US Treasury Proposes State Stablecoin Rules for <$10 billion Issuers

- Treasury unveils dual regulatory framework under the GENIUS Act—states to regulate smaller stablecoin issuers. - New rules aim to ensure financial stability while inviting public feedback on the proposal. On April 2, 2026, the U.S. Department of the Treasury issued a notice of proposed rulemaking (NPRM). The notice seeks public input on new state-level governance frameworks for stablecoins under the GENIUS Act. These proposed regulations address the expanding stablecoin market and aim to balance innovation with financial stability. The GENIUS Act, signed into law in July 2025, grants states the authority to regulate stablecoins with a market capitalization of less than $10 billion, provided they meet strict federal standards. The Treasury's proposal outlines several key requirements: issuers must maintain one-to-one reserve backing with cash or high-quality cash equivalents, provide monthly reserve transparency, and comply with federal anti-money laundering (AML) measures and sanctions policies. Additionally, the proposal bans rehypothecation, which is the use of single assets to back multiple claims. This dual regulatory framework empowers states to establish their own rules for liquidity, reserves, risk management, and enforcement while adhering to federal baselines. However, when a stablecoin's market capitalization exceeds $10 billion, regulatory oversight shifts exclusively to the federal level, removing state jurisdiction over these larger issuers. The Treasury set a 60-day public comment period following the announcement. However, unresolved questions about yield-bearing stablecoins reportedly hinder progress on the broader CLARITY crypto regulation bill in Congress. Pricing data from a market survey on April 2 at 08:08 UTC reflects ongoing activity and resilience in the stablecoin sector. PayPal USD (PYUSD) was priced at $1 with no change, though its 24-hour trading volume increased by 67.29%. Tether USDt (USDT) traded at $1 after a 0.01% price increase, while its 24-hour trading volume declined by 5.14%. Similarly, USDC was stable at $1 despite a -0.009% change and a 3.75% drop in trading volume. Meanwhile, World Liberty Financial USD (USD1) was priced at $0.999, marking a -0.042% change, but its 24-hour trading volume grew by 14.13%. These performance trends highlight the stablecoin market's adaptability amid evolving regulatory efforts and underscore the significance of the Treasury's proposals in shaping the industry's future.