The U.S. Treasury recently took a key step toward formalizing the "Guiding and Establishing a National Innovation Program for Stablecoins in the United States" (GENIUS Act) into a formal regulatory framework. The Treasury recently released an Advance Notice of Proposed Rulemaking (ANPRM) for public comment. The notice covers nearly every key aspect of the stablecoin ecosystem: from issuer qualifications and reserve disclosures to cross-border issuance, anti-money laundering, marketing restrictions, and tax gaps. The Treasury hopes to gain broad feedback from the industry, investors, and the public to lay a solid foundation for future formal regulations. An EY survey found that the passage of the GENIUS Act would significantly increase stablecoin adoption, with cross-border transaction volume expected to reach $4 trillion. The survey shows that since the Act's enactment, 13% of businesses have already used stablecoins, primarily for cross-border payments. Among companies not yet using stablecoins, 54% expect to adopt them within the next 6 to 12 months. Can USDT still exist in the United States? A core issue in the US Treasury's inquiry is who can issue payment stablecoins in the United States. According to the GENIUS Act, only licensed payment stablecoin issuers (PPSIs) may issue such stablecoins in the United States. The ANPRM also seeks public feedback on whether additional definitions are needed and whether certain safe harbor provisions should be established to allow exceptions for small-volume transactions. BeInCrypto feature writer Camila stated that once the GENIUS Act is signed into law, it will give stablecoin issuers 18 to 36 months to comply with its regulations. Failure to do so will result in a ban from operating in the US market. As the issuer of USDT, the world's largest stablecoin, Tether faces three options: comply with the regulations, exit the US market, or launch a separate, compliant stablecoin. Tether's stance is self-evident—it has officially announced its entry into the US market, launching USAT, a compliant, dollar-pegged stablecoin tailored specifically for the US market. Related to this are the regulations regarding foreign issuers. The GENIUS Act allows compliant foreign stablecoin issuers to offer services to customers in the United States, provided that the regulations in those countries can be deemed "consistent with the U.S. federal framework" and that the issuers possess the necessary compliance capabilities. The ANPRM is seeking public comment to clarify which foreign regulatory regimes offer this possibility and what factors could create friction between these regimes. Is the use of stablecoin yields compliant? The holding and disclosure of reserve assets is also a key focus. The GENIUS Act requires issuers to disclose monthly the composition of their reserves, including the type of reserve instruments, average maturity, custodial location, and liquidity arrangements. The ANPRM specifically asks, "Is there a need to further clarify the extent to which reserve assets need or should be held?" This reflects regulators' belief that current regulations require further clarification regarding the custody and risk management of reserve assets. Furthermore, the issue of extraterritorial application is explicitly raised. The GENIUS Act states that providing stablecoin services to individuals in the United States has extraterritorial effects, particularly for foreign payment stablecoin issuers and digital asset service providers. In its ANPRM, the Treasury Department asked how these transnational mechanisms should be specifically addressed in regulatory rules and how compliance and sanctions issues related to foreign entities' activities in the United States should be legally addressed. While the GENIUS Act provides for numerous regulatory obligations regarding stablecoins, including issuance, compliance, penalties, marketing, and reserves, it does not clarify how payment stablecoins should be classified for federal income tax purposes. This leaves uncertainty and room for interpretation by the Internal Revenue Service (IRS), which is widely believed in the industry to have implications for stablecoin issuance structures and user incentives. Among these topics, the ban on interest payments is particularly controversial. The bill prohibits issuers, but does not prohibit exchanges or other crypto service providers from paying interest to users for holding and storing stablecoins. The banking industry is concerned that cryptocurrency exchanges will attract deposits through such methods and has been lobbying for a change to this regulation. In addition, the Ministry of Finance also explicitly asked about "indirect payments" of interest in its consultation. For example, a cryptocurrency exchange like Coinbase pays a 4% "reward" for holding stablecoins, which is an indirect payment.
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