US Treasury Proposes New Rules for Offshore Stablecoin Issuers Under GENIUS Act

The US Treasury Department has unveiled a proposed rule aimed at enhancing oversight of offshore stablecoin issuers. This initiative, part of the enforcement of the Guiding and Establishing National Innovation for US Stablecoins Act (GENIUS Act), mandates that foreign digital asset service providers (DASPs) must meet stringent registration and compliance criteria to operate in the US.

Under the proposed regulations, which are set to take effect on January 18, 2027, payment stablecoin issuers will be classified as financial institutions under the Bank Secrecy Act. This classification subjects them to anti-money laundering (AML) obligations similar to those faced by traditional financial entities, including customer due diligence and suspicious activity reporting.

Foreign stablecoin issuers will face additional challenges, as they will need to register with the Office of the Comptroller of the Currency (OCC) and maintain their reserves in US financial institutions. Failure to comply will result in US-based exchanges being prohibited from listing their stablecoins.

Treasury Secretary Scott Bessent emphasized that the proposal is a national security measure designed to safeguard the financial system from potential risks. The public comment period for the proposed rule will remain open until June 9, 2026, allowing industry stakeholders to provide feedback before the regulations are finalized.

The GENIUS Act, signed into law on July 18, 2025, aims to create a comprehensive federal framework for payment stablecoins, addressing the previously fragmented regulatory landscape. The act outlines clear definitions and obligations for stablecoin issuers, which will significantly impact both domestic and foreign players in the market.

US-based stablecoin issuers are likely to benefit from these regulations, as they will gain a competitive advantage over foreign issuers that fail to meet the new compliance standards. However, foreign issuers will need to navigate the complexities of US regulatory requirements, which may deter some from entering the market.