Nine months after the GENIUS Act became law, the U.S. Treasury has published its first concrete proposal for how that law will actually work. The Notice of Proposed Rulemaking, released on April 1, 2026, runs 87 pages and addresses what may be the single most consequential implementation question in stablecoin regulation: when does a state's oversight framework qualify as "substantially similar" to the federal standard?
The answer to that question determines whether stablecoin issuers with less than $10 billion in outstanding supply can stay under state supervision or get pushed into federal oversight. For companies like Circle and Tether, and for the dozens of smaller issuers building on stablecoins right now, this is the document that shapes their compliance roadmap through 2027 and beyond.
The $10 Billion Line
The GENIUS Act, signed into law in July 2025, created a dual-track regulatory system for payment stablecoins. Issuers below $10 billion in consolidated outstanding issuance can choose to operate under state-level regulation, provided their state's framework passes Treasury's similarity test. Above $10 billion, federal oversight becomes mandatory.
The practical effect: Tether (USDT) and Circle (USDC), both well above the threshold, will fall under direct federal supervision through the Office of the Comptroller of the Currency. Smaller issuers, including the growing wave of bank-issued and fintech-backed stablecoins, may be able to operate under lighter state regimes, as long as those regimes clear the bar.
Treasury's draft intentionally avoids a rigid checklist. Instead, it lays out principles for evaluating state frameworks across four areas: reserve requirements, disclosure obligations, custody standards, and supervisory authority. The agency wants state regulators to "meet or exceed" federal standards in each category, but leaves room for different approaches to getting there.
Why the Similarity Test Matters More Than the Threshold
The $10 billion cutoff is clear. The similarity test is not, and that is by design. As legal analysis from the DC Bar noted, "Since the act leaves room for states to experiment with regulatory models, there will inevitably be tension."
That tension is real. States like Wyoming and New York have already built digital asset frameworks that differ significantly in scope and rigor. Wyoming's special-purpose depository institution charter is lighter on consumer protection requirements. New York's BitLicense regime is one of the most demanding in the country. Whether either framework qualifies as "substantially similar" under Treasury's proposed standard will determine whether issuers flock to specific states or consolidate under federal charters.
The stakes extend beyond compliance costs. The proposed rules also address insolvency treatment, requiring that stablecoin holders receive priority in bankruptcy scenarios. This mirrors protections in traditional banking and represents a significant upgrade from the current patchwork, where a stablecoin issuer's bankruptcy could leave holders behind secured creditors.
The OCC Steps In as Primary Regulator
Alongside Treasury's NPRM, the OCC released its own proposed rulemaking covering permitted stablecoin issuers, foreign stablecoin issuers, and custody activities. Comptroller Gould described the goal as creating a framework "in which the stablecoin industry can flourish in a safe and sound manner."
The OCC's role is significant. For issuers above the $10 billion threshold, the OCC becomes the primary federal regulator, with its rules serving as the benchmark against which state frameworks will be measured. The Federal Reserve, FDIC, and National Credit Union Administration also have oversight roles, but the OCC's standards will anchor the system.
Anti-money laundering and sanctions compliance will be handled separately through coordination between Treasury and the OCC, meaning the full regulatory picture is still incomplete. BSA/AML/OFAC rules for stablecoin issuers are expected in a follow-up rulemaking later this year.
What Changed Between September and Now
Treasury previously issued an Advance Notice of Proposed Rulemaking in September 2025, which received 333 public comments. State regulators pushed for enforcement parity with federal agencies. Industry participants flagged concerns about compliance costs for smaller issuers. This NPRM incorporates feedback from that first round, narrowing its focus to the similarity standard rather than attempting to address every open question at once.
The OCC had also issued its own NPRM in February 2026, creating a layered regulatory calendar. The April release aligns the two agencies and signals that Treasury intends to have the system operational by November 2026, roughly 16 months after the GENIUS Act became law.
Timing Meets a Fearful Market
The rulemaking arrives during a week where crypto markets are under pressure. Bitcoin is trading at $66,511, down 3.2% over the past 24 hours as of April 2, 2026. ETH has dropped 4.3% to $2,047, and SOL is down 5.6% to $79. The Fear and Greed Index sits at 28, firmly in "Fear" territory.
The regulatory progress offers a counterweight to the price action. Stablecoin regulation has been the one policy area where bipartisan momentum has held through multiple sessions of Congress, and the fact that Treasury is now drafting implementation rules, not debating whether to regulate, suggests a regulatory floor is forming beneath the stablecoin spending ecosystem.
For crypto card users who spend stablecoins directly, the framework matters practically. Cards that fund from USDC or USDT balances depend on the continued legal clarity of those assets. A finalized GENIUS Act framework, expected by late 2026, would give both issuers and the payment rails built on top of them a regulatory foundation that does not currently exist.
Overview
The U.S. Treasury published an 87-page Notice of Proposed Rulemaking on April 1, 2026, setting out its first concrete rules for implementing the GENIUS Act. The proposal establishes a "substantially similar" test for determining whether state-level stablecoin frameworks can substitute for federal oversight, with a $10 billion issuance threshold separating the two tracks. The OCC will serve as the primary federal regulator. A 60-day public comment period is now open, with the full system expected to be operational by November 2026.
