Treasury Misses GENIUS Act Deadline, Proposes Stablecoin Rules Amid Congressional Gridlock

Woofun AI reports that the U.S. Department of the Treasury has advanced federal definitions for stablecoin issuance under the GENIUS Act, a move spearheaded by Treasury Secretary Scott Bessent to establish regulatory clarity before statutory deadlines expire.

Structurally, the proposal distinguishes payment stablecoins from traditional securities, arguing that applying established securities laws to these instruments could hinder their function as cross-border settlement tools. While the department referenced longstanding legal regimes governing the offer and sale of financial instruments, including offshore activities, it concluded that such frameworks are ill-suited for assets intended primarily for payment and settlement.

This regulatory push follows an advance notice issued in September of last year, initiating a 60-day public comment period that closes in mid-October. The department must now review industry feedback before finalizing the rule, a process that requires resolving dozens of interpretive questions regarding the law's application to various market participants.

Per Woofun AI, the industry is closely monitoring how the Treasury addresses foreign issuers, particularly market leader Tether, as the proposed rule seeks to define compliance obligations for entities operating outside U.S. jurisdiction. The specific treatment of these offshore players remains a critical variable in determining the global reach of the new regulations.

The administration has already missed the one-year target for implementing the GENIUS Act, a deadline that passed last month without full regulatory completion. With the law's effective date set for January 18, it is unlikely that all rules will be finalized in time, necessitating transition periods for industry adaptation.

Legislative uncertainty compounds these challenges, as the Digital Asset Market Clarity Act seeks to rewrite portions of the GENIUS Act, including provisions on rewards programs for stablecoin customers on exchanges.

However, the Clarity Act faces significant hurdles after failing to begin key votes earlier this month, before the Senate departed for its August recess.