Who Decides Tether's U.S. License? Treasury Opens 60-Day GENIUS Act Comment Period

Crypto News

The U.S. Treasury Department has opened a 60-day public comment period on proposed rules that would require any entity issuing a payment stablecoin in the United States — including foreign issuers such as Tether (USDT) — to hold a federal or state license. Monday's consultation is the first major rulemaking step under the Guiding and Establishing National Innovation for U.S. Stablecoins (GENIUS) Act, signed into law by President Donald Trump in 2025. The statute permits banks and other entities to issue stablecoins backed by reserve assets such as U.S. Treasuries and to publish monthly reserve disclosures. A reserve-backed payment stablecoin, as distinct from algorithmic stablecoins that depend on code-based mechanisms, would fall inside the licensing net. Treasury Secretary Scott Bessent said the department is moving quickly to implement the framework and wants stakeholder input on where the licensing line should be drawn.

The notice of proposed rulemaking makes the Treasury the latest agency to act on GENIUS Act implementation, following proposed rules from the Office of the Comptroller of the Currency, the Federal Deposit Insurance Corporation and the Federal Reserve Board. All four agencies, however, have passed the 120-day deadline that fell in July, leaving the possibility that the law takes effect on Jan. 18, 2027 — 18 months after enactment — without complete implementing guidance. The Treasury's proposed interpretation states that, once the GENIUS Act is in force, a person generally may not “issue a payment stablecoin in the United States” without a relevant license. Comments on the department's proposed rules will remain open for 60 days after the document appears in the Federal Register. The U.S.-U.K. Financial Regulatory Working Group also discussed GENIUS implementation during a July meeting in London.

Beyond the licensing question, the consultation asks 87 specific questions that probe how far the statute reaches outside U.S. borders. The proposal would bar digital asset service providers from offering or selling foreign payment stablecoins to U.S. customers unless the foreign issuer has the technical ability to comply with legal orders from U.S. authorities and any reciprocal arrangements between jurisdictions. It also asks when a stablecoin should be treated as “issued,” how offshore activity should be analyzed, and what due diligence providers must perform when they rely on a foreign issuer's compliance representations. The Treasury had scheduled the consultation document for official publication the day after the announcement, following an earlier advance notice issued in September.

Another part of the proposal attempts to fix two definitions that determine who is regulated. The Treasury wants to clarify what counts as “issuing a payment stablecoin in the United States” and what counts as “offering or selling” such a token, an altcoin designed to maintain a stable value, to a U.S. person. That second definition becomes critical on July 18, 2028, when a stricter prohibition is scheduled to take effect: digital asset service providers would generally be barred from offering or selling payment stablecoins to U.S. persons unless the token was issued by a licensed issuer. The department said the definitions are meant to give issuers a clear signal of the moment they must obtain a GENIUS Act license and the moment they enter the U.S. market.

The proposed rule also addresses how the new regime should interact with established securities law. The Treasury said it studied the “longstanding legal regimes” governing offers and sales of other financial instruments, but it concluded that applying traditional investment rules to payment stablecoins — reserve-backed assets distinct from algorithmic stablecoins — could frustrate the law's goal of enabling cross-border payment and settlement. Industry attention is likely to center on foreign issuers, with Tether singled out as the sector's largest player, and participants have until mid-October to submit comments. The one-year deadline for implementing the law expired last month without final rules in place, and the Treasury noted that new regulations normally include transition periods before binding the industry.

Taken together, these rulemaking strands leave one unresolved question: who gets to decide whether a stablecoin may be sold to Americans — the statute, the agency, or the issuer's home regulator. The primary authority, the GENIUS Act itself, anchors the answer only partly. It sets the expected effective date of Jan. 18, 2027, and a second threshold of July 18, 2028, for the broader distribution ban, while delegating the contested definitions in Section 3 to agency rulemaking. The statute's reserve-backed model also separates payment stablecoins from algorithmic stablecoins, whose supply mechanisms are set by code. The Treasury's notice of proposed rulemaking is a proposal, not a final rule, so it currently binds no issuer; if adopted, a final rule would bind U.S. and foreign issuers as well as digital asset service providers after the 60-day comment window closes and any transition period ends.