GENIUS Act State Regulatory Regime Substantially Similar Determination Framework
Summary
Treasury issued its first proposed rule under the GENIUS Act (enacted July 2025) implementing section 4(c), which establishes principles for determining whether state-level payment stablecoin regulatory regimes are "substantially similar" to the federal framework. The proposal permits issuers with up to $10 billion consolidated total outstanding issuance to opt for state regulation if approved by the Stablecoin Certification Review Committee. Comments are due June 2, 2026.
What changed
The proposed rule establishes criteria for the Stablecoin Certification Review Committee (chaired by the Treasury Secretary with Fed and FDIC chairs) to evaluate whether state regimes are "substantially similar" to the federal framework. The rule distinguishes between "uniform requirements" (reserve asset standards, BSA/AML compliance) that must match federal standards substantively, and "state-calibrated requirements" (capital and liquidity standards) where states retain discretion if outcomes are at least as stringent. States may use legislation, regulation, or enforceable guidance to build their regimes and may impose additional requirements not conflicting with federal law.
Payment stablecoin issuers and state regulators should review existing state frameworks against the proposed substantially similar standard and prepare comments by the June 2, 2026 deadline. Companies currently operating under state licenses should assess whether their state regime will qualify under the new federal approval process. Issuers must ensure compliance with uniform requirements including reserve asset standards and BSA/AML obligations regardless of state oversight.
What to do next
- Submit comments on the NPRM by June 2, 2026
- Assess whether current state regulatory framework meets the "substantially similar" standard
- Verify compliance with uniform requirements (reserve asset standards, BSA/AML) regardless of state oversight pathway
Source document (simplified)
April 6, 2026
Treasury issues first proposed rule under GENIUS Act on state stablecoin oversight
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On April 1, Treasury issued an NPRM seeking public comment on its first proposed regulation implementing the GENIUS Act, enacted in July 2025, which establishes a comprehensive payment stablecoin regulatory framework (covered by InfoBytes here). The proposed rule, which would implement section 4(c) of the act, outlines broad principles for determining whether a state-level regulatory regime is “substantially similar” to the federal regulatory framework for payment stablecoins and, when such a determination is made, provides states with “wide latitude” to diverge from certain federal regulations. Under the act, payment stablecoin issuers with a consolidated total outstanding issuance of no more than $10 billion may opt for state-level regulation, provided the state’s regime receives approval from the “Stablecoin Certification Review Committee,” chaired by the Treasury secretary with members including the chairs of the Fed and FDIC. The proposal also broadly defines the term “state-level regulatory regime” to provide states with discretion to design their regimes using a mix of legislation, regulation, and enforceable guidance. The NPRM followed an advance notice of proposed rulemaking that Treasury published in September 2025 (covered by InfoBytes here), which solicited public input on the act’s implementation.
Additionally, the proposed rule defines the term “federal regulatory framework” to include the statutory text of the act along with interpretations and regulations issued by the OCC and published in the Federal Register (the first of which was covered by this Orrick Insight here), as well as certain regulations and orders issued by Treasury and the Fed concerning anti-money laundering, sanctions, and anti-tying provisions. The rule distinguishes between “uniform requirements,” such as reserve asset standards and BSA/AML compliance obligations, which must be consistent with federal standards in all substantive respects, and “state-calibrated requirements,” such as capital and liquidity standards, for which states retain discretion, so long as regulatory outcomes are at least as stringent and protective as the federal framework. The proposal also addresses state frameworks for applications and licensing, supervision and enforcement, custody and insolvency, and permits states to impose additional requirements that do not conflict with federal law. Comments on the NPRM are due by June 2.
[View source.]
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