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.