NPRM: GENIUS Act regulations on payment stablecoin issuance, offer and sale (91 FR 53368) (Part 1 of 2)
Document text
Research, not advice. Part of the Bitcoin research archive (October 2026). Claims labelled unverified, contested or fringe are reported, not endorsed; statuses of bills and rules are as of the date checked. Government, court and patent records are public domain; the research notes are CC BY 4.0.
53368
Proposed Rules Federal Register
Vol. 91, No. 158
Tuesday, August 18, 2026
This section of the FEDERAL REGISTER Attorney-Advisors, Office of the General violation of section 3(a) is punishable by
contains notices to the public of the proposed Counsel, and Jonathan Hurowitz, Senior a fine of not more than $1 million for
issuance of rules and regulations. The Advisor, Office of Financial Institutions, each violation, imprisonment for not
purpose of these notices is to give interested Treasury, at OGC_GeniusAct@ more than five years, or both under the
persons an opportunity to participate in the Treasury.gov or 202–622–0480. Act.6
rule making prior to the adoption of the final Section 3(b) of the Act (12 U.S.C.
rules. SUPPLEMENTARY INFORMATION:
5902(b)) addresses the offer, sale, or
I. Background and Authority otherwise making available of payment
DEPARTMENT OF THE TREASURY The GENIUS Act, enacted on July 18, stablecoins in the United States by
2025, establishes a comprehensive digital asset service providers. Under
12 CFR Chapter XV framework for the regulation of payment the Act, a digital asset service provider
stablecoins.1 As defined in the GENIUS is a person (such as a digital asset
[TREAS–DO–2026–0496] exchange) that, for compensation or
Act, a payment stablecoin is a digital
RIN 1505–AC95 asset 2 (i) that is, or is designed to be, profit, engages in the business in the
used as a means of payment or United States (including on behalf of
GENIUS Act Regulations on Payment customers or users in the United States)
settlement, and (ii) the issuer of which
Stablecoin Issuance, Offer, and Sale of exchanging digital assets for
is obligated to convert, redeem, or
AGENCY: Department of the Treasury. repurchase for a fixed amount of monetary value or for other digital
monetary value (not including a digital assets, transferring digital assets to a
ACTION: Notice of proposed rulemaking
asset denominated in a fixed amount of third party, acting as a digital asset
(NPRM).
monetary value) and represents that the custodian, or participating in financial
SUMMARY: The Department of the issuer will maintain, or create the services relating to digital asset
Treasury (Treasury) proposes to issue reasonable expectation that it will issuance.7
regulations to implement section 3 of Section 3(b) (12 U.S.C. 5902(b))
maintain, a stable value relative to a
the Guiding and Establishing National contains two distinct prohibitions. First,
fixed amount of monetary value.3
Innovation for U.S. Stablecoins under section 3(b)(1) of the Act (12
Section 3 of the Act (12 U.S.C. 5902)
(GENIUS) Act regarding the statutory U.S.C. 5902(b)(1)), beginning on July 18,
delineates the fundamental architecture
prohibitions and limitations on payment 2028 (i.e., the date that is three years
of the payment stablecoin market in the
stablecoin issuance, offer, and sale in after the date of enactment of the
United States, prescribing who may
the United States. GENIUS Act), it shall be unlawful for a
issue, offer, sell, or otherwise make
DATES: Comments on the NPRM must be
digital asset service provider to offer or
available payment stablecoins. Section 3
sell a payment stablecoin to a person in
received on or before October 19, 2026. ‘‘is intended to have extraterritorial the United States, unless the payment
ADDRESSES: Written comments may be effect if conduct involves the offer or stablecoin is issued by a permitted
submitted through one of two methods: sale of a payment stablecoin to a person payment stablecoin issuer.8 Second,
• Electronic Submission: Comments located in the United States.’’ 4 section 3(b)(2) (12 U.S.C. 5902(b)(2))—
may be submitted electronically through With respect to issuance of payment which unlike section 3(b)(1) becomes
the Federal Government eRulemaking stablecoins, section 3(a) of the Act (12 applicable on the effective date of the
portal at https://www.regulations.gov. U.S.C. 5902(a)) makes it unlawful for Act—specifically addresses payment
• Mail: Send to U.S. Department of any person other than a permitted stablecoins issued by foreign payment
the Treasury, Attention: Office of payment stablecoin issuer to issue a stablecoin issuers,9 providing that it
General Counsel, 1500 Pennsylvania payment stablecoin in the United shall be unlawful for any digital asset
Avenue NW, Washington, DC 20220. States.5 Knowing participation in a
We encourage comments to be service provider to offer, sell, or
submitted via https:// 1 See Public Law 119–27 (codified at 12 U.S.C.
otherwise make available in the United
www.regulations.gov. All comments 5901 et seq.). The GENIUS Act is referred to States a payment stablecoin issued by a
should be captioned with ‘‘GENIUS Act throughout this proposal simply as ‘‘the Act.’’
2 The term ‘‘digital asset’’ means any digital issuer (as defined in section 2(11) of the Act (12
Regulations on Payment Stablecoin representation of value that is recorded on a U.S.C. 5901(11))), or (iii) a State qualified payment
Issuance, Offer, and Sale.’’ Please cryptographically secured distributed ledger. See stablecoin issuer (as defined in section 2(31) of the
include your name, organizational section 2(6) of the Act (12 U.S.C. 5901(6)). Act (12 U.S.C. 5901(31))). See section 2(23) of the
affiliation, address, email address, and 3 See section 2(22) of the Act (12 U.S.C. 5901(22)). Act (12 U.S.C. 5901(23)). Permitted payment
Digital assets that are (i) national currencies, (ii) stablecoin issuers are regulated by the primary
telephone number in your comment. In Federal payment stablecoin regulators or State
deposits (as defined in section 3 of the Federal
general, all comments received, Deposit Insurance Act), including deposits recorded payment stablecoin regulators, as appropriate.
including attachments and other using distributed ledger technology, or (iii) 6 Section 3(f) of the Act (12 U.S.C. 5902(f)).
supporting materials, will be part of the securities (as defined in certain federal securities 7 See section 2(7) of the Act (12 U.S.C. 5901(7)).
public record and subject to public laws) are not considered payment stablecoins. See 8 See section 3(b)(1) of the Act (12 U.S.C.
lotter on DSK8BHNXB4PROD with PROPOSALS1
id. 5902(b)(1)).
disclosure. Do not submit any 4 Section 3(e) of the Act (12 U.S.C. 5902(e)). 9 The term ‘‘foreign payment stablecoin issuer’’
information in your comment or 5 See section 3(a) of the Act (12 U.S.C. 5902(a)). means an issuer of a payment stablecoin that is
supporting materials that you consider The term ‘‘permitted payment stablecoin issuer’’ organized under the laws of or domiciled in a
confidential or inappropriate for public means a person formed in the United States that is foreign country, a territory of the United States,
disclosure. (i) a subsidiary of an insured depository institution Puerto Rico, Guam, American Samoa, or the Virgin
that has been approved to issue payment Islands, and is not a permitted payment stablecoin
FOR FURTHER INFORMATION CONTACT: stablecoins under section 5 of the Act (12 U.S.C. issuer. See section 2(12) of the Act (12 U.S.C.
Brendan Costello and Cody Gaffney, 5904), (ii) a Federal qualified payment stablecoin 5901(12)).
VerDate Sep<11>2014 16:09 Aug 17, 2026 Jkt 268001 PO 00000 Frm 00001 Fmt 4702 Sfmt 4702 E:\FR\FM\18AUP1.SGM 18AUP1
Federal Register / Vol. 91, No. 158 / Tuesday, August 18, 2026 / Proposed Rules 53369
foreign payment stablecoin issuer unless pending application on the Act’s focused on the text of the GENIUS Act
the foreign payment stablecoin issuer effective date.13 itself as the starting point for these
has the technological capability to Finally, the Act vests Treasury with proposed regulations and did not start
comply, and will comply, with the authority to issue regulations providing from any pre-existing regulatory
terms of any lawful order and any certain safe harbors that are consistent baseline. Nevertheless, throughout the
reciprocal arrangement pursuant to with the purposes of the Act, limited in proposal, Treasury considered certain
section 18 of the Act (12 U.S.C. 5916).10 scope, and apply to a de minimis discrete aspects of existing legal and
Various provisions of the Act create volume of transactions, and to provide regulatory regimes where Treasury
exemptions from certain of these general certain other limited safe harbors in believes these regimes may be
prohibitions relating to the issuance, unusual and exigent circumstances.14 instructive to the regulation of payment
offer, sale, or making available of The Act directs Treasury to issue stablecoin activities under section 3 of
payment stablecoins. First, section 3(h) regulations to implement section 3, the Act.
(12 U.S.C. 5902(h)) contains rules of including regulations to define terms.15 For example, in developing this
construction that expressly exempt On September 19, 2025, Treasury proposal, Treasury considered several
three categories of transactions from published in the Federal Register an comments to the ANPRM that suggested
section 3: (i) the direct transfer of digital Advance Notice of Proposed that the federal securities laws, in
assets between two individuals acting Rulemaking (ANPRM) to solicit public addition to the text of the GENIUS Act,
on their own behalf and for their own comment on questions relating to the should serve as a reference point for
lawful purposes, without the implementation of the Act.16 In drafting implementing section 3 of the Act.
involvement of an intermediary, (ii) any this NPRM, Treasury carefully Treasury recognizes that there are
transaction involving the receipt of considered comments received in longstanding legal regimes that address
digital assets by an individual between response to the ANPRM that were the issue, offer, and sale of other
an account owned by the individual in material and relevant to the subjects financial instruments, such as
the United States and an account owned addressed herein.17 securities, including offshore activities.
