Treasury Proposes GENIUS Act Rules: Who Can Issue and Sell Stablecoins in the US
The US Treasury Department released proposed rules on August 17, 2026 that spell out who may legally issue, offer, or sell payment stablecoins inside the United States. The notice targets Section 3 of the Guiding and Establishing National Innovation for US Stablecoins Act (GENIUS Act) and is the most concrete regulatory signal yet about how the federal stablecoin licensing regime will operate in practice. For accounting firms, auditors, and CFOs whose clients touch stablecoins in any capacity, the timeline is tight and the penalties are serious.
What the GENIUS Act Actually Says About Issuance
The core prohibition and who it covers
Section 3 of the GENIUS Act makes it unlawful for any person other than a "permitted payment stablecoin issuer" to issue a payment stablecoin in the United States. The statute is deliberately broad. It covers issuance, offer, sale, and any other act of making a payment stablecoin available. Treasury's proposed rules are designed to give the industry workable definitions of each of those terms so that firms know precisely when they need a GENIUS license and when they do not.
The enforcement stakes are not abstract. Violations carry fines of up to $1 million per incident and criminal penalties of up to five years in prison. That combination of civil and criminal liability puts stablecoin compliance firmly in the same conversation as Bank Secrecy Act obligations, not just a checkbox for product teams.
Effective dates firms must calendar now
Two dates govern the rollout:
- January 18, 2027: The GENIUS Act's expected effective date. From this point, no person may issue a payment stablecoin in the United States without holding an appropriate federal or state license.
- July 18, 2028: Digital asset service providers (DASPs) may not offer or sell any payment stablecoin to persons "in the United States" unless the stablecoin is issued by a licensed issuer. This second date extends the licensing requirement downstream to distribution and sales infrastructure.
The gap between the two dates is intentional. It gives the market roughly eighteen months after the issuance prohibition kicks in before the full sales-channel restriction applies. But that window is shorter than it looks when you factor in licensing application timelines at both the federal and state levels.
The Extraterritorial Reach: Foreign Issuers and US Persons
When overseas issuance becomes a US problem
One of the most consequential elements of the proposed rules is the explicit extraterritorial scope. Section 3 "is intended to have extraterritorial effect if conduct involves the offer or sale of a payment stablecoin to a person located in the United States." In plain terms, a stablecoin issuer domiciled outside the US is still caught by the GENIUS Act if it is selling into the US market.
For digital asset service providers handling foreign-issued stablecoins, Treasury's proposed framework adds a specific compliance condition: a DASP generally cannot offer, sell, or otherwise make available a foreign-issued payment stablecoin unless the foreign issuer has the technological capability to comply with any lawful US order and any reciprocal arrangement between the US and the issuer's home jurisdiction. This is a due-diligence obligation that sits squarely on the service provider, not just the issuer.
Practical read-through for accounting and audit teams
For an accounting firm advising a DASP client that currently lists foreign stablecoins, this means onboarding or re-papering those issuer relationships before July 2028. The audit trail will need to show that the firm assessed each foreign issuer's technological compliance capability, documented the reciprocal-arrangement status of the issuer's home jurisdiction, and reached a reasoned conclusion. That is a new category of evidence for engagement files.
CFOs at companies that settle intercompany transactions, payroll, or vendor payments in foreign stablecoins face an analogous question: does the stablecoin they are using qualify under the proposed framework, and if not, what is the transition path? Switching settlement rails takes time, and the January 2027 date is less than six months away from the date of this notice.
Treasury's Proposed Definitions: Why the Language Matters
Defining "issue in the United States"
A core function of Treasury's notice is to define what it means to "issue a payment stablecoin in the United States." This definition determines when the licensing obligation attaches. Without it, issuers operating across multiple jurisdictions, or through decentralised protocols, face genuine uncertainty about whether they need a GENIUS license or not. The proposed rule aims to resolve that ambiguity and give industry a clear threshold.
Defining "offer or sell" to a US person
The second definitional pillar addresses when and how payment stablecoins can be offered or sold in US markets. This mirrors the approach securities regulators have used for decades to determine whether a foreign offering triggers US registration requirements. Treasury is applying analogous logic to stablecoins, which signals that the compliance infrastructure built around securities offerings may serve as a useful template, even if the licensing authority differs.
Firms that already have robust know-your-customer and geolocation screening for securities purposes will have a head start. Those that don't will need to build it, and that build needs to be captured and tested in the systems that a competent crypto compliance reporting practice would review.
The Comment Period: A Window Accounting Firms Should Use
How to engage before the window closes
Treasury is accepting public comments for 60 days from the notice's publication in the Federal Register. This is not a formality. The proposed rules build on an earlier advance notice of proposed rulemaking that Treasury issued on GENIUS Act implementation, as well as separate guidance on detecting illicit activity published last August. Comments submitted now will directly shape the final definitions that govern licensing and sales restrictions.
