Treasury draws lines around wallets, interfaces, market makers, and oracle operators will decide where BSA duties land in practice.
Redemption guarantees by channel. Whether rules force common service levels or allow issuers to set different speeds by customer type.
Accounting and reporting harmonization. How Treasury, the banking agencies, and the IRS synchronize custody accounting and tax reporting will determine how quickly treasurers and public companies adopt.

The bottom line

The U.S. just moved from tweets and testimony to rule text for dollar stablecoins. The GENIUS Act gives Treasury the bones. The ANPRM is your invitation to help add muscle. The first chapters are clear. Run like a money fund, act like a financial institution, and build the technical muscles to comply with lawful orders at machine speed. Use the next 30 days to get your facts on the record and your systems in order.