Rulemaking proposed by the Department of the Treasury on April 3, 2026 furthers efforts to implement the Guiding and Establishing National Innovation for U.S. Stablecoins (GENIUS) Act at a rapid clip. The GENIUS Act both outlines a federal regulatory framework governing the authorization and oversight of permitted payment stablecoin issuers and contemplates the development of state-level frameworks that are “substantially similar” to the federal framework.
We have previously detailed proposed rules by the Office of the Comptroller of the Currency (OCC) to implement the federal framework. Treasury’s proposed rules outline broad-based principles for assessing whether state-level frameworks qualify as substantially similar to this emerging federal framework and address:
- What constitutes the federal framework state frameworks will be assessed against.
- What analysis the federal Stablecoin Certification Review Committee should conduct when approving state frameworks.
- In what ways, and for which topics, state laws may deviate from the federal framework and from each other.
Treasury’s proposal comes at a time when states like Florida and Georgia have already enacted frameworks (specifically, licensing laws) designed to meet the GENIUS Act’s substantial similarity standard, and others are considering them.
Comments on Treasury’s proposal are due by June 2, 2026.
Background
A key feature of the GENIUS Act is its allocation of regulatory authority based on payment stablecoin issuer type and size. Section 4(a) of the GENIUS Act allows issuers that are not subsidiaries of insured depository institutions and have less than $10 billion in outstanding stablecoin issuance to opt for state regulation so long as the state framework is substantially similar to the federal framework. State issuers that cross the $10 billion threshold must either be transitioned to federal regulation or request a waiver to remain under state regulation.
Importantly, an issuer approved under a state’s GENIUS Act–compliant framework can carry out activities that are permissible for issuers under the federal framework and under the state’s framework (if different than the federal framework) in other states without the need for additional licensing in the other states. This allows issuers to conduct a nationwide issuance business by selecting a single state’s regulatory framework that best suits their issuance activities and operations, rather than pursuing multistate licensing or seeking OCC approval as a federally authorized issuer. GENIUS Act preemption, however, is activity-specific and generally preserves host-state authority over activities outside the scope of payment stablecoin issuance.
Defining the Federal Framework
Section 4(c) of the GENIUS Act requires Treasury to propose “broad-based principles for determining whether a State-level regulatory regime is substantially similar to the Federal regulatory framework” under the Act.
The principles would define the federal framework for this purpose as the GENIUS Act together with (1) any interpretations of the Act, or regulations issued by the OCC and published in the Federal Register; (2) any regulations, interpretations, or orders issued by Treasury covering anti-money laundering (AML) and sanctions requirements of the Act; and (3) any interpretations, regulations, or orders issued by the Board of Governors of the Federal Reserve System covering the Act’s prohibitions on tying. This makes clear that the federal framework is not limited to statutory text, but instead encompasses the evolving body of federal implementing rules and supervisory interpretations.
The Stablecoin Certification Review Committee
Treasury’s proposal includes discussion of the federal Stablecoin Certification Review Committee (to be chaired by the Secretary of the Treasury and include representation by the Board and the Federal Deposit Insurance Corporation). Under the Act, this committee will approve a state framework as substantially similar to the federal framework if the state framework “meets or exceeds” the standards and requirements described in Section 4(a) of the GENIUS Act.
Treasury notes the distinction between these two assessment standards and interprets them as referring to overlapping, but different, subsets of the Act: namely, while the committee’s review is limited to the standards and requirements of Section 4(a), the state framework must take into account the entire “Federal regulatory framework” before a state can certify to the committee that its law is substantially similar.
Uniform vs. State-Calibrated Requirements
The principles would distinguish between “uniform” and “state-calibrated” requirements under the Act. Uniform requirements are those standards that must be consistent across federal and state regimes, including the Act’s requirement for reserves and the monthly reporting of reserve composition, AML and sanctions requirements, and the prohibition on the payment of interest or yield on payment stablecoins. Treasury indicates that deviation from uniform requirements would generally preclude a finding of substantial similarity. State-calibrated requirements are those that states have discretion to develop their own frameworks for, including timely redemption requirements, capital, liquidity, reserve asset diversification, more general risk-management standards, and additional permitted payment stablecoin activities.
It is important to note that the principles, consistent with the GENIUS Act, limit additional permitted payment stablecoin activities for issuers to those incidental to the primary payment stablecoin activities allowed by the Act: issuance and redemption of stablecoins, managing reserves, and custodial and safekeeping services. The principles would also require state frameworks to address transition to federal oversight, licensing, supervision and enforcement, custody, and insolvency proceedings, reflecting Treasury’s view that substantial similarity requires end-to-end life cycle regulation, not solely issuance-stage requirements.
Under the principles, both the uniform requirements and state-calibrated requirements of a state’s framework must “meet or exceed” the requirements of the federal framework for the state framework to be deemed substantially similar to the federal framework. This means uniform requirements must be consistent with the federal regulatory framework in all substantive respects and state-calibrated requirements must be consistent with the applicable provisions of the GENIUS Act and lead to regulatory outcomes that are at least as rigorous and protective as the federal framework. Finally, any additional restrictions or requirements that state frameworks may impose on issuers may not conflict with any provision of the GENIUS Act or with other applicable federal law.
Conclusion
The GENIUS Act is an ambitious and historic piece of legislation, and we are in the early stages of its implementation. The Act’s unique features include the option for state regulators to authorize issuers with nationwide issuance capabilities, provided the state framework is substantially similar to the Act’s federal regulatory framework. While state laws satisfying this standard may appear to align closely in substance with the GENIUS Act, states could use the discretion afforded to them under the GENIUS Act and articulated in the principles to differentiate their frameworks through rules, supervisory practices, and interpretive guidance.
This dynamic is likely to give rise to increasing competition among states seeking to attract payment stablecoin issuers, with potential benefits for merchants, consumers, and others seeking to leverage stablecoins, while presenting both incumbents and new entrants with meaningful strategic choices. Against this backdrop, issuers should carefully consider federal versus state qualification, including both initial licensing requirements and the durability of a state’s substantially similar certification as federal standards and supervisory expectations continue to evolve.
If you have any questions, or would like additional information, please contact one of the attorneys on our Financial Services team.
You can subscribe to future advisories and other Alston & Bird publications by completing our publications subscription form.