U.S. Treasury Proposes GENIUS Act Stablecoin Rules

The U.S. Department of the Treasury has officially proposed federal definitions for stablecoin issuers, marking the first major regulatory milestone in implementing the Guiding and Establishing National Innovation for U.S. Stablecoins (GENIUS) Act [3]. This regulatory push coincides with a shift in commercial adoption, where more than 100,000 merchants are now receiving stablecoin payments through integrated payment networks without needing to interact directly with crypto-native infrastructure [1].

Regulatory progress and commercial integration

The Treasury’s proposal aims to establish core definitions for stablecoin issuers and jurisdictional boundaries, a process that missed its initial one-year deadline last month [3]. Treasury Secretary Scott Bessent stated that the administration is working to provide regulatory certainty to cement the U.S. dollar’s role as the global reserve currency [3]. While the industry has 60 days to comment on the proposal, the effective date for the underlying law is targeted for January 18, though final rules may require a transition period for compliance [3].

Simultaneously, the infrastructure supporting these assets is expanding into traditional banking. BNY has expanded its relationship with Circle, making USDC the first stablecoin supported on its Digital Asset Custody program [2]. This integration allows institutional clients to manage stablecoin lifecycles within existing financial frameworks, bridging the gap between traditional and digital asset custody [2].

The shift toward invisible payments

As regulation advances, payment providers are focusing on "invisible" adoption, where stablecoins function as a backend rail for traditional commerce. Rain, which recently raised $58 million in a Series B funding round to reach a total of $88.5 million in funding, is facilitating payments that settle through Visa’s network in approximately three days [1].

A key feature of this model is the implementation of traditional consumer protections, such as chargebacks and refund mechanisms, within the stablecoin payment flow [1]. By mirroring the risk-shift frameworks used by card networks, providers aim to increase adoption by ensuring the merchant experience remains identical to standard card processing [1]. This approach contrasts with the ongoing legislative struggle over the Digital Asset Market Clarity Act, which remains stalled following banking industry lobbying against stablecoin yield programs [4].

What to watch

• Public Comment Period: The Treasury’s 60-day window for industry feedback on the GENIUS Act definitions, with a response deadline set for mid-October [3].
• Legislative Status: The potential revival of the Digital Asset Market Clarity Act, which currently faces hurdles regarding its treatment of stablecoin rewards and yield programs [4].
• Institutional Custody: Further expansion of BNY’s digital asset program to include additional stablecoin issuers beyond the current USDC and Ripple-related reserves [2].

The industry now faces a dual-track evolution: while regulators work to finalize the legal framework for stablecoin issuers, private infrastructure providers are successfully embedding these assets into existing payment rails to bypass the need for merchant-side crypto expertise. Whether these invisible payment systems will be impacted by the final GENIUS Act rules remains the central uncertainty for the coming months.