Treasury proposes the first GENIUS Act rules on who may issue and sell stablecoins
A Treasury proposal would add a new 12 CFR part 1523 setting out how the GENIUS Act's bans on unpermitted payment stablecoin issuance, offer and sale work in practice. Comments are due 19 October 2026.
The GENIUS Act was enacted on 18 July 2025. It set up a federal framework for payment stablecoins, and at its centre is a simple prohibition: only a "permitted payment stablecoin issuer" may issue one in the United States. On 18 August 2026 the Treasury Department published a proposed rule (91 FR 53368) explaining how it reads that prohibition and the related limits on offering and selling stablecoins.
Comments are due by 19 October 2026.
What the proposal covers
The proposal would add a new part 1523 to title 12 of the Code of Federal Regulations, titled "Payment Stablecoin Offer, Sale, and Issuance." It deals with three provisions of the Act.
Section 3(a) makes it unlawful for anyone other than a permitted payment stablecoin issuer to issue a payment stablecoin in the United States. Section 3(b)(1) stops digital asset service providers from offering or selling a payment stablecoin to a person in the United States unless a permitted issuer issued it, and that one applies "beginning on July 18, 2028," three years after enactment. Section 3(b)(2) restricts offers and sales of stablecoins from foreign issuers that lack "the technological capability to comply," and applies from the Act's effective date.
Much of the proposal is definitions, and they matter more than they look. "Issue" would mean "the first transfer of a payment stablecoin by the issuer, whether directly or indirectly, including by crediting an account." An individual counts as located in the United States when "physically present in the United States," with a carve-out for non-residents who are only here temporarily. An entity counts if it is organized under U.S. or state law, or has its principal place of business here.
There are exceptions. The Act exempts "the direct transfer of digital assets between two individuals acting on their own behalf." The proposal also sets out two safe harbors: one for pending applications (proposed § 1523.4(a)) and a limited one for "unusual and exigent circumstances" (proposed § 1523.4(b)). Separately, the Act lets regulators waive requirements, for up to 12 months, for "subsidiaries of insured depository institutions and Federal qualified payment stablecoin issuers with a pending application on the Act's effective date."
The penalty for knowing participation in a section 3(a) violation is "a fine of not more than $1 million for each violation," up to five years in prison, or both.
Where banks and credit unions come in
Most of the text is aimed at issuers and digital asset service providers. Two details stand out for depository institutions. The pending application waiver is written with bank subsidiaries in mind. And Treasury asks, in its question 5, whether a token redeemable only in credit union shares should count as a payment stablecoin. The proposal leaves it open.
What it could mean
For most community banks and credit unions, we think this proposal touches the edges of what you already do. Few small institutions plan to issue a stablecoin themselves. More of them will run into stablecoins sideways: a fintech partner that wants to "credit an account" with tokens, a commercial customer that holds them, or a core provider pitching a tokenized deposit product.
The definition of "issue" is the part we'd read twice. Because it reaches the first transfer "including by crediting an account," a partnership arrangement where your institution's systems are the ones doing the crediting could look closer to issuance than anyone intended. If you have a fintech program that touches digital assets, it's worth asking your partner how they read that sentence.
Credit unions should watch question 5. A share-redeemable token is exactly the sort of product a credit union service organization might build, and whether it falls inside the definition would change the whole analysis. If you have a view, the comment period is the place for it.
The 2028 date for digital asset service providers feels far off. Vendor contracts signed this year may well still be running then, so renewal season is a sensible time to ask vendors about their stablecoin plans.