Analysis
The US Treasury's Financial Crimes Enforcement Network and Office of Foreign Assets Control issued a joint proposed rule on August 17 to implement the GENIUS Act's stablecoin licensing framework, according to The Block and CoinDesk. The rule specifies that only authorized issuers meeting GENIUS Act standards can issue payment stablecoins for the US market, and defines a stablecoin as 'issued in the US' if the issuer is located in the country, or if the coin is issued to someone located in the US -- a jurisdictional test broad enough to reach offshore issuers actively serving US users.
The GENIUS Act itself passed in 2025 as the first comprehensive federal stablecoin framework, ending years of stablecoins operating in a gray zone between banking law and securities law. This proposed rule is the implementation mechanism: mandatory issuer licensing takes effect January 18, 2027, and starting July 18, 2028, digital asset service providers generally won't be able to offer or sell payment stablecoins to US users unless the token comes from a licensed issuer. Foreign issuers get a narrow carve-out if they can show they reasonably believe recipients are outside the US, maintain controls to prevent US issuance, and don't market to US users.
“The rule lands directly on the two dominant stablecoin issuers' business models.”
The rule lands directly on the two dominant stablecoin issuers' business models. Circle, whose USDC circulation reached $73.3 billion in the most recent quarter, just renewed its revenue-sharing distribution deal with Coinbase through 2029 -- a structure this rule doesn't directly touch, since it governs issuance rather than distribution partnerships. Tether, the larger stablecoin by circulation and historically the less US-regulatory-compliant of the two, faces a harder path: its offshore structure is precisely the kind of arrangement the broad 'issued to a US person' test appears designed to capture.
Sixty days of public comment starting from Federal Register publication gives every affected issuer -- Circle, Tether, and any bank or fintech eyeing a stablecoin license under the new framework -- a formal channel to push back on specific provisions, particularly the extraterritorial reach of the 'issued in the US' definition, before Treasury finalizes the rule.
For fintech and crypto investors, the January 2027 licensing deadline is now a concrete underwriting date: any portfolio company building on stablecoin rails, or planning to issue one, needs a compliance plan built around that timeline rather than the more flexible gray-zone assumptions that governed stablecoin infrastructure bets through 2026. The risk cuts the other direction too -- a licensing regime this specific could become a moat for whichever issuers get licensed first, similar to how bank charters have historically advantaged early movers over legal ambiguity.
