The United States Department of the Treasury has proposed new rules for the implementation of the GENIUS Act that would require exchanges and other digital asset service providers to conduct due diligence on foreign stablecoin issuers before making these tokens available to customers in the country. The proposal was published in the Federal Register on Tuesday (18).
Under the proposed model, a platform may rely on a foreign issuer's declaration that it has the technological capacity and intention to comply with US legal orders, but only after carrying out checks considered reasonable. The rule is still in public consultation and may change before the final version.
The text does not approve or prohibit specific stablecoins and does not determine whether USDT or any other foreign token will remain available in the American market.
Exchanges will be responsible for the verification
The GENIUS Act determines that digital asset service providers may not make available in the US a stablecoin issued abroad if the issuer does not have the technological capacity to comply with legal orders and reciprocity agreements provided for in the legislation.
The Treasury proposal defines how platforms may evaluate this requirement. Exchanges, custodians, and other businesses classified as digital asset service providers may accept a declaration from the issuer, provided they conduct reasonable due diligence on the information presented.
This analysis must include, at a minimum, confirmation that the Treasury has not imposed on the issuer a public prohibition on secondary trading in the United States. The absence of such a restriction, however, will not be sufficient by itself.
Companies must also consider other reasonably available information about the issuer. A platform may not rely on the declaration when it knows, has reason to know, or should know that it is false or that the issuer cannot or does not intend to comply with a legal order.
In practice, the proposal assigns to the service provider the responsibility of assessing whether sufficient evidence exists to justify offering the foreign stablecoin to its clients.
Treasury still discusses how far the audit should go
The exact level of verification required of platforms has not yet been defined.
The Treasury has opened a consultation on the possibility of making the process more prescriptive, including requirements that issuer declarations be made in writing, updated periodically, and kept on record by companies.
The agency also asks whether exchanges should examine the smart contracts of stablecoins and verify functions capable of freezing, seizing, or destroying tokens in compliance with legal orders.
These measures appear as questions submitted to public consultation and do not constitute obligations defined in the current proposal. Comments on the regulation may be submitted until October 19, 2026.
Rules become more stringent in 2028
The restriction related to the ability of foreign issuers to comply with legal orders is expected to accompany the entry into force of the GENIUS Act, currently expected for January 18, 2027.
A second limit takes effect on July 18, 2028. As of that date, digital asset service providers may not offer or sell stablecoins to persons in the United States, except when the tokens are issued by authorized issuers in the country or by foreign issuers that qualify for the exception provided in Section 18 of the law.
To qualify for this exception, the foreign issuer must be subject to a regulatory regime deemed comparable by the Treasury and registered with the Office of the Comptroller of the Currency (OCC).
The legislation also requires reserves held at a US financial institution in sufficient volume to meet the liquidity demand of American customers, unless there is a reciprocity agreement. The issuer's country of origin may not be subject to comprehensive US economic sanctions or be considered by the Treasury a jurisdiction of primary money-laundering concern.
Meeting these criteria, however, does not eliminate the requirement related to legal orders. The Treasury states that foreign issuers covered by Section 18 remain subject to the capacity and compliance obligations set forth in the GENIUS Act.
Rule does not prevent all transfers
The legislation provides exceptions for certain transactions that do not go through a digital asset service provider.
These include direct and lawful transfers between two persons acting on their own behalf, movements between accounts in the US and abroad belonging to the same individual and offered by the same parent company, as well as operations carried out through self-hosted software or hardware wallets.
The proposal, therefore, does not establish a general prohibition on the possession or direct transfer of stablecoins issued outside the United States.
Until the completion of the regulation, the Treasury will still need to define the final due diligence standard and other implementation details. The current proposal also does not provide a list of foreign stablecoins approved for circulation in the American market.
