U.S. Treasury Releases GENIUS Act Rules for Stablecoins

The U.S. Treasury has published a draft of the rules for stablecoins under the GENIUS Act. This matters for issuers, exchanges, and traders. The market is already large, at about $300.9 billion.

The document concerns the law’s third section. In it, Treasury explains when a stablecoin is considered issued in the U.S., how foreign issuers will operate, and when liability may shift to exchanges or market makers. This is not a minor edit. It determines who bears legal risk and where.

The GENIUS Act became Public Law 119-27 on July 18, 2025. It passed the Senate by 68 votes to 30 and the House of Representatives by 308 to 122. This is the first U.S. federal law specifically for payment stablecoins. And now Treasury is beginning to break it down.

What exactly does Treasury’s new draft change?

The main shift is simple. Stablecoin issuance is now tied not to the technical creation of tokens, but to their first transfer to a user.

In other words, a token may be minted earlier. But legally, issuance occurs only when another person gains the right to use it, transfer it, or redeem it. If the token is returned to the issuer, the previous issuance is effectively canceled. And the new transfer is counted as a new issuance.

There is another important point. Treasury ties the rule to the location of the issuer and the recipient. If, at the time of the first transfer, one of the parties is in the U.S., the issuance may be treated as American. For individuals, it looks at actual physical presence, not citizenship. In simple terms, a passport is not the main factor.

This is not a small detail. For the stablecoin market, now valued at roughly $300.9 billion, such details determine who can operate without risking a legal violation. According to DefiLlama, USDT has $183.0 billion, while USDC has about $72.0 billion. It will get even stricter from here.

Why does this matter for foreign issuers?

The bad news for them is absent. The U.S. is not closing the market entirely.

Treasury proposes allowing foreign issuers to operate in the U.S. if they meet the requirements of Section 18(a). They need a regime in their home country that the U.S. recognizes as comparable to its own, as well as registration with the OCC. The company must also show that it did not accidentally issue the token in the U.S.

To prove this, the issuer will have to show that it was outside the U.S., checked users’ locations, and did not promote the token in the American market.

The draft mentions IP addresses, device data, contract confirmations, and transaction tracking. But Treasury is not yet ordering one mandatory set of checks. It is asking the market for comments. That means the final version may still change.

For Ukraine, this is also a useful signal. If the rules are adopted in their current form, compliance in stablecoins will become more expensive and slower. On the other hand, clearer rules could reduce the risk of sudden blocks for legitimate services. This is already visible in other regulatory changes, which we wrote about in the article on the role of banks in crypto regulation.

Market reaction

Separately, Treasury warns that liability may not fall only on issuers. Exchanges and market makers could also be at risk if they knowingly help with the unlawful initial distribution of stablecoins.

This means that a simple “we only provided liquidity” no longer protects anyone. If a company coordinates key stages of issuance or facilitates token redemption, it may be treated as a participant in the violation. That is why the market is now reading not only the GENIUS Act itself, but also the accompanying documents. We have already seen similar pressure on compliance in AML, which was discussed in the recent news about tighter AML controls.

• Stablecoin issuance will be counted from the first transfer, not from mint.

• The user’s location matters more than citizenship.

• Foreign issuers can operate in the U.S., but not without conditions.

• Exchanges and market makers may also be held liable.

• Treasury has not yet approved the final list of checks.

What does this mean for investors?

For stablecoin holders, the main takeaway is this: the U.S. is building a very specific framework where every step has legal significance. That reduces room for gray schemes, but increases requirements for services that work with tokens.

There is another consequence as well. The GENIUS Act has already established that reserves must be 1:1, and they may include cash, deposits, repo, and Treasury bills, notes, and bonds with a remaining maturity of up to 93 days. For the market, this could mean greater demand for short-term U.S. government securities. However, for users in Ukraine, something else is more practical: the value of stablecoins that operate under clear rules and are less likely to face blocking is increasing.

Another threshold is important for issuers. The state regime in the U.S. is available to those issuing no more than $10,000,000,000. For larger players, there is only one path: federal oversight. And from July 18, 2028, digital services in the U.S. will be prohibited from offering payment stablecoins unless they are issued by an authorized issuer or fall under an exception for foreign companies.

So in the coming months, the market will likely focus not on loud statements, but on how exactly Treasury writes the procedures. That is where the main risk is hidden. And for those already working with crypto assets into fiat, selling USDT TRC20 to Monobank may also come in handy if a quick exit into hryvnia is needed.

Frequently asked questions

When will the GENIUS Act take effect?

The provided text states January 18, 2027. That is the date when the law is expected to launch in full. Separate restrictions for services in the U.S. are scheduled for July 18, 2028.

Will foreign stablecoins be able to operate in the U.S.?

Yes, but not automatically. Treasury proposes allowing them only if there is comparable regulation in the country of origin, registration with the OCC, and user verification procedures are followed.

Why could exchanges be at risk?

Because the draft does not limit liability to the issuer alone. If an exchange or market maker knowingly helps with unlawful issuance or distribution, they may also be recognized as participants in the violation.

Treasury’s draft is not the final version yet. But it is already setting the tone for the entire stablecoin market.

This material is not financial advice. Cryptocurrency trading involves significant risks. Part of this text was prepared with the help of artificial intelligence based on public sources and reviewed by our editorial team.