The U.S. Department of the Treasury has unveiled its latest proposed rulemaking to implement Section 3 of the GENIUS Act, setting clear licensing deadlines and new compliance duties for stablecoin issuers and digital asset platforms. Issuers must be federally or state-licensed by January 18, 2027, and from July 18, 2028, exchanges and other service providers will be barred from offering or selling unlicensed stablecoins to U.S. persons.

What the GENIUS Act Is and Why It Matters

The Guiding and Establishing National Innovation for U.S. Stablecoins (GENIUS) Act, signed into law on July 18, 2025, created the first comprehensive federal framework for payment stablecoins. Section 3 of the Act prohibits the issuance, offer, or sale of payment stablecoins in the United States by anyone who is not a licensed or permitted issuer, with limited exceptions for qualifying foreign issuers. Treasury’s August 17, 2026 Notice of Proposed Rulemaking (NPRM) defines key terms and sets the operational guardrails that will determine which stablecoins can legally circulate in the U.S. market.

Key Deadlines and Licensing Requirements

1. January 18, 2027: It becomes unlawful to issue a payment stablecoin in the U.S. without a federal or state license, unless the issuer is foreign and meets Treasury’s comparability and registration conditions.

2. July 18, 2028: Digital asset service providers cannot offer or sell any payment stablecoin to U.S. persons unless it was issued by a permitted or qualifying foreign issuer.

These dates create a two-stage compliance runway: first for issuers to secure authorization, then for platforms to delist or restrict access to noncompliant tokens.

New Duties for Exchanges and Platforms

Under the proposal, platforms listing offshore stablecoins can no longer rely solely on an issuer’s self-certification. Treasury requires “reasonable due diligence” before a platform can depend on an issuer’s representation that it will comply with U.S. lawful orders. At a minimum, platforms must confirm that no secondary-trading ban is in force against the issuer. This shifts some regulatory burden onto exchanges, pushing them to vet foreign issuers more rigorously before listing or continuing to support their tokens for U.S. users.

How Treasury Defines “Issued in the U.S.”

The proposal adopts a conduct-based test rather than importing securities-law concepts. A foreign issuer is generally not considered to have “issued” in the U.S. if it:

1. Reasonably believes its buyers are located outside the U.S.,

2. Maintains real operational controls (not just paper policies) to prevent U.S. sales, and

3. Does not market to U.S. persons.

For individuals, Treasury looks at physical presence; for companies, it considers U.S. incorporation or principal place of business at the time of issuance.

Penalties and Enforcement

Knowing participation in an unlawful issuance, including market-making, white-labeling, or coordinating minting, can carry fines up to $1 million and up to five years in prison per violation. This creates significant personal and corporate liability for actors who facilitate unlicensed stablecoin activity after the 2027 and 2028 deadlines.

Public Comment and Next Steps

Treasury has opened a 60-day public comment period following the NPRM’s publication in the Federal Register on August 18, 2026. Stakeholders can submit feedback on the proposed definitions, due diligence standards, and foreign-issuer treatment before final rules are adopted. Treasury Secretary Scott Bessent framed the rulemaking as part of an effort to keep the U.S. “the crypto capital of the world,” signaling that clarity, not restriction, is the stated goal.