Accounting firms that serve stablecoin issuers, DASPs, or corporate treasury teams using stablecoins have standing to submit technical comments on definitional ambiguities. Practitioners who have reviewed the proposed definitions and identified edge cases (for instance, how a protocol-level mint relates to "issuance," or how smart-contract-based distribution interacts with "offer or sale") should put those observations in writing and submit them to regulations.gov before the deadline.
Treasury Secretary Scott Bessent framed the initiative in terms of dollar hegemony and US competitiveness: "Treasury welcomes input from stakeholders as we work to provide the regulatory certainty businesses need to innovate and grow in America, cement the role of the US dollar as the world's reserve currency, and keep America the crypto capital of the world." That framing suggests Treasury is receptive to industry input that helps it write workable rules, not just restrictive ones.
Accounting and Tax Implications for B2B Practitioners
Licensing status as a financial reporting consideration
Once the GENIUS Act framework is live, a stablecoin issuer's licensing status becomes a material fact for financial reporting purposes. An issuer that holds stablecoins on its balance sheet, or that records stablecoin-denominated receivables, needs to disclose whether the instrument it is holding is issued by a permitted payment stablecoin issuer. Auditors will need to assess that status as part of the going-concern and risk-disclosure review, particularly for any client whose stablecoin holdings are material.
The penalty exposure compounds this. A client facing potential fines of up to $1 million per violation, or criminal liability for key personnel, is a client with a contingent liability that may require disclosure under ASC 450 (contingencies). Auditors should be asking whether management has assessed compliance with the January 2027 deadline and whether any exposure has been quantified.
For a deeper look at how stablecoin accounting standards are evolving alongside these licensing rules, see how stablecoins will be accounted for and assured under ICAEW guidance, which sets out the emerging consensus on classification and assurance.
KYC, AML, and the due-diligence paper trail
The foreign-issuer compliance condition in the proposed rules creates a new layer of KYC obligation that sits on DASPs. Accounting firms advising DASPs should treat this as a BSA/AML program enhancement, not a product decision. The relevant questions for an AML gap analysis include: Does the DASP have a documented process for assessing foreign issuers' technological compliance capability? Does that process include a periodic re-assessment as reciprocal arrangements between the US and other jurisdictions evolve? Is the output of that assessment recorded in a format that survives a regulatory examination?
For context on how a parallel OCC licensing development is reshaping stablecoin-related compliance obligations, the analysis of what the World Liberty Trust OCC charter means for accounting firms is directly relevant.
Digital asset accounting software and the compliance data layer
Firms using crypto bookkeeping software or digital asset accounting software to manage client ledgers that include stablecoin positions will need those systems to capture issuer licensing status as a data field from January 2027 onward. A stablecoin denominated in USD is not the same as a GENIUS-licensed USD stablecoin for reporting and risk purposes. The distinction will matter for audit evidence, for tax basis calculations if a non-compliant stablecoin is treated as a taxable disposal, and for AML screening if a non-permitted instrument is flagged as a potential sanctions or illicit-finance risk.
Workflow reviews should also account for the July 2028 sales-channel restriction. Any client process that routes client funds through stablecoin rails, whether for payments, collateral, or settlement, needs to be assessed against the DASP distribution rules, not just the issuer licensing rules.
Frequently Asked Questions
When does the GENIUS Act licensing requirement take effect for issuers?
The GENIUS Act's expected effective date is January 18, 2027. From that date, no person may issue a payment stablecoin in the United States without holding a federal or state GENIUS license. Applications and state licensing processes will need to be initiated well in advance of that date.
Does the GENIUS Act apply to foreign stablecoin issuers?
Yes. Section 3 is explicitly intended to have extraterritorial effect where the conduct involves the offer or sale of a payment stablecoin to a person located in the United States. A foreign issuer selling into the US market is caught by the regime regardless of where it is incorporated or domiciled.
What are the penalties for non-compliance?
Violations carry civil fines of up to $1 million per incident and criminal penalties of up to five years in prison. Given that these penalties can attach to individuals, not just entities, accounting firms should ensure that key personnel at issuer and DASP clients understand the personal liability dimension.
How does the 60-day comment period work?
Treasury is accepting written comments for 60 days from the notice's publication in the Federal Register. Comments are submitted via regulations.gov and are publicly viewable. Accounting firms, trade associations, and individual practitioners can all submit comments. The submissions will inform the final rulemaking.
What should CFOs do right now to prepare?
CFOs whose organisations use stablecoins for settlement, payroll, or treasury management should immediately identify which stablecoins they hold or transact in and whether the issuers are on a path to GENIUS licensing. They should also map any third-party DASPs or payment rails in their stack and confirm those providers are assessing the July 2028 sales-channel restriction. If there is material exposure, a contingent-liability disclosure analysis under ASC 450 should begin now.
Source: Accounting Today