by the individual abroad that are offered However, the GENIUS Act clearly
II. Description of the Proposed Rule
by the same parent company, and (iii) distinguishes among payment
any transaction by means of a software A. Treasury’s Approach to This stablecoins, securities, and
or hardware wallet that facilitates an Rulemaking commodities, expressly providing that
individual’s own custody of digital Consistent with its obligation to payment stablecoins are not securities
assets.11 faithfully implement the GENIUS Act, or commodities.18 Unlike many existing
Second, section 18(a) of the Act (12 in crafting this proposal, Treasury financial instruments that are designed
U.S.C. 5916(a)) provides that the for investment and capital appreciation,
prohibitions under section 3 (12 U.S.C. 13 See section 5(f) of the Act (12 U.S.C. 5904(f)). payment stablecoins are, or are designed
5902) shall not apply to a foreign ‘‘Primary Federal payment stablecoin regulator’’ is to be, used as a means of payment or
payment stablecoin issuer if certain defined in section 2(25) of the Act (12 U.S.C. settlement and are expected to maintain
5901(25)) and may refer, depending on the entity a stable value. Treasury believes that the
conditions are met, including that (i) the in question, to the OCC, the Board of Governors of
foreign payment stablecoin issuer is the Federal Reserve System (Board), the Federal Act evinces a clear intent for payment
subject to regulation and supervision by Deposit Insurance Corporation (FDIC), or the stablecoins to serve as an effective
a foreign payment stablecoin regulator National Credit Union Administration (NCUA). means of payment and settlement,
‘‘Federal qualified payment stablecoin issuer’’ is including across borders, and
of a foreign country that has a regulatory defined in section 2(11) of the Act (12 U.S.C.
and supervisory regime with respect to 5901(11)). application of traditional investment
payment stablecoins that the Secretary 14 See section 3(c) of the Act (12 U.S.C. 5902(c)). rules to payment stablecoins may
of the Treasury determines, pursuant to 15 See section 3(d) of the Act (12 U.S.C. 5902(d)). frustrate that goal. Similarly, some
section 18(b) of the Act (12 U.S.C. See also section 13 of the Act (12 U.S.C. 5913) operational mechanics of payment
(requiring Treasury and other regulators to stablecoins (such as payment stablecoin
5916(b)), is comparable to the regulatory promulgate regulations to carry out the GENIUS
and supervisory regime established Act). minting and redemption) may differ
under the GENIUS Act, and (ii) the 16 See 90 FR 45159 (Sep. 19, 2025). Comments on from traditional securities and
foreign payment stablecoin issuer is the ANPRM were originally due on October 20, commodities in material ways that may
2025, but Treasury later extended the comment not be properly accounted for by
registered with the Office of the period by 15 days to November 4, 2025. See 90 FR
Comptroller of the Currency (OCC).12 47251 (Oct. 1, 2025). applying those existing regulatory
Third, section 5(f) of the Act (12 17 This proposal addresses only the portions of regimes to payment stablecoins.19
U.S.C. 5904(f)) authorizes the primary section 3 of the Act (12 U.S.C. 5902) relating to the Treasury welcomes comment on
issuance, offer, sale, and making available of whether this approach is appropriate or
Federal payment stablecoin regulators to payment stablecoins. Other provisions of section 3
waive the application of the of the Act (12 U.S.C. 5902), such as section 3(g) of
whether, in the alternative, these
requirements of the Act for a period not the Act (12 U.S.C. 5902(g))’s rules concerning the
18 Specifically, section 17 of the Act (Pub. L. 119–
to exceed 12 months beginning on the treatment of payment stablecoins for accounting,
margining, and other purposes, are outside the 27, 17, 139 Stat. 459, amending 7 U.S.C. 1a and 15
effective date of the Act with respect to scope of this proposal. In addition, conduct that U.S.C. 77b, 78c, 78lll, 80a–2, 80a–3, and 80b–2)
subsidiaries of insured depository would constitute an unlawful issuance, offer, or clarifies that payment stablecoins are not securities
institutions and Federal qualified sale of a payment stablecoin under this proposal for purposes of the federal securities laws, nor
may, depending on the facts and circumstances, commodities for purposes of the Commodity
payment stablecoin issuers with a Exchange Act.
also lead to penalties under section 4(e)(3) of the
Act. See 12 U.S.C. 5903(e)(3) (providing that it shall 19 Several commenters on the ANPRM expressed
lotter on DSK8BHNXB4PROD with PROPOSALS1
10 See section 3(b)(2) of the Act (12 U.S.C.
be unlawful to ‘‘market a product in the United similar sentiments. For example, one commenter on
5902(b)(2)). The effective date of the GENIUS Act States as a payment stablecoin unless the product the ANPRM noted that while Securities and
is expected to be January 18, 2027 (i.e., the date that is issued pursuant to’’ the Act and setting penalties Exchange Commission (SEC) rules may be a useful
is 18 months after the date of enactment of the for knowing and willful participation). While example, not all aspects of those rules are
GENIUS Act). See section 20 of the Act (Pub. L. Treasury will consider whether it would be helpful appropriate in the context of digital assets. Another
119–27, 20, 139 Stat. 466, set out as a note under or appropriate to issue guidance or procedures commenter noted that while the territorial approach
12 U.S.C. 5901). relating to potential penalties under section 4(e)(3) of certain SEC rules could be a possible starting
11 See section 3(h) of the Act (12 U.S.C. 5902(h)).
of the Act (12 U.S.C. 5903(e)(3)), that is outside the point, unique issues may be presented by digital
12 See section 18(a) of the Act (12 U.S.C. 5916(a)). scope of this proposal. assets that would require updating that approach.
VerDate Sep<11>2014 16:09 Aug 17, 2026 Jkt 268001 PO 00000 Frm 00002 Fmt 4702 Sfmt 4702 E:\FR\FM\18AUP1.SGM 18AUP1
53370 Federal Register / Vol. 91, No. 158 / Tuesday, August 18, 2026 / Proposed Rules
regulations should adopt an approach activities that, when conducted by a 2. Extraterritorial Effect
that is more similar to existing securities person in connection with the issuance
or commodities regulatory frameworks, of a payment stablecoin that violates Proposed paragraph (b) makes clear
such as Regulation S under the section 3(a) of the Act (12 U.S.C. that, consistent with section 3(e) of the
Securities Act.20 5902(a)), may constitute participation in Act (12 U.S.C. 5902(e)), proposed Part
an unlawful issuance for purposes of the 1523 is intended to have extraterritorial
B. Overview of the Rule effect if conduct involves the offer or
criminal penalty in section 3(f) of the
This proposal would add new part Act (12 U.S.C. 5902(f)), such as acting as sale of a payment stablecoin to a person
1523 to subchapter C of chapter XV of a market maker for newly-issued located in the United States.
title 12 of the Code of Federal payment stablecoins or coordinating Question 1: Is the extraterritorial
Regulations.21 Part 1523 would define with the issuer to facilitate key steps in effect of section 3 of the Act (12 U.S.C.
key terms and implement section 3’s the issuance. 5902) (as described in this proposed
prohibitions related to the issuance, Part 1523) clear or should Treasury
offer, sale, and making available of Proposed § 1523.3 implements the
GENIUS Act’s prohibitions on the offer, provide additional clarity? For example,
payment stablecoins. should Treasury specify in regulatory
Proposed § 1523.1 sets out the scope sale, and making available of payment
stablecoins by digital asset service text the extent to which Part 1523 has
of Part 1523 and defines key terms. extraterritorial effect as to the issuance
Consistent with the Act, proposed providers under section 3(b) of the Act
(12 U.S.C. 5902(b)). First, proposed of payment stablecoins to persons
§ 1523.1 makes clear that this part is
§ 1523.3(a) and (b) codify sections located outside of the United States?
intended to have extraterritorial effect if
conduct involves the offer or sale of a 3(b)(1) and 3(b)(2) of the Act (12 U.S.C. Question 2: Are there any scenarios in
payment stablecoin to a person located 5902(b)(1), (2)), respectively, with some which issuing or making available a
in the United States. Proposed § 1523.1 clarifications. Second, proposed payment stablecoin would not
also defines terms such as ‘‘issue’’ and § 1523.3(c) describes a digital asset reasonably be considered an offer or
‘‘located in the United States.’’ service provider’s obligations with sale? If so, would such activity
Significantly, proposed § 1523.1 makes respect to a foreign payment stablecoin nonetheless fall within the
clear that a payment stablecoin issuer issuer’s compliance with lawful orders extraterritorial scope of the Act and this
may also be considered a digital asset and reciprocal arrangements. Next, Part? Are there any scenarios in which
service provider, and thus, the rules that proposed § 1523.3(d) enumerates other conduct or transactions involving
apply to issuers and the rules that apply examples of activities that constitute the a payment stablecoin contemplated by
to digital asset service providers are not offer or sale of payment stablecoins, Part 1523 would not reasonably be
mutually exclusive. such as directly soliciting a person considered within the extraterritorial
Proposed § 1523.2 implements the located in the United States, advertising scope of the Act?
prohibition on payment stablecoin a payment stablecoin as available for
issuance in the United States under 3. Definitions
purchase by persons located in the
section 3(a) of the Act (12 U.S.C. United States, and advising potential Proposed paragraph (c) sets forth a
5902(a)). First, proposed § 1523.2(a) purchasers on how to evade generally number of definitions for purposes of
makes clear that foreign payment applicable location detection or Part 1523.22
stablecoin issuers that meet the criteria restriction mechanisms. Finally,
set out in section 18(a) of the Act (12 Under the proposal, the terms ‘‘digital
proposed § 1523.3(e) describes activities asset,’’ ‘‘federal qualified payment
U.S.C. 5916(a)), including registration that would be deemed not to be offers
with the OCC, may issue payment stablecoin issuer,’’ ‘‘foreign payment
or sales of payment stablecoins to stablecoin issuer,’’ ‘‘insured depository
stablecoins in the United States in persons located in the United States.
addition to permitted payment institution,’’ ‘‘lawful order,’’ ‘‘monetary
stablecoin issuers. Next, proposed Proposed § 1523.4 sets out value,’’ ‘‘offer,’’ ‘‘payment stablecoin,’’
§ 1523.2(b) provides that a person will exemptions and safe harbors from the ‘‘permitted payment stablecoin issuer,’’
be considered to have issued a payment section 3 framework, and Treasury ‘‘person,’’ ‘‘primary Federal payment
stablecoin in the United States only if, requests comment on whether to create stablecoin regulator,’’ ‘‘State,’’ and
at the time of issuance, the person is additional safe harbors. ‘‘subsidiary’’ 23 would be defined by
located in the United States (as defined Proposed § 1523.5 includes a cross-reference to the corresponding
in proposed § 1523.1) or the person severability provision. Proposed statutory definitions in section 2 of the
issues the payment stablecoin to a Appendix A provides a number of
person located in the United States (as interpretations intended to clarify the 22 These definitions are proposed only for the
defined in proposed § 1523.1). By purposes of part 1523 and this proposal does not
application of proposed Part 1523 to propose to define terms that may be defined by any
contrast, proposed § 1523.2(c) describes certain common or complex scenarios. other statute or regulation, including other sections
activities that would be deemed not to of the Act and regulations issued thereunder. For
be issuances of payment stablecoins in C. Scope, Applicability, and Definitions example, the proposed definition of ‘‘issue’’ is
the United States. Finally, proposed (Proposed § 1523.1) designed for and based on section 3 of the Act (12
U.S.C. 5902), which is meant to proscribe issuance
§ 1523.2(d) provides examples of 1. Scope and Applicability by persons that are not permitted payment
stablecoin issuers; this context is distinct from other
20 See 17 CFR 230.901–905.
Proposed § 1523.1 sets forth the scope contexts that may use facially similar terminology,
21 On April 3, 2026, Treasury proposed broad- such as the concepts of ‘‘outstanding issuance
lotter on DSK8BHNXB4PROD with PROPOSALS1
and applicability of Part 1523.
based principles for determining whether a State- value’’ that are used by the primary Federal
level regulatory regime is substantially similar to
Paragraph (a) provides that Part 1523 is payment stablecoin regulators for purposes of
the Federal regulatory framework under section 4(c) issued by Treasury to implement section prudential reserve requirements for permitted
of the Act (12 U.S.C. 5903(c)). See 91 FR 16844 3 of the Act (12 U.S.C. 5902) regarding payment stablecoin issuers.
