Catenaa, Monday, August 17, 2026- The US Treasury has proposed rules defining when stablecoin issuance crosses into US territory, opening a 60-day comment process before the GENIUS Act is expected to take effect in January.
The Aug. 17 proposal implements Section 3 of the Guiding and Establishing National Innovation for US Stablecoins Act, enacted on July 18, 2025.
Its reach goes beyond deciding which American companies need licenses.
Treasury is proposing a location-based test that could determine whether foreign stablecoin issuers, crypto exchanges and other service providers fall within US rules when tokens reach people inside the country.
The proposed rules are expected to become especially important for offshore stablecoin operators because the GENIUS Act was written to apply beyond US borders when stablecoins are offered or sold to people located in the United States.
Treasury proposes that a payment stablecoin would be considered issued in the United States when either the issuer is located in the country or the recipient is located there when issuance occurs.
That distinction matters for digital assets because a blockchain transaction itself may not have an obvious geographic location.
Treasury’s approach instead focuses on the people or entities involved.
Under the proposal, an overseas issuer sending a new stablecoin directly to someone located in the United States could therefore trigger US issuance rules even when the issuer, servers and other operations remain abroad.
By contrast, Treasury gives the example of a US resident receiving a foreign stablecoin while physically traveling outside the United States. In that scenario, the transaction would not automatically count as US issuance under the proposed test.
Treasury is seeking feedback on whether the location of issuers and recipients should determine jurisdiction or whether use of US banks, payment rails or infrastructure should also matter.
Beginning on the GENIUS Act’s expected effective date of Jan. 18, 2027, entities generally will not be allowed to issue payment stablecoins in the United States without authorization under an applicable federal or state regime.
Foreign-issued payment stablecoins face another test.
Digital asset service providers generally would be barred from making such tokens available unless the foreign issuer can comply with lawful US orders and applicable reciprocal arrangements.
Treasury proposes allowing certain foreign issuers to issue stablecoins directly into the US market when they satisfy GENIUS Act conditions. Those conditions include regulation under a foreign regime deemed comparable and registration with the Office of the Comptroller of the Currency.
A second deadline arrives on July 18, 2028.
From that date, digital asset service providers generally cannot offer or sell payment stablecoins to people in the United States unless those tokens come from an authorized issuer.
Treasury’s 87-page proposal also shows how seemingly routine crypto practices could fall inside the new regime.
One example involves an issuer minting and airdropping a payment stablecoin at no cost to a US resident physically located inside the country.
Treasury says that would count as issuance in the United States because the recipient gains the ability to use, transfer or redeem the token.
The proposal also considers exchange involvement.
An exchange coordinating with an issuer to list newly created stablecoins would not automatically become the issuer merely because it lists them. However, Treasury says the exchange could, depending on the circumstances, be treated as participating in the issuance or offering and selling the tokens.
Knowing participation in unlawful stablecoin issuance can carry criminal penalties under the GENIUS Act of up to $1 million for each violation, imprisonment for up to five years, or both.
Treasury is also asking how the rules should treat stablecoins moving between blockchains.
The agency seeks comment on whether lock-and-mint, burn-and-mint and other cross-chain bridge structures could amount to new issuance. It also asks when bridge operators, custodians or intermediaries should be treated as issuers.
Wrapped stablecoins and tokenized claims referencing an underlying stablecoin are also under examination. Treasury has not made final determinations on those questions.
That part of the proposal could carry wide consequences for multichain stablecoins, where representations of one asset circulate across several blockchain networks.
Treasury is proposing protections for foreign issuers that take reasonable measures to avoid issuing stablecoins to US-located customers.
To qualify, an overseas issuer would generally need policies and controls designed to prevent US issuance and would need a reasonable basis for believing recipients are outside the country.
The proposal also says issuers seeking that treatment should not advertise or solicit customers in ways aimed at the US market.
For service providers, Treasury is considering location checks that could include customer identification, account information, geographic restrictions, device or network-location tools and transaction monitoring.
Treasury is also asking whether a different offshore framework modeled more closely on existing securities rules would work better.
Catenaa View
The most consequential part of Treasury’s proposal may be its answer to a basic problem: Where does a borderless stablecoin transaction legally happen?
Treasury’s proposed answer is largely to follow the parties rather than the blockchain.
That could make the physical or corporate location of an issuer and recipient more important than where token infrastructure operates.
It also means offshore issuers may not be insulated from US rules merely by keeping corporate operations outside America.
A foreign stablecoin that is marketed, issued or made available to people inside the United States can still enter the GENIUS Act’s regulatory perimeter.
For exchanges and wallet operators, the proposal could turn geolocation, customer checks and token-distribution controls into a central part of stablecoin compliance.
For issuers, airdrops, cross-chain transfers and direct distributions may require closer examination once the rules are finalized.
What Comes Next
Treasury will accept comments for 60 days after the proposal appears in the Federal Register. The department said responses will become part of the public record.
The proposal follows Treasury’s September 2025 advance rulemaking notice and forms part of a wider federal effort to implement the GENIUS Act before its expected January 2027 effective date.
The final wording could determine how deeply US stablecoin rules reach into offshore markets and how exchanges distribute foreign-issued dollar tokens to American customers.
President Donald Trump signed the GENIUS Act into law on July 18, 2025, creating the first US federal statutory regime dedicated to payment stablecoins. The law establishes licensing, reserve, compliance and supervisory requirements for issuers while setting rules for foreign stablecoins entering US markets. Federal agencies have spent much of 2026 developing implementing regulations covering areas including issuer supervision, anti-money laundering controls and customer identification. Treasury’s latest proposal focuses specifically on issuance, offers and sales under Section 3 and contains dozens of questions seeking industry feedback before final rules are issued.
