U.S. Treasury Opens Public Comment on Stablecoin Rules Under GENIUS Act

Stablecoins, cryptocurrencies designed to maintain a consistent value relative to a fiat currency, like the U.S. dollar, have grown rapidly. While they promise efficiency and financial inclusion, they also pose risks including financial instability, illicit finance, and fragmented regulatory oversight. The GENIUS Act, recently passed by Congress, seeks to address these challenges by establishing clear, comprehensive rules for stablecoin issuers and related entities.

The Treasury’s RFC invites stakeholders, including financial institutions, payment system operators, academic experts, and the general public, to submit their views on how best to implement the GENIUS Act. The open comment process is designed to capture a wide range of perspectives, ensuring that eventual guidance reflects both industry expertise and public interest.

This particular RFC is narrowly focused on innovative methods to detect and deter illicit activity in digital assets, such as the use of artificial intelligence, blockchain monitoring tools, and digital identity verification. While the broader GENIUS Act itself addresses issues like risk management, consumer protection, oversight, and interoperability of stablecoins, Treasury’s immediate request for feedback is centered on strengthening safeguards against illegal financial activity within the stablecoin and digital asset ecosystem.

The request underscores the Treasury’s long-standing commitment to promoting responsible financial innovation while safeguarding the integrity and stability of the U.S. financial system. By opening this process to broad feedback, the Treasury is positioning the GENIUS Act as a landmark piece of legislation that will influence the digital asset industry for years to come.

Stablecoins have transitioned from niche tools in cryptocurrency trading to potential mainstream instruments used for payments, remittances, and everyday transactions. Their ability to offer near-instant settlement and low transaction costs has spurred growing interest from both the private sector and consumers.

At the same time, regulators have raised alarms about the inherent risks these assets pose. Concerns include financial instability, the possibility of sudden “runs” on stablecoins, illicit finance, and the lack of consistent regulatory oversight across jurisdictions.

In 2021, the President’s Working Group on Financial Markets, together with the FDIC and the OCC, issued a report calling for stablecoin issuers to be insured depository institutions and for custodial wallet providers to be subject to federal supervision. The report highlighted significant gaps in regulatory authority over digital assets, underscoring the potential risks to financial stability and consumer protection.

The GENIUS Act reflects Congress’s intent to build on these earlier recommendations. By codifying clear regulatory principles, the law closes gaps that previously allowed some stablecoins to operate without comprehensive oversight, while establishing a framework designed to safeguard innovation and stability in the U.S. financial system.

By issuing this RFC, the Treasury signals its commitment to transparency and soliciting broad input in rulemaking, key tenets of sound regulatory policy. Public participation ensures that the final guidance will be informed by practical insights from market operators, consumer advocates, technologists, academics, and others. Moreover, inclusive rulemaking helps avoid unintended consequences and industry pushback. Treasury’s approach aligns with its established practice of using notice-and-comment processes even for interpretive guidance, upholding principles of public engagement and clarity in regulatory endeavors.

Following the RFC, public comments will be reviewed by Treasury officials. The feedback may prompt revisions to the proposed guidance, affect how federal agencies implement the GENIUS Act, and influence future regulatory actions or legislation. The ultimate goal is to balance innovation in digital payments with rigorous safeguards, ensuring that stablecoins can fulfill their promise without exposing users or the financial system to undue risks.

As stablecoins evolve, the Treasury’s public comment process and eventual guidance could set a global standard for digital asset regulation. The outcome will likely inform not just U.S. policy, but international regulatory discussions and cooperation as well.