(Apr. 3, 2026). Those principles would be codified 23 With respect to this term, proposed paragraph
statutory prohibitions and limitations
at Part 1521 within a new Subchapter C of Chapter (c) cites both sections 2(32) and 2(33) of the Act (12
XV of the Code of Federal Regulations. This
on issuing, offering, selling, and U.S.C. 5901(32), (33)) to ensure subsidiaries of
proposal would add new part 1523 to subchapter otherwise making available payment insured credit unions are appropriately captured.
C, reserving part 1522 for other regulations. stablecoins in the United States. See 91 FR 6531, 6532 n.13 (Feb. 12, 2026).
VerDate Sep<11>2014 16:09 Aug 17, 2026 Jkt 268001 PO 00000 Frm 00003 Fmt 4702 Sfmt 4702 E:\FR\FM\18AUP1.SGM 18AUP1
Federal Register / Vol. 91, No. 158 / Tuesday, August 18, 2026 / Proposed Rules 53371
Act (12 U.S.C. 5901) without further U.S. Stablecoins Act (12 U.S.C. 5901 et stablecoin that a digital asset service
elaboration. seq.). provider is not permitted to offer or sell,
Question 3: Should any of the terms Digital asset service provider. such as a payment stablecoin issued by
that would be defined solely by cross- Proposed § 1523.1(c) would define a foreign payment stablecoin issuer that
reference to section 2 of the Act (12 ‘‘digital asset service provider’’ by cross- does not have the technological
U.S.C. 5901) be clarified? For example, reference to section 2(7) of the Act (12 capability to comply, or will not
should Treasury clarify the application U.S.C. 5901(7)), with the additional comply, with the terms of any lawful
of the term ‘‘person’’ to various entities clarification that the term includes a order and any reciprocal arrangement
that may be involved with payment person that, for compensation or profit, pursuant to section 18 of the Act (12
stablecoins, including those that are or engages in the business in the United U.S.C. 5916).25 This interpretation
may be affiliated with a government States of issuing payment stablecoins. would likewise allow a foreign payment
entity. If a term’s definition depends on Treasury considered whether the Act stablecoin issuer to offer and sell a
other defined terms in the Act, should should be read as treating issuers of payment stablecoin issued by another
those nested definitions be spelled out? payment stablecoins and digital asset issuer that is not compliant with the
Should any of the definitions be service providers as mutually exclusive GENIUS Act. Such an interpretation
reproduced in the text of Part 1523 categories, but concluded that the better would facilitate the evasion of section
rather than by cross-reference to the reading of the Act is that issuers of 3’s prohibitions and obviate the GENIUS
Act? payment stablecoins can simultaneously Act’s otherwise clear boundaries
Question 4: Should Treasury make be digital asset service providers. ensuring that payment stablecoins
any modifications to the definition of Notably, the Act does not specify that offered and sold to persons in the
‘‘lawful order’’ as proposed for part issuers of payment stablecoins cannot United States comply with the Act’s
1523, including clarifications, such as to be digital asset service providers, but in requirements.
define terms within the definition of other instances does specify when two Question 6: Does Treasury’s
‘‘lawful order’’ as considered by FinCEN categories are mutually exclusive.24 determination that all persons that, for
for its proposed definition of the term Further, some of the core activities of compensation or profit, engage in the
‘‘lawful order’’ or otherwise to align payment stablecoin issuers (such as the business in the United States of issuing
more closely to FinCEN regulatory activities of permitted payment payment stablecoins constitute digital
definitions? See 91 FR 18582, 18594–5 stablecoin issuers listed in section asset service providers reflect the best
(Apr. 10, 2026). 4(a)(7) of the Act (12 U.S.C. 5903(a)(7))) reading of the statute? Assuming
Question 5: For purposes of section 3 clearly fall within the list of digital asset payment stablecoin issuers can also be
of the Act (12 U.S.C. 5902) and Part service provider activities in section digital asset service providers, is
1523, should Treasury interpret the term 2(7) of the Act (12 U.S.C. 5901(7)). For additional clarity needed with respect to
‘‘payment stablecoin’’ and related example, redeeming payment how any of section 3’s prohibitions
definitions to include a digital asset that stablecoins (section 4(a)(7)(A)(ii) of the regarding the offer or sale of payment
the issuer is obligated to redeem in other Act (12 U.S.C. 5903(a)(7)(A)(ii))) stablecoins apply to payment stablecoin
forms of value that may be the necessarily involves exchanging digital issuers? Are there certain digital asset
functional equivalent of those forms of assets for monetary value (section service provider restrictions that should
‘‘monetary value’’ enumerated in 2(7)(A)(ii) of the Act (12 U.S.C. not apply to payment stablecoin issuers,
section 2(17) of the Act (12 U.S.C. 5901(7)(A)(ii))). For this reason, and if so, should it depend on whether
5901(17)) (i.e., national currencies or Treasury not only determined that the the issuers are registered or unregistered
deposits as defined in section 3 of the categories of payment stablecoin issuer under the Act? By contrast, if issuers of
Federal Deposit Insurance Act)? For and digital asset service provider are payment stablecoins and digital asset
example, should a digital asset that is overlapping, but that all persons that, service providers are mutually exclusive
redeemable only in credit union shares for compensation or profit, engage in the categories, what changes would be
be considered a payment stablecoin business in the United States of issuing necessary to the proposal to clarify the
within the scope of section 3 of the Act payment stablecoins will constitute application of section 3?
(12 U.S.C. 5902) and these proposed digital asset service providers as defined Question 7: Should any additional
regulations? Does the ubiquitous in the Act. clarification (beyond the one
convertibility of credit union shares and A contrary reading in which payment clarification proposed) be provided on
bank deposits in the U.S. financial stablecoin issuers are deemed not to be the statutory definition of the term
system bear on this question? Similarly, digital asset service providers could ‘‘digital asset service provider’’?
should digital assets redeemable only in further have the effect of exempting Issue. The term ‘‘issue’’ is not defined
non-deposit liabilities of a company that persons who engage in significant in the Act. Proposed § 1523.1(c) defines
are commonly viewed by the public as payment stablecoin offer and sale ‘‘issue’’ to mean, except as required by
ubiquitously convertible to bank activities in the United States from the a lawful order, the first transfer of a
deposits be considered to be payment operative restrictions of section 3 (12 payment stablecoin by the issuer,
stablecoins? What are the practical or U.S.C. 5902) merely because they are whether directly or indirectly, including
evasion risks of possible interpretations? also engaged in payment stablecoin by crediting an account, that results or
By contrast, the proposal would issuance. For example, such an will result in a person other than the
define several key terms other than interpretation would, theoretically, issuer having the right to use or transfer
solely by cross-reference to the Act allow a permitted payment stablecoin the payment stablecoin or to have the
lotter on DSK8BHNXB4PROD with PROPOSALS1
either because the Act does not define issuer to offer and sell a payment payment stablecoin converted,
the term or because Treasury has redeemed, or repurchased.
determined that additional clarity is 24 Compare section 2(7) of the Act (12 U.S.C.
Because the term ‘‘issue’’ is not
needed to provide regulatory certainty. 5901(7)) (defining ‘‘digital asset service provider’’ defined in the Act, in order to
Act or GENIUS Act. Proposed without carving out issuers of payment stablecoins)
with section 2(12) of the Act (12 U.S.C. 5901(12)) implement the limitation on payment
§ 1523.1(c) would define ‘‘Act’’ or (defining ‘‘foreign payment stablecoin issuer’’ and
‘‘GENIUS Act’’ to mean the Guiding and clearly noting that a permitted payment stablecoin 25 See section 3(b)(2) of the Act (12 U.S.C.
Establishing National Innovation for issuer is not a foreign payment stablecoin issuer). 5902(b)(2)).
