On August 17, Treasury announced that it issued a notice of proposed rulemaking (NPRM) to implement section 3 of the Guiding and Establishing National Innovation for U.S. Stablecoins (GENIUS) Act regarding statutory prohibitions and limitations on payment stablecoin issuance, offer and sale in the United States. The proposed rule would define key terms, including “issue” (i.e., the first transfer of a payment stablecoin by the issuer that results in a third party having the right to use, transfer or redeem the token), “issuer,” and “located in the United States,” which for individuals turns on physical presence (with a carve-out for temporarily present non-residents) and for entities turns on U.S. organization or principal place of business.

Under the proposal, beginning on January 18, 2027, a person generally may not issue a payment stablecoin in the U.S. unless the person is a permitted payment stablecoin issuer or a qualifying foreign issuer registered with the OCC; beginning July 18, 2028, digital asset service providers may not offer or sell a payment stablecoin to a person in the U.S. unless it is issued by a permitted issuer. Treasury also proposed a safe harbor under which a foreign issuer would be deemed not to issue in the U.S. if it reasonably believes each recipient is outside the U.S., maintains policies and controls to avoid issuing to U.S.-located persons, and refrains from U.S.-targeted advertising or solicitation. Digital asset service providers offering foreign-issued stablecoins could rely on a foreign issuer’s compliance representation, but only after conducting reasonable due diligence.

The NPRM would also codify statutory exemptions for: direct peer-to-peer transfers, same-company cross-border account transfers, and self-custody wallet transactions. The rule is intended to have extraterritorial effect, and knowing participation in a violation is punishable by a fine of up to $1 million for each violation, imprisonment for up to five years, or both. The proposed rule builds on an advance notice of proposed rulemaking that Treasury issued in September 2025 (previously covered by InfoBytes here). Comments are due by October 19.