CryptoSlate
Treasury's proposed rules under the GENIUS Act would let US exchanges and other digital-asset service providers keep offering some foreign-issued payment stablecoins, but only if they can defend why they trusted the issuer's promise to comply with lawful US orders. The general regime is expected to take effect on January 18, 2027, with a stricter offering limit beginning July 18, 2028 that effectively gates non-US issuers out of the US market without equivalent supervision, OCC registration and US-held reserves. The proposal does not name any specific token, but USDT and other large foreign-issued stablecoins sit squarely in the crosshairs of the new compliance test.
Why it matters
The draft shifts the diligence burden from regulator to platform. A provider can rely on a foreign issuer's representation that it has the technology and intent to comply with lawful orders, including freezes, seizures and burns, only after conducting reasonable due diligence. Reliance is barred when the platform knows, has reason to know, or should know that the representation is false. Treasury is asking whether the final rule should require written representations, record retention, smart-contract review, or live testing of freeze and burn functions. Those questions remain open; comments on the Federal Register proposal close October 19, 2026.
Market impact
For US exchanges, the operational cost is the new variable. Any venue that lists, sells or custodies a foreign payment stablecoin for US users must now build a documented diligence file on the issuer, including confirmation it is not subject to a public GENIUS Act prohibition on secondary trading and that its home jurisdiction is not under comprehensive US sanctions or designated a primary money-laundering concern. The proposal carves out direct peer-to-peer transfers and self-custody wallet use, so the pressure is on centralized venues rather than individual holders. Until Treasury finalizes the standard, USDT's continued US availability is a moving target.
Frequently asked questions
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What does the GENIUS Act proposal require of US exchanges for foreign stablecoins?
Under the proposed rule, US exchanges and digital-asset service providers can continue offering foreign-issued payment stablecoins only if they can defend the diligence they conducted on the issuer's ability to comply with lawful US orders, including freezes and seizures.
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Does the proposal name USDT or any specific stablecoin?
No. The proposal does not identify qualifying tokens or decide whether USDT or any other named stablecoin can remain available in the US market. Compliance will be assessed by category and issuer-specific evidence.
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When does the new GENIUS regime take effect?
The general regime is expected to take effect on January 18, 2027, unless final implementing rules trigger an earlier date under the statute. A stricter offering limit begins July 18, 2028.
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What standards must a foreign issuer meet to stay accessible in the US?
Under Section 18, a foreign issuer would need supervision under a regime Treasury finds comparable, OCC registration, and sufficient reserves at a US financial institution for US customer liquidity, unless a reciprocal arrangement provides otherwise.
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Are individual self-custody users or peer-to-peer transfers affected?
No. The proposal exempts direct transfers between individuals without an intermediary, certain same-parent transfers between US and foreign accounts, and transactions through self-custody wallets. The compliance pressure falls on centralized platforms, not individual holders.
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