VerDate Sep<11>2014 16:09 Aug 17, 2026 Jkt 268001 PO 00000 Frm 00004 Fmt 4702 Sfmt 4702 E:\FR\FM\18AUP1.SGM 18AUP1
53372 Federal Register / Vol. 91, No. 158 / Tuesday, August 18, 2026 / Proposed Rules
stablecoin issuance in section 3(a) (12 a payment stablecoin to a holder’s element to make clear that the issuance
U.S.C. 5902(a)), it is necessary for wallet would be considered a first of a payment stablecoin need not result
Treasury to determine when in the transfer of the payment stablecoin. in a right to use or transfer the payment
process of creating a new payment Second, the proposed definition stablecoin immediately, or a right to
stablecoin the payment stablecoin clarifies that the first transfer of the have the payment stablecoin converted,
should be considered to have been payment stablecoin may be effected redeemed, or repurchased immediately.
issued.26 The proposed definition directly or indirectly by the issuer. This Treasury considered that an issuer may,
contains several elements designed to element is intended to address by smart contract or otherwise, limit the
ensure that the definition captures the situations where the first transfer of the holder of a digital asset purporting to be
appropriate payment stablecoin payment stablecoin is effected by the a payment stablecoin from redeeming or
activities consistent with the text and issuer through an agent or intermediary further transferring the payment
purposes of the Act. The proposed acting on behalf of the issuer, such as an stablecoin until some future time (such
definition also contains an exception to underwriter or distributor. as a purported payment stablecoin that
allow for compliance with a lawful Third, the proposed definition may not be redeemed until 6 months
order notwithstanding proposed clarifies that the transfer of a payment after issuance). In such a case, during
§ 1523.2.27 stablecoin includes the crediting of an the lockout period, the purported
First, the proposed definition focuses account. This element is intended to payment stablecoin could potentially be
on the first transfer of the payment address situations where rights viewed as not having been issued
stablecoin by the issuer. This element is associated with the payment stablecoin because the issuer does not have an
consistent with the plain meaning of have been transferred to a person other obligation at present to convert, redeem,
‘‘issue’’ 28 as well as existing definitions than the issuer, but the payment or repurchase the purported payment
of ‘‘issue’’ for other financial stablecoin remains in the issuer’s wallet, stablecoin on demand or the holder of
instruments.29 A consequence of this for example, because the issuer also the payment stablecoin does not have
element is that a digital asset that has serves as custodian. In this situation, the right to use or further transfer it.
been minted but is held in the issuer’s even though the payment stablecoin has However, Treasury believes that such an
treasury would not be considered to not transferred to a different wallet interpretation is not compelled by
have been issued as a payment address, Treasury believes that an section 2(22) or section 3(a) of the Act
stablecoin because the digital asset has issuance has occurred. (12 U.S.C. 5901(22), 5902(a)) and would
not yet been transferred to a third Fourth, the first transfer of the facilitate evasion of section 3(a). Instead,
party.30 However, the direct minting of payment stablecoin by the issuer must for example, Treasury believes that a
result or will result in a person other purported payment stablecoin which
26 For a description of how payment stablecoins
than the issuer having the right to use the issuer is obligated to convert,
are created, see Strengthening American Leadership or transfer the payment stablecoin or to redeem, or repurchase for a third party
in Digital Financial Technology at 90 (July 2025),
https://www.whitehouse.gov/wp-content/uploads/ have the payment stablecoin converted, at some future time should, during the
2025/07/Digital-Assets-Report-EO14178.pdf. redeemed, or repurchased. This element non-redemption period, be considered a
27 The Act calls for compliance with lawful orders
reflects the key features that make a payment stablecoin that has been
in various provisions. See, e.g., sections 3(b)(2), digital asset a payment stablecoin as issued.
4(a)(6), and 8 of the Act (12 U.S.C. 5902(b)(2),
5903(a)(6), and 5907). Treasury’s proposed defined in the Act: its usability as a Another aspect of the fourth element
regulatory provisions accordingly seek to means of payment or settlement and its of the definition of ‘‘issue’’ is that it
implement the language provided in the GENIUS convertibility into a fixed amount of does not require that the transferee be
Act regarding lawful orders. the person who has the right to use,
28 See Black’s Law Dictionary, ‘‘Issue’’ (12th ed.,
monetary value.31 As such, in defining
2024) (‘‘to be put forth officially,’’ ‘‘to send out or when a payment stablecoin is transfer, or redeem the payment
distribute officially’’); Merriam-Webster Online (‘‘to considered to have been issued, stablecoin. For example, Treasury
put forth or distribute usually officially,’’ ‘‘to send Treasury believes that it is appropriate considered that the issuer may transfer
out for sale or circulation’’). to focus on the transaction that gives the payment stablecoin to a custodian,
29 See UCC § 3–105(a) (defining ‘‘issue’’ to mean
rise to these key features of a payment but it is the custodian’s customer who
‘‘the first delivery of an instrument by the maker or
drawer, whether to a holder or nonholder, for the stablecoin.32 Further, existing has the right to use, transfer, or redeem
purpose of giving rights on the instrument to any definitions of ‘‘issue’’ include similar the payment stablecoin. In this case,
person’’); id. at § 1–201(b)(15) (defining delivery, language focused on the vesting of rights Treasury believes that the payment
with respect to an instrument, as ‘‘voluntary stablecoin has been issued,
transfer of possession’’). Treasury believes that in a third party.33
reference to negotiable instruments under Article 3 Treasury proposes to include the notwithstanding the fact that the
of the Uniform Commercial Code (UCC) is a helpful phrase ‘‘will result’’ in this fourth transferee does not have the right to use,
analogy because such instruments share certain transfer, or redeem the payment
characteristics with payment stablecoins—namely stablecoin. Additionally, Treasury is
stablecoins held in the issuer’s treasury. See 91 FR
that they are, or are designed to be, used as a means
of payment or settlement. Treasury further believes
10202, 10208 (Mar. 2, 2026). aware that some payment stablecoins
31 See section 2(22) of the Act (12 U.S.C.
that concepts of transfer with respect to controllable may be, as a technical matter,
5901(22)) (defining ‘‘payment stablecoin’’ as a
electronic records under Article 12 of the UCC also
digital asset that, among other things, is, or is
redeemable only by certain persons
serve as helpful analogies. See, e.g., UCC § 12– (such as intermediaries in contractual
104(d) (‘‘A purchaser of a controllable electronic designed to be, used as a means of payment or
record acquires all rights in the controllable settlement, and the issuer of which is obligated to privity with the issuer), rather than by
electronic record that the transferor had or had convert, redeem, or repurchase for a fixed amount each individual holder of the payment
power to transfer . . .’’); id. at § 12–105(a) of monetary value). stablecoin. The proposed fourth element
32 Treasury notes that the OCC similarly
(providing that a person has control over a record
lotter on DSK8BHNXB4PROD with PROPOSALS1
concluded that the concept of issuance should be
of the definition of ‘‘issue’’ would
if it, among other things, gives the person exclusive
power to ‘‘transfer control of the electronic record understood consistent with the defined term ensure that these payment stablecoins
to another person’’). However, Treasury does not ‘‘payment stablecoin.’’ See 91 FR 10202, 10208 are considered to have been issued even
take a position in this proposal on appropriate (Mar. 2, 2026) (discussing ‘‘outstanding issuance though a person other than the holder
treatment under the UCC of any transactions value’’).
involving payment stablecoins, either before or after 33 In particular, under Article 3 of the UCC, a
has the right to redeem the payment
the effective date of the Act. negotiable instrument is not issued unless the first stablecoin.
30 Treasury notes that the OCC proposed to define delivery is ‘‘for the purpose of giving rights on the The proposed definition of ‘‘issue’’
‘‘outstanding issuance value’’ to exclude payment instrument to any person.’’ See UCC § 3–105(a). contains the phrase ‘‘except as required
VerDate Sep<11>2014 16:09 Aug 17, 2026 Jkt 268001 PO 00000 Frm 00005 Fmt 4702 Sfmt 4702 E:\FR\FM\18AUP1.SGM 18AUP1
Federal Register / Vol. 91, No. 158 / Tuesday, August 18, 2026 / Proposed Rules 53373
by a lawful order’’ to allow for transfer of control or transfer of token arrangements, or transfers of
compliance with a lawful order possession under the UCC? previously redeemed or reacquired
notwithstanding proposed § 1523.2. Question 11: Should a payment stablecoins?
The proposed definition of ‘‘issue’’ stablecoin that a third party has Question 17: Under what
contains one additional clarification: purchased be considered issued upon circumstances should internal transfers,
For the avoidance of doubt, after a offer or sale, even though it has not yet custody movements, treasury-
payment stablecoin has been converted, been transferred to the third party (or management activity, or other activity
redeemed, repurchased, or otherwise potentially even minted)? by or on behalf of an issuer be treated
reacquired by the issuer, the first Question 12: What additional as an issuance? How should the
subsequent transfer of the payment clarification would be useful regarding definition apply to transfers among
stablecoin by the issuer that otherwise when a payment stablecoin is issuer-controlled wallets, transfers to
satisfies the proposed definition is transferred ‘‘indirectly’’ by an issuer? custodians or agents acting solely for
considered a new issuance, whether or Should Treasury clarify that this would the issuer, transfers to affiliates,
not the transfer is characterized as a cover, for example, transfers that occur transfers to omnibus accounts, or
reissuance, except as required by a automatically through smart contracts transfers to exchanges, market makers,
lawful order. This is the case whether or or other mechanisms? liquidity providers, or other
not the issuer burns the digital asset or Question 13: How should purported intermediaries that may later make the
holds it on its books. Treasury believes restrictions on the class of holders payment stablecoin available to third
this understanding of reissuance is eligible to redeem the payment parties?
appropriate, administrable, and stablecoin, or the time or manner in
Question 18: How should the theft of
consistent with the Act because, which they can do so, be considered
a payment stablecoin from the issuer or
although the digital asset may continue when determining whether a payment
the unintended transfer of a payment
to exist following the redemption or stablecoin has been issued? For
stablecoin to a third party by the issuer
transfer back to the issuer, the issuer no example, should a payment stablecoin
be viewed? What about a transfer in the
longer has an obligation to a third party be considered issued if there is no
absence of a sale (e.g., an airdrop)?
to convert, redeem, or repurchase the obligation at present to redeem the
Should the payment stablecoins in these
payment stablecoin. However, the payment stablecoin, but there is an
obligation to redeem it in the future? examples be considered to have been
subsequent transfer of the payment issued?
stablecoin to a person other than the Should it matter whether the obligation
to redeem the payment stablecoin in the Question 19: Under what
issuer would have the economic effect
future is known with certainty (e.g., the circumstances, if any, should the
of a new issuance, in that a third party
payment stablecoin can be redeemed transfer or movement of a payment
would newly have the right to use or
starting six months after issuance), or stablecoin from one blockchain network
transfer the payment stablecoin, or to
whether the existence of the obligation to another, including through a bridge
have the payment stablecoin converted,
to redeem the payment stablecoin in the or similar cross-chain mechanism, be
redeemed, or repurchased. Finally,
future is dependent on an uncertain treated as an issuance? Should the
recognizing that the terms of a lawful
trigger event or condition (e.g., the treatment depend on the technical
order requiring seizing, freezing,
payment stablecoin can be redeemed structure of the bridging arrangement,
burning, or preventing the transfer of a
payment stablecoin may additionally only if a particular trigger occurs)? including whether the arrangement uses
require reissuance of the payment Question 14: How should a payment a lock-and-mint, burn-and-mint,
stablecoin, the last clause of the stablecoin that has been redeemed or is liquidity-pool, issuer-operated bridge,
clarification makes clear that issuers otherwise transferred back to the issuer third-party bridge, or other mechanism?
may reissue a payment stablecoin to be viewed? If the payment stablecoin is Question 20: Under what
comply with a lawful order held by the issuer (rather than being circumstances, if any, should a bridge
notwithstanding proposed § 1523.2. burned) for a time and is thereafter provider, bridge operator, custodian, or
As discussed in section II.H below, transferred to a third party, should that other intermediary involved in cross-
Treasury is proposing to include in constitute a new issuance or only a new chain transfers be treated as an issuer
Appendix A several interpretations of offer or sale? of a payment stablecoin? What factors
proposed Part 1523. Some of the Question 15: Which types of activity should be relevant to that
proposed interpretations relate to when by an issuer, or by a person acting on determination, including control over
a payment stablecoin is considered to be behalf of an issuer, including activity minting or burning, control over reserve
issued. that could be considered to be assets, redemption obligations,
Question 8: Is the proposed definition secondary market activity, should be contractual rights, or the ability to
of ‘‘issue’’ appropriate and clear as to treated as an issuance, and which create or retire tokenized claims?
the point in time at which an issuance should not? Should the analysis differ Question 21: Under what
occurs? Should a payment stablecoin be for issuer buybacks and resales, market- circumstances should the creation,
considered to have been issued earlier making activity, transfers of redeemed minting, distribution, or transfer of a
or later in the process of creating a or reacquired stablecoins, or recovered wrapped version of a payment
payment stablecoin? or seized tokens? stablecoin, a bridged representation of a
Question 9: Should a payment Question 16: Should an increase in payment stablecoin, a deposit receipt, or
stablecoin that is minted and exists on the aggregate amount of payment another tokenized claim referencing a
lotter on DSK8BHNXB4PROD with PROPOSALS1
the public blockchain be considered stablecoins outstanding be a necessary payment stablecoin be treated as a new
issued even where the issuer holds the condition for an activity to constitute an issuance? Should the analysis depend
payment stablecoin in its treasury? issuance? Are there circumstances in on the economic or legal rights
Question 10: Is the phrase ‘‘first which the aggregate amount embedded in the wrapped token, receipt
transfer’’ sufficiently clear in the context outstanding does not increase, but the token, or other instrument, including
of payment stablecoin issuance? Should activity should nevertheless be treated rights to use, transfer, redeem, convert,
the definition incorporate other existing as an issuance, such as certain chain or obtain the underlying payment
concepts relating to transfer, such as migrations, burning of tokens, wrapped- stablecoin or related reserve value?
VerDate Sep<11>2014 16:09 Aug 17, 2026 Jkt 268001 PO 00000 Frm 00006 Fmt 4702 Sfmt 4702 E:\FR\FM\18AUP1.SGM 18AUP1
53374 Federal Register / Vol. 91, No. 158 / Tuesday, August 18, 2026 / Proposed Rules
Question 22: Is it clear from the appropriately identifies the issuer. parent, person providing its branding, or
definition of ‘‘issue’’ that an issuer Other persons who participate in the other person as ‘‘participating’’ in the
directly minting a payment stablecoin issuance (e.g., by performing technical issuance in accordance with proposed
into a holder’s account is considered an functions to effectuate minting of the § 1523.2(d) below, rather than as an
issuance? If not, how could that be payment stablecoin, or by providing issuer of the payment stablecoin?
made more clear? their branding in a white label Located in the United States. Section
Issuer. Although the Act defines terms arrangement) but do not carry out the 3 of the Act (12 U.S.C. 5902) refers to
such as ‘‘permitted payment stablecoin functions identified in the statute would a person ‘‘located in the United States’’
issuer’’ and ‘‘foreign payment stablecoin not be considered an issuer of the but does not define the phrase.35 In
issuer,’’ the term ‘‘issuer’’ itself is not payment stablecoin for purposes of other instances, section 3 refers to
defined in the Act. Proposed § 1523.1(c) proposed Part 1523 but may still be persons located or activities conducted
would define ‘‘issuer’’ of a particular subject to criminal penalties if they ‘‘in the United States,’’ but this phrase
payment stablecoin to mean a person knowingly participate in an unlawful is similarly undefined.36 As described
who (i) is obligated to convert, redeem, issuance, as described further in the below in connection with proposed
or repurchase the payment stablecoin discussion around proposed § 1523.2(d). § 1523.2 and § 1523.3, Treasury has
for a fixed amount of monetary value, Question 23: Is the proposed interpreted these phrases in section 3 of
and (ii) represents that the person will definition of ‘‘issuer’’ appropriate and the Act (12 U.S.C. 5902) consistently as
maintain, or creates the reasonable clear? Is a definition of ‘‘issuer’’ referring to persons ‘‘located in the
expectation that the person will necessary at all? Should either of the United States.’’
maintain, a stable value relative to the proposed prongs be sufficient? For Proposed § 1523.1(c) would define
value of a fixed amount of monetary example, should having a redemption ‘‘located in the United States’’
value. obligation be independently sufficient to separately with respect to individuals
Treasury believes that a definition of be treated as an issuer, without inquiry and entities. With respect to an
‘‘issuer’’ is necessary because both the into representations or expectations individual, ‘‘located in the United
Act and the proposal refer to the regarding maintaining a stable value, or States’’ would mean the individual is
‘‘issuer’’ of a payment stablecoin in vice versa? Should the definition of physically present in the United States,
several instances. For example, the Act’s ‘‘issuer’’ also include a prong related to unless the individual is not a resident
definition of ‘‘payment stablecoin’’ the minting or creation of the payment of the United States and the individual’s
refers to the issuer,34 and Treasury’s stablecoin? If so, how should the physical presence in the United States
proposed definition of ‘‘issue’’ requires definition account for an issuer that is merely temporary. The proposed
a transfer to a person other than the contracts out the technical work of definition thus generally turns on the
issuer. More generally, Treasury minting the payment stablecoin to a individual’s physical presence on U.S.
believes that there may be situations third party? soil,37 but carves out temporarily
where the creation and distribution of a Question 24: Are there situations in present non-residents. Treasury
payment stablecoin involves multiple which the two activities that define considered an alternative approach in
parties, such as in white label ‘‘issuer’’ under the proposal are which all individuals who are
arrangements, and a definition of conducted by different persons? In those physically present in the United States
‘‘issuer’’ would be useful to clarify each cases, who should be viewed as the are regarded as ‘‘located in the United
party’s obligations and facilitate issuer of the payment stablecoin? Is States,’’ but concluded that such an
compliance with the Act. there a risk of evasion if activities are approach is not compelled by the Act
The proposed definition of ‘‘issuer’’ split among persons to attempt to avoid and could create significant
incorporates two elements, both of any one of them being considered the administrability concerns and punitive
which derive from the statutory issuer? What about a corporate structure results. For example, consider a non-
definition of ‘‘payment stablecoin’’: the where a single subsidiary or affiliate has U.S. resident who is issued a payment
issuer is obligated to convert, redeem, or the legal obligation to redeem the stablecoin by a foreign payment
repurchase the payment stablecoin for a payment stablecoins, but the issuance stablecoin issuer while temporarily on
fixed amount of monetary value, and the activities are otherwise carried out in a
vacation in the United States, even if the
issuer represents that such issuer will separate public-facing entity?
individual has a longstanding
maintain, or creates the reasonable Question 25: Can there be more than
one issuer of a payment stablecoin? For relationship with the foreign payment
expectation that it will maintain, a stablecoin issuer, and even if the foreign
stable value relative to the value of a example, if a parent entity functionally
takes all steps to issue the payment payment stablecoin issuer has
fixed amount of monetary value. As previously verified the foreign residency
described above with respect to the stablecoin but the obligation is legally
recorded as a liability of a subsidiary or of the individual and was not aware of
definition of ‘‘issue,’’ Treasury the individual’s temporary travel plans
interprets the obligation to convert, affiliate, is only the subsidiary or
affiliate considered the issuer, or has the to the United States. In this case,
redeem, or repurchase the payment
stablecoin broadly—imposing a lockout parent also issued a payment 35 E.g., section 3(e) of the Act (12 U.S.C. 5902(e))
period or placing other conditions on stablecoin? Similarly, in a white label (stating that section 3 is intended to have
redemption will not prevent a person arrangement, should a person providing extraterritorial effect if conduct involves the offer or
from being considered the ‘‘issuer’’ of a its branding for the payment stablecoin sale of a payment stablecoin ‘‘to a person located
be considered an issuer? Does that in the United States’’).
particular payment stablecoin if the 36 E.g., section 3(a) of the Act (12 U.S.C. 5902(a))
lotter on DSK8BHNXB4PROD with PROPOSALS1
conditions for being an issuer are answer change if the parent, person
(prohibiting the issuance of certain payment
otherwise satisfied. providing its branding, or another stablecoins ‘‘in the United States’’); section 3(b)(1)
Treasury believes that relying on person has a joint or secondary of the Act (12 U.S.C. 5902(b)(1)) (prohibiting digital
these core statutory functions of the obligation (e.g., through a guarantee) to asset service providers from offering or selling
redeem or repurchase the payment certain payment stablecoins ‘‘to a person in the
issuer relating to the payment stablecoin United States’’).
stablecoin (e.g., in the event that the 37 See Black’s Law Dictionary, ‘‘Location’’ (12th
34 See section 2(22) of the Act (12 U.S.C. original obligee fails to redeem or ed. 2024) (‘‘the specific place or position of a person
5901(22)). repurchase)? Is it better to treat the or thing’’).
VerDate Sep<11>2014 16:09 Aug 17, 2026 Jkt 268001 PO 00000 Frm 00007 Fmt 4702 Sfmt 4702 E:\FR\FM\18AUP1.SGM 18AUP1
Federal Register / Vol. 91, No. 158 / Tuesday, August 18, 2026 / Proposed Rules 53375
Treasury does not believe it would be Question 26: Is the proposed States.39 Together with the statutory
reasonable to subject the foreign definition of ‘‘located in the United definition of ‘‘State,’’ Treasury intends
payment stablecoin issuer to all States’’ appropriate and clear? Is the the proposed definition of ‘‘United
requirements relating to dealings with proposed definition underinclusive of States’’ to include the full territory
persons located in the United States and persons who should properly be subject to U.S. jurisdiction.
potential associated penalties, and the considered located in the United States? Question 31: Is the proposed
Act does not clearly require this result. Is the proposed definition overinclusive definition of ‘‘United States’’ (together
Conversely, the proposed definition of of persons who should not properly be with the statutory definition of ‘‘State’’)
‘‘located in the United States’’ would considered located in the United States? clear? Is the proposed definition
exclude U.S. residents who are not Question 27: Should Treasury underinclusive of geographies that
physically present in the United States, prescribe standards for what constitutes should properly be considered part of
such as a U.S. resident who is residence in the United States or the United States for purposes of Part
temporarily abroad. Treasury does not temporary presence in the United 1523? Is the proposed definition
believe that the limitation in section 3(a) States? overinclusive of geographies that should
of the Act (12 U.S.C. 5902(a)) on issuing Question 28: Does Treasury’s not properly be considered part of the
a payment stablecoin ‘‘in the United proposed definition of ‘‘located in United States for purposes of Part 1523?
States’’ was intended to capture, for United States’’ present substantial Question 32: Are there any additional
example, a foreign payment stablecoin operational challenges for issuers or risk statutory or non-statutory terms that
issuer who issues a payment stablecoin of evasion by persons to whom tokens should be defined in Part 1523?
to a U.S. resident temporarily traveling are issued? What considerations and
capabilities should Treasury take into D. Payment Stablecoin Issuance
abroad on vacation. Application of Part (Proposed § 1523.2)
1523 to U.S. residents abroad would account to address such challenges and
also risk frustrating particular goals of risks? Proposed § 1523.2 implements the
the Act, such as to promote payment Question 29: Should Treasury limitation in section 3(a) of the Act (12
stablecoins as payment instruments and prescribe standards for what constitutes U.S.C. 5902(a)) on payment stablecoin
establish reciprocal arrangements with an entity’s principal place of business issuance in the United States. Proposed
foreign jurisdictions, while providing an for purposes of determining its paragraph (a) codifies the statutory
appropriately tailored regime to mitigate corporate domicile? Should Treasury limitation with certain clarifications.
potential illicit finance threats. At the consider alternatives to what it means to Proposed paragraph (b) clarifies when a
outer extreme, a U.S. resident traveling be ‘‘located in the United States’’ for person will be considered to have
temporarily in a foreign country where corporate entities, such as where an issued a payment stablecoin in the
payment stablecoins were routinely entity does substantial business? Are all United States. Proposed paragraph (c)
used as payment instruments would be entities, incorporated or clarifies when a person will be
unable to purchase a limited amount of unincorporated, that may be issuers of considered to not have issued a
payment stablecoins used in that payment stablecoins sufficiently payment stablecoin in the United States.
country to engage in ordinary captured by this definition? Finally, proposed paragraph (d) clarifies
transactions within the country. Offer. Proposed § 1523.1(c) would when a person has participated in a
define ‘‘offer’’ by cross-reference to violation of section 3(a) of the Act (12
With respect to a partnership,
section 2(21) of the Act (12 U.S.C. U.S.C. 5902(a)) for purposes of the
company, corporation, association,
5901(21)), with the additional penalty imposed by section 3(f) of the
trust, estate, cooperative organization, or
clarification that the term includes Act (12 U.S.C. 5902(f)).
other business entity, proposed
making available for purchase, sale, or
§ 1523.1(c) would define ‘‘located in the 1. Limitation on Payment Stablecoin
exchange a payment stablecoin that has
United States’’ to mean that the entity Issuance in the United States (Proposed
not yet been issued. Treasury believes
(i) is organized or incorporated under § 1523.2(a))
that the plain meaning of ‘‘offer’’
the laws of the United States or a State,
includes presales of payment Section 3(a) of the Act (12 U.S.C.
or (ii) has its principal place of business
stablecoins that have not yet been 5902(a)) generally provides that it shall
in the United States. This disjunctive
issued, and that making this be unlawful for any person other than
definition comports with traditional
interpretation explicit in proposed a permitted payment stablecoin issuer to
notions of corporate domicile,38 and
§ 1523.1(c) would promote clarity and issue a payment stablecoin in the
Treasury believes that this traditional
facilitate compliance with the Act’s United States. Proposed § 1523.2(a)
definition is appropriate in the context
requirements related to offers and sales implements this provision and provides
of the Act.
of payment stablecoins. that, except in accordance with the
As discussed in section II.H below, Question 30: Should the term ‘‘offer’’ exemptions and safe harbors in
Treasury is proposing to include in be defined to expressly state that proposed § 1523.4, it shall be unlawful
Appendix A several interpretations of presales of payment stablecoins that for any person to issue a payment
proposed Part 1523. Some of the have not yet been issued constitute stablecoin in the United States unless
proposed interpretations relate to when offers of payment stablecoins? the person is a permitted payment
a person is considered to be located in United States. The term ‘‘United stablecoin issuer, or a foreign payment
the United States. States’’ is not defined in the GENIUS stablecoin issuer that meets the criteria
Act. Proposed § 1523.1(c) would define set out in section 18(a) of the Act (12
lotter on DSK8BHNXB4PROD with PROPOSALS1
38 See Black’s Law Dictionary, ‘‘Domicile’’ (12th
‘‘United States’’ to mean each of the U.S.C. 5916(a)).
ed. 2024) (stating that ‘‘the legal home of a
corporation’’ is usually ‘‘its state of incorporation or
several States (defined in the Act to
the state in which it maintains its principal place include the District of Columbia and 39 The proposed definition is based on the
of business,’’ and noting that for determining each territory of the United States), the definition of ‘‘United States’’ in 31 CFR
whether diversity jurisdiction exists in federal Indian lands (as that term is defined in 1010.100(hhh), except that the reference to U.S.
court, ‘‘a corporation is considered a citizen of both territories has been removed because the statutory
its state of incorporation and the state of its
the Indian Gaming Regulatory Act), and definition of ‘‘State’’ already includes U.S.
principal place of business’’). the Insular Possessions of the United territories.
VerDate Sep<11>2014 16:09 Aug 17, 2026 Jkt 268001 PO 00000 Frm 00008 Fmt 4702 Sfmt 4702 E:\FR\FM\18AUP1.SGM 18AUP1
53376 Federal Register / Vol. 91, No. 158 / Tuesday, August 18, 2026 / Proposed Rules
The text of proposed § 1523.2(a) issuers that meet the criteria set out in issuing a payment stablecoin pursuant
differs from the text of section 3(a) of section 18(a) of the Act (12 U.S.C. to section 4(a)(12) of the Act (12 U.S.C.
the Act (12 U.S.C. 5902(a)) in two key 5916(a)) may issue payment stablecoins 5903(a)(12)).44
ways. First, the inclusion of the in the United States. The Act clearly Question 33: Does Treasury’s
qualifying language ‘‘[e]xcept in contemplates secondary market interpretation that foreign payment
accordance with § 1523.4’’ makes clear transactions in the United States stablecoin issuers that meet the criteria
from the outset that certain exemptions involving payment stablecoins issued by set out in section 18(a) may issue
and safe harbors may apply. These foreign payment stablecoin issuers.41 payment stablecoins in the United
exemptions and safe harbors are Thus, construing the Act as prohibiting States reflect the best reading of the
addressed in proposed § 1523.4. direct issuance of payment stablecoins Act? What would be the practical effects
Second, while the text of section 3(a) in the United States by foreign payment if foreign payment stablecoin issuers
(12 U.S.C. 5902(a)) only expressly stablecoin issuers would require extra were instead permitted to offer and sell
contemplates issuance of payment steps before these payment stablecoins payment stablecoins to persons in the
stablecoins in the United States by are made available in U.S. markets.42 United States but not issue payment
permitted payment stablecoin issuers, Treasury believes that these extra steps stablecoins in the United States?
proposed § 1523.2(a) additionally states would create inefficiencies, potentially Question 34: Should § 1523.2(a)
that foreign payment stablecoin issuers obscure from U.S. regulators certain key address generally which categories of
that meet the criteria set out in section steps in the creation of payment persons may issue a payment stablecoin
18(a) of the Act (12 U.S.C. 5916(a)) may stablecoins intended for persons located in the United States (as proposed), or
lawfully issue payment stablecoins in in the United States, and may create an should it list some or all potentially
the United States. unintended uneven playing field as applicable prerequisites to issuing
Treasury believes that the best reading between permitted payment stablecoin payment stablecoins in the United
of the Act, considered as a whole, is that issuers and foreign payment stablecoin States (such as the need to obtain the
foreign payment stablecoin issuers that issuers that meet the criteria set out in approval of the SCRC pursuant to
meet the criteria set out in section 18(a) section 18(a) of the Act (12 U.S.C. section 4(a)(12) (12 U.S.C. 5903(a)(12)))?
of the Act (12 U.S.C. 5916(a)) may issue 5916(a)) that ultimately discourages 2. Issuance in the United States
payment stablecoins in the United payment stablecoin and broader digital (Proposed § 1523.2(b))
States. This conclusion is principally asset innovation in the United States
based on two key provisions of the relative to foreign countries. Treasury The Act does not define when a
statute. First, section 18(a) of the Act (12 believes this result would be person has issued a payment stablecoin
U.S.C. 5916(a)) provides that the inconsistent with the purposes of the ‘‘in the United States.’’ Proposed
‘‘prohibitions under section 3’’ shall not Act and does not reflect the best reading § 1523.2(b) provides that a person will
apply to a foreign payment stablecoin of the Act.43 be considered to have issued a payment
issuer meeting certain criteria. Treasury Treasury notes that proposed stablecoin in the United States only if,
believes that the plain meaning of this § 1523.2(a) addresses generally which at the time of issuance, the person is
phrase is that the prohibition in section categories of persons may issue a located in the United States, or the
3(a) of the Act (12 U.S.C. 5902(a)) shall payment stablecoin in the United States person issues the payment stablecoin to
not apply to a foreign payment and does not exhaustively list all a person located in the United States.
stablecoin issuer meeting the criteria set potentially applicable prerequisites to Treasury first determined that a
out in section 18(a) of the Act (12 U.S.C. issuing payment stablecoins in the standard based on the location of the
5916(a)).40 United States. For example, a permitted parties to the transaction is consistent
Second, section 4(a)(12)(C) of the Act payment stablecoin issuer or a foreign with the text of the Act and would be
(12 U.S.C. 5903(a)(12)(C)) expressly payment stablecoin issuer that meets the administrable and promote clarity and
states that certain companies not criteria set out in section 18(a) of the compliance with the requirements of the
domiciled in the United States or its Act (12 U.S.C. 5916(a)) may need to Act. In particular, the proposed
Territories may not issue payment obtain the approval of the SCRC prior to approach would be simpler for all
stablecoins without the approval of the payment stablecoin market participants
Stablecoin Certification Review 41 See, e.g., section 3(b)(2) of the Act (12 U.S.C. to understand, relative to other
Committee (SCRC). This section of the 5902(b)(2)) and section 18(c)(1)(A) of the Act (12 approaches that considered, for
U.S.C. 5916(c)(1)(A)). example, a broader conception of U.S.
statute would be in direct tension with 42 Specifically, a foreign payment stablecoin
section 3 if foreign payment stablecoin nexus, and thus better facilitate
issuer would need to issue the payment stablecoin
issuers were outright prohibited from to a person not located in the United States, such compliance with the requirements of the
issuing payment stablecoins in the as a foreign exchange, which in turn would need Act, especially in light of criminal
United States.
to then act as a digital asset service provider to offer penalties associated with violations of
or sell the payment stablecoins to persons in the
Treasury further believes that United States or transfer the payment stablecoin to
section 3(a) (12 U.S.C. 5902(a)).45
practical considerations reinforce the a digital asset service provider to do so.
44 Treasury expects that the Stablecoin
conclusion, based on the text of the 43 Treasury also considered, in the alternative,
Certification Review Committee will issue separate
statute, that foreign payment stablecoin whether the Act contemplates that payment
stablecoins issued by foreign payment stablecoin regulations or guidance to implement section
issuers would only be traded on the secondary 4(a)(12) of the Act (12 U.S.C. 5903(a)(12)).
40 Treasury acknowledges that the heading of 45 Unlike other Federal financial regulatory
market in the United States, rather than being
section 3(a) of the Act (12 U.S.C. 5902(a)) refers to directly issued in the United States. See, e.g., frameworks, such as Federal securities law
this paragraph as a ‘‘limitation’’ rather than a frameworks or Federal banking law frameworks,
lotter on DSK8BHNXB4PROD with PROPOSALS1
section 3(b)(2) of the Act (12 U.S.C. 5902(b)(2))
‘‘prohibition’’ (unlike section 3(b) of the Act (12 (expressly focusing on the offer and sale of such which have existed for decades, the Federal
U.S.C. 5902(b))). However, Treasury does not stablecoins); section 18(c)(1)(A) of the Act (12 payment stablecoin framework has not yet even
believe that paragraph headings are determinative. U.S.C. 5916(c)(1)(A)) (providing that a foreign become effective. Treasury believes that adopting
The limitation in section 3(a) is, in substance, a payment stablecoin issuer may offer or sell payment regulations that clarify the criminal penalties
prohibition on issuance of payment stablecoins in stablecoins using a digital asset service provider if associated with participations in issuances in
the United States by persons not authorized to do certain requirements are met). However, Treasury violation of section 3(a) of the Act (12 U.S.C.
so, and is therefore among the prohibitions believes that these other isolated references cannot 5902(a)) as provided in section 3(f) of the Act (12
referenced in section 18(a) of the Act (12 U.S.C. overcome the plain text reading of section 18(a) of U.S.C. 5902(f)) should be set forth as simply as
5916(a)). the Act (12 U.S.C. 5916(a)), as described above. practicable. Treasury further believes this approach
VerDate Sep<11>2014 16:09 Aug 17, 2026 Jkt 268001 PO 00000 Frm 00009 Fmt 4702 Sfmt 4702 E:\FR\FM\18AUP1.SGM 18AUP1
Federal Register / Vol. 91, No. 158 / Tuesday, August 18, 2026 / Proposed Rules 53377
Similarly, the proposed approach would issuances could raise questions about To benefit from the protection of
be more administrable for Treasury and the extraterritorial application of the proposed § 1523.2(c), a person must
other implementing agencies. Act. meet four conditions. First, the person
Treasury next considered whether As discussed in section II.H below, must not be located in the United States
issuance in the United States should be Treasury is proposing to include in as defined in proposed § 1523.1(c).
determined based on the location of the Appendix A several interpretations of Second, the person must reasonably
issuer or based on the location of the proposed Part 1523. Some of the believe that each person to whom the
third party to which the payment proposed interpretations relate to when payment stablecoin is issued is not
stablecoin has been issued.46 In the a payment stablecoin is considered to be located in the United States. Treasury
former case, a payment stablecoin issued in the United States. acknowledges that what constitutes a
would be considered issued in the Question 35: Should issuance in the reasonable belief may depend on the
United States if the issuer is located in United States be determined based on facts and circumstances. However,
the United States, even if the third party the location of the parties to the Treasury intends this requirement to
to which the payment stablecoin has transaction? Alternatively, should exclude situations where the issuer
been issued is located abroad. In the Treasury consider other, broader knows, has reason to know, or should
latter case, a payment stablecoin would measures of nexus to the United States know, based on the facts and
be considered issued in the United during the issuance process, such as the circumstances, including
States if the third party is located in the use of U.S. financial institutions, representations of the person to whom
United States, even if the issuer is payment rails, or other infrastructure? the payment stablecoin is issued or
located abroad. Question 36: Is the proposed standard other information reasonably accessible
Various provisions of the Act suggest to the issuer, that the person is located
for when a payment stablecoin is
that Congress was concerned with both in the United States.
considered to have been issued in the
the issuance of payment stablecoins to Third, the issuer must have adopted
United States appropriate? For example,
persons located in the United States and and implemented policies, procedures,
should the location of a payment
the issuance of payment stablecoins by and controls reasonably designed to
stablecoin issuance be determined
issuers located in the United States.47 avoid issuing the payment stablecoin to
based solely on the location of the
However, Treasury believes that the Act any person located in the United States.
issuer, or based solely on the location of
does not evidence any intent to capture Treasury emphasizes that these policies,
the third party to which the payment
issuances where neither the issuer nor procedures, and controls must not only
stablecoin has been issued?
the recipient of the payment stablecoin be adopted on paper, but actually
is located in the United States. Question 37: Are there other
situations covered by proposed § 1523.2 implemented in the issuer’s operations,
Extending the reach of part 1523 to such in order for the issuer to benefit from
for which Treasury should also not
deem an issuance in the United States proposed § 1523.2(c). In addition,
comports with the spirit of Executive Order 14294, Treasury believes that policies,
Fighting Overcriminalization in Federal to have occurred in furtherance of the
Regulations, 90 FR 20363 (May 14, 2025) (stating purposes of this Act? For example, procedures, and controls cannot be said
that the ‘‘status quo . . . privileges large should issuances resulting from certain to be reasonably designed if they are
corporations, which can afford to hire expensive
types of reverse solicitations involving static; rather, Treasury expects issuers to
legal teams to navigate complex regulatory schemes periodically review and update their
and fence out new market entrants, over average payment stablecoins issued by foreign
Americans’’ and that ‘‘[a]gencies promulgating payment stablecoin issuers not be policies, procedures, and controls as
regulations potentially subject to criminal deemed to violate the prohibition? warranted by changing circumstances,
enforcement should explicitly describe the conduct such as when the payment stablecoin
subject to criminal enforcement’’). Therefore, in 3. Activities Deemed Not To Be Issuance market matures, technology evolves, the
accordance with Executive Order 14294, in the United States (Proposed
participating in violations of section 3(a) and the issuer gains experience in issuing
proposed implementing regulations, if finalized, § 1523.2(c)) payment stablecoins, and in response to
may be subject to criminal penalties with mens rea
Whereas proposed § 1523.2(b) is discovery of any inadvertent issuance to
of knowingly as an element pursuant to 12 U.S.C. persons located in the United States.
5902(f). intended to provide clarity about what
46 Treasury’s interpretation of ‘‘located in the constitutes payment stablecoin issuance Finally, the issuer must not engage in
United States’’ is discussed above in connection in the United States for purposes of advertising or solicitation activities that
with proposed § 1523.1(c). section 3(a) of the Act (12 U.S.C. target, or could be reasonably expected
47 By contrast, Treasury interprets the Act’s offer
5902(a)), proposed § 1523.2(c) describes to have the effect of targeting, any
and sale provisions as squarely focused on person located in the United States.
protecting U.S. markets. For example, section when a person not located in the United
3(b)(1) of the Act (12 U.S.C. 5902(b)(1)) and section States will be deemed not to issue a Treasury believes this condition is
3(e) of the Act (12 U.S.C. 5902(e)) both explicitly payment stablecoin in the United States. necessary to avoid a situation where an
refer to the offer or sale of a payment stablecoin ‘‘to
In this way, proposed § 1523.2(c) is issuer is not knowingly issuing payment
a person [located] in the United States.’’ See also stablecoins to a person located in the
section 4(e)(3) of the Act (12 U.S.C. 5903(e)(3)) intended to provide clarity and promote
(making it unlawful ‘‘to market a product in the compliance with the Act by describing United States, but is engaged in
United States as a payment stablecoin’’ unless what a foreign issuer must do to avoid activities that could foreseeably have
issued pursuant to the Act). In comparison, the
any potential liability under section 3(a) this result.
issuance provision in section 3(a) of the Act (12 Proposed § 1523.2(c) reflects certain
U.S.C. 5902(a)) uses broader language (‘‘in the of the Act (12 U.S.C. 5902(a)).
concepts that are similar to concepts
United States’’ rather than ‘‘to a person [located] in Significantly, a person that meets the
the United States’’), which suggests a broader focus reflected in Regulation S under the
lotter on DSK8BHNXB4PROD with PROPOSALS1
requirements of proposed § 1523.2(c)
on issuance activities based in the United States, Securities Act, including determination
will be deemed not to have violated
even if the person to whom a payment stablecoin of the non-U.S. status of the relevant
is issued is located abroad. Other provisions of the section 3(a) of the Act (12 U.S.C.
person and prohibition against U.S.-
Act related to issuers, such as section 4(a) of the Act 5902(a)) even if the person’s activities
(12 U.S.C. 5903(a))’s standards for permitted targeted advertising or solicitation.48
would otherwise constitute, for
payment stablecoin issuers, evince a Congressional
concern for issuers of payment stablecoins located
example, the inadvertent issuance of an 48 Regulation S clarifies the extraterritorial
in the United States and relying on the U.S. unregistered payment stablecoin to a application of the registration provisions of the
financial system for their operations. person located in the United States. Continued
VerDate Sep<11>2014 16:09 Aug 17, 2026 Jkt 268001 PO 00000 Frm 00010 Fmt 4702 Sfmt 4702 E:\FR\FM\18AUP1.SGM 18AUP1
53378 Federal Register / Vol. 91, No. 158 / Tuesday, August 18, 2026 / Proposed Rules
Proposed § 1523.2(c), however, would stablecoin issuance. To promote clarity persons who provide substantial
operate within the proposed definition on the scope of this penalty provision assistance in issuing a payment
of ‘‘located in the United States’’ and and prevent evasion of the Act, Treasury stablecoin in violation of section 3(a),
would not adopt Regulation S’s is proposing three specific but non- and where such assistance was provided
offshore-transaction framework. In exclusive examples in proposed at or around the point of issuance.
particular, proposed § 1523.2(c) would § 1523.2(d) of when a person would be Treasury expects, for example, that this
not determine whether an entity considered to participate in a violation would cover a digital asset service
acquirer is outside the United States by of section 3(a) in connection with a provider making an initial listing of an
reference to the location from which an payment stablecoin issued in violation unregistered payment stablecoin shortly
authorized employee or other of section 3(a). These proposed after issuance, in effect supporting the
authorized person originates the examples do not represent all situations mass initial distribution of the unlawful
relevant transaction instruction. where a person would be considered to issuance. Treasury generally does not
Question 38: What policies, participate in a violation of section 3(a), intend for proposed § 1523.2(d)(3) to
procedures, or controls should support but rather Treasury enumerates these cover persons who merely purchase a
a reasonable belief that the acquiring examples to provide a principled smaller subset of the unlawfully issued
person is outside the United States? framework in implementing regulations payment stablecoins in the issuance for
Should Treasury identify specific with respect to section 3(a). their own use (as opposed to for
controls, such as customer identification First, proposed § 1523.2(d)(1) immediate resale in a dealer capacity),
and due diligence, account-opening provides that a person would participate nor is proposed § 1523.2(d)(3) intended
information, geographic access in a violation of section 3(a) if, in to capture secondary market trading
restrictions, device- or network-location connection with a payment stablecoin activities that do not have a close
checks, contractual representations, issued in violation of section 3(a), the temporal nexus to the initial issuance.
transaction monitoring, or other person incurs an obligation to a third Of course, secondary market trading
controls? Would this diligence take the party to convert, redeem, or repurchase activities of unregistered payment
form of self-attestations, IP address a payment stablecoin, including a stablecoins at any time may implicate
checking, identification document secondary obligation to convert, redeem, the prohibitions on offer and sale in
checking, or something else? If the or repurchase on behalf of the original section 3(b) of the Act (12 U.S.C.
issuer only directly distributed to a issuer. This example is intended to 5902(b)), as described further below.
digital asset service provider or other capture the issuer itself, as well as Treasury emphasizes that the
intermediary to make the market or others who effectively function as a proposed examples are not intended to
otherwise facilitate the transfer of joint issuer or guarantor insofar as they be exhaustive, and that other persons
newly-issued payment stablecoins to the are obligated to redeem a payment not covered by these examples may be
ultimate purchasers, should the issuer’s stablecoin issued in violation of section found to have knowingly participated in
obligations be limited to checking 3(a). a violation of section 3(a).
whether the intermediary is located in Second, proposed § 1523.2(d)(2) As discussed in section II.H below,
the United States? Or should the issuer provides that a person would participate Treasury is proposing to include in
be required or expected to work with the in a violation of section 3(a) if, in Appendix A several interpretations of
intermediary to confirm whether the connection with a payment stablecoin proposed Part 1523. Some of the
ultimate purchasers of newly-issued issued in violation of section 3(a), the proposed interpretations relate to when
payment stablecoins are located in the person coordinates with the issuer to a person may have participated in a
United States? Does a reasonableness facilitate key steps in the issuance, such violation of section 3(a) of the Act (12
standard provide sufficient guidance? as soliciting customers or minting the U.S.C. 5902(a)).
Should the policies, procedures, and payment stablecoins. This example is Question 39: Are the proposed
controls be reviewed and updated on a intended to capture persons who examples of when a person would be
particular cadence? provide substantial assistance to the considered to participate in a violation
issuer in issuing a payment stablecoin of section 3(a) appropriate and clear?
4. Participation in Violation of Section in violation of section 3(a), and where Question 40: What additional
3(a) of the Act (Proposed § 1523.2(d)) such assistance was provided prior to or examples of when a person would be
Section 3(f) (12 U.S.C. 5902(f)) at the point at which the payment considered to participate in a violation
imposes certain penalties on persons stablecoins are considered issued. For of section 3(a) should Treasury adopt?
who knowingly participate in a example, in a white label arrangement, Question 41: Should the situations
violation of section 3(a) (12 U.S.C. the person providing its branding may covered by proposed § 1523.2(d) be non-
5902(a)). The Act does not define what be considered to facilitate key steps in exhaustive examples of participating in
it means to participate in a violation of the issuance process even though such an unlawful issuance, or should they be
section 3(a)’s limitation on payment person may not itself be the issuer of the an exhaustive set? What is the value and
payment stablecoin. risk of providing complete certainty of
Securities Act of 1933. It provides generally that Third, proposed § 1523.2(d)(3) activities that constitute participation
any offer or sale of securities that occurs outside the provides that a person would participate versus preserving flexibility to capture
United States is not subject to registration under the
Securities Act, and includes two safe harbors for
in a violation of section 3(a) if, in participation in unlawful issuances in
specified transactions. See Release No. 33–6863 connection with a payment stablecoin ways that are unanticipated or
(April 24, 1990). The safe harbors require that offers issued in violation of section 3(a), the structured to evade proposed rule?
and sales of securities occur in offshore transactions
lotter on DSK8BHNXB4PROD with PROPOSALS1
person acts as a market maker for newly Question 42: Are there situations
(which includes not being made to U.S. persons),
and that no directed selling efforts are made in the
issued payment stablecoins, distributes covered by proposed § 1523.2(d) for
United States. The term ‘‘offshore transaction’’ is the newly issued payment stablecoins to which Treasury should grant foreign
defined in Rule 902(c) and the term ‘‘directed purchasers of newly issued payment payment stablecoin issuers or related
selling efforts’’ is defined in Rule 902(h) of stablecoins, or otherwise makes the parties relief in furtherance of the
Regulation S. While proposed part 1523 is similar
in certain ways to Regulation S, Treasury does not
newly issued payment stablecoins purposes of this Act? If so, what would
intend to formally incorporate any portion of that available for secondary market trading. be the appropriate form(s) of such
regulation or any interpretations thereof. This example is intended to capture relief?
VerDate Sep<11>2014 16:09 Aug 17, 2026 Jkt 268001 PO 00000 Frm 00011 Fmt 4702 Sfmt 4702 E:\FR\FM\18AUP1.SGM 18AUP1
Federal Register / Vol. 91, No. 158 / Tuesday, August 18, 2026 / Proposed Rules 53379
Question 43: Should Treasury set reasonable belief with respect to the requirement that the person acquiring
requirements, guidance, or safe harbors location of the recipient would not be the payment stablecoin be outside the
relating to how a person should relevant considerations as to whether an United States would be satisfied,
determine if it is participating in an issuance has occurred in the United regardless of the place of incorporation
unlawful issuance in accordance with States in the first instance; rather, these or principal place of business of the
proposed § 1523.2(d)? If so, would they factors are most relevant to the question entity.
be similar to or different from the of whether the issuer or another person As compared to proposed § 1523.2(c),
requirements, guidance, or safe harbors ‘‘knowingly’’ participated in an the alternative would more directly
contemplated in the prior question unlawful issuance, which is a required incorporate the concept of directed
relating to proposed § 1523.2(c)? Should element for the criminal penalties under selling efforts from Regulation S, which
the requirements differ based on section 3(f) of the Act (12 U.S.C. could be defined as any activity
whether the participant in the issuance 5902(f)). undertaken for the purpose of, or that
is the issuer itself, a person providing its As a second alternative, Treasury is could reasonably be expected to have
branding in a white label arrangement, considering whether to align proposed the effect of, conditioning the market in
a market maker, a service provider, or § 1523.2 more directly to the territorial the United States for the payment
something else? Should one participant concepts reflected in Regulation S under stablecoin. In applying that concept to
be permitted to rely on the the Securities Act by adopting a broader payment stablecoins, Treasury could
representations of another participant offshore transaction framework. Under consider whether activity is undertaken
that the issuance is lawful? Are such this alternative, for example, the term for the purpose of, or could reasonably
requirements, guidance, or safe harbors ‘‘located in the United States’’ would be expected to have the effect of,
appropriate and necessary for § 1523.2 not be defined based on an individual promoting, soliciting, or creating
or should § 1523.2 focus instead on the or entity’s status (e.g., residency or demand in the United States for the
factual contours of participating in an jurisdiction of organization), and a payment stablecoin. Such activity could
issuance to a person located in the foreign payment stablecoin issuer would include advertising or solicitation
United States, and reserve questions of be deemed not to issue a payment directed at the United States, liquidity
knowledge or due diligence to the stablecoin in the United States if (i) the incentives directed at U.S. use,
determination of a ‘‘knowing’’ violation issuance is made in an offshore merchant-enablement activity in the
under section 3(f)? transaction and (ii) no directed selling United States, U.S.-facing wallet or
efforts are made in the United States by platform integrations, or other
5. Alternative Approaches the foreign payment stablecoin issuer or ecosystem-development activity
In lieu of the proposal discussed any person acting on its behalf. intended to facilitate the use or
above, Treasury is also considering Proposed § 1523.2(c) similarly circulation of the payment stablecoin in
alternative approaches under which incorporates certain Regulation S-like the United States, even if the formal
proposed § 1523.2 would deem any concepts, but it would not adopt issuance occurs outside the United
issuance of a payment stablecoin by a Regulation S’s offshore-transaction States.
person other than a permitted payment framework nor its specific definitions. While informed by Regulation S
stablecoin issuer or a foreign payment In such an alternative, an offshore concepts, such an approach need not
stablecoin issuer that meets the criteria transaction could be defined to require import Regulation S wholesale. For
set out in section 18(a) of the Act (12 that no offer be made to a person in the example, Regulation S’s category
U.S.C. 5916(a)) to a person who is United States and that, at the time the structure, distribution compliance
located in the United States to be acquisition request or other transaction periods, and offering restrictions may
unlawful, regardless of whether the instruction is originated, the person not be necessary.
issuer knew or should have known that acquiring the payment stablecoin is Treasury recognizes that this
the recipient was actually located in the outside the United States, or the foreign alternative may better address certain
United States. Such an alternative payment stablecoin issuer and any cross-border fact patterns than the
would involve narrowing or removing person acting on its behalf reasonably proposed approach, which defines
proposed § 1523.2(c). This alternative believe that the person acquiring the when a payment stablecoin has been
approach would provide a clear, payment