US Treasury Advances GENIUS Act Compliance for Stablecoins

US Treasury Advances GENIUS Act Implementation – Stablecoin Issuers Face Bank Secrecy Act and Sanctions Compliance Requirements

Key Takeaways

• The US Treasury Department has issued a joint proposed rule to implement provisions of the GENIUS Act targeting illicit finance.
• Payment stablecoin issuers would be required to establish AML and CFT programs and sanctions compliance frameworks.
• Issuers would need the ability to block, freeze, and reject certain stablecoin transactions.
• Under the proposal, stablecoin issuers would be treated as financial institutions under the Bank Secrecy Act.
• The GENIUS Act was signed into law in July 2025 and will take effect 18 months after signing or 120 days after related regulations are issued.

Treasury and OFAC Propose Rule Targeting Illicit Finance in Stablecoin Payments

The US Treasury Department has taken a further step in implementing the GENIUS Act by publishing a joint proposed rule through its Financial Crimes Enforcement Network and the Office of Foreign Assets Control. The proposal focuses on reducing illicit finance risks linked to payment stablecoins.

According to the notice, payment stablecoin issuers in the United States would be required to establish and maintain anti money laundering and countering the financing of terrorism programs. In addition, issuers would need to implement sanctions compliance measures in line with OFAC requirements.

A central element of the proposal is the obligation for issuers to have the operational capacity to block, freeze, and reject certain transactions. This requirement would apply in cases involving sanctions, suspicious activity, or other legal triggers defined under US financial law.

For users of crypto payment systems, including those transferring stablecoins to online platforms, this framework signals stricter transaction oversight at the issuer level. Stablecoin transfers could be subject to intervention if they fall within the scope of sanctions or AML enforcement.

Stablecoin Issuers to Be Treated as Financial Institutions Under the Bank Secrecy Act

Under the proposed rule, payment stablecoin issuers would be classified as financial institutions for purposes of the Bank Secrecy Act. This classification would align them with entities such as banks in terms of compliance expectations.

Being brought under full BSA and OFAC compliance would require issuers to adopt formal risk management structures, reporting systems, and monitoring mechanisms. The Treasury’s move reflects the broader aim of integrating stablecoin activity into the existing US financial compliance architecture.

Snir Levi, CEO of blockchain intelligence firm Nominis, told Cointelegraph that bringing issuers into full BSA and OFAC compliance effectively turns them into bank like gatekeepers. According to Levi, this could result in a higher number of wallet freezes, blocked transactions, and asset seizures executed at scale.

For crypto users, this classification changes how stablecoins are positioned within the regulatory landscape. Rather than operating solely as blockchain based instruments, payment stablecoins would be subject to oversight similar to traditional financial intermediaries.

GENIUS Act Framework and Timeline for Implementation

The GENIUS Act, described as a stablecoin payments bill, was signed into law by US President Donald Trump in July 2025. The law establishes a federal framework for stablecoin issuers operating in the United States.

The legislation is set to take effect 18 months after it was signed into law or 120 days after federal authorities issue related implementing regulations, whichever comes first. The current proposed rule from Treasury and OFAC forms part of that regulatory rollout.

In parallel, the US Federal Deposit Insurance Corporation has issued its own proposed rule under the GENIUS Act framework. The FDIC stated that stablecoin holders would not be insured under the bill. However, reserve deposits held by issuers would receive protection.

This distinction clarifies that while issuers’ backing reserves may benefit from deposit insurance safeguards, individuals holding stablecoins would not receive direct insurance coverage on their token balances.

Congressional Debate Continues on Broader Digital Asset Framework

While federal agencies move ahead with implementing the GENIUS Act, progress on a broader digital asset market structure bill remains stalled in Congress. The bill, referred to as the CLARITY Act when it passed the House of Representatives last year, has not yet advanced in the Senate.

The Senate Banking Committee has not scheduled a markup on the CLARITY Act, a necessary step before a full vote in the chamber. At the same time, representatives from the crypto and banking sectors have met with White House officials to discuss issues including stablecoin yield, tokenized equities, and ethics.

The White House’s Council of Economic Advisers stated that a proposed ban on stablecoin yield in the bill would do very little to protect bank lending and would impose costs on users. As of the latest update, the Senate Banking Committee had not rescheduled a markup session.

For market participants, this means that while stablecoin specific rules are advancing under the GENIUS Act, the wider legal framework for digital assets remains under legislative discussion.

Our Assessment

The Treasury’s proposed rule represents a concrete step in integrating payment stablecoin issuers into the US financial compliance system. By requiring AML, CFT, and sanctions programs and by classifying issuers as financial institutions under the Bank Secrecy Act, the GENIUS Act framework increases regulatory oversight of stablecoin transactions. At the same time, related measures by the FDIC clarify the limits of insurance protection for holders and issuers. Together, these actions define how stablecoin payments will be supervised under US law once the implementation timeline is completed.