GENIUS Act Regulations on Payment Stablecoin Issuance, Offer, and Sale

======================================================================== Proposed Rules Federal Register ________________________________________________________________________ This section of the FEDERAL REGISTER contains notices to the public of the proposed issuance of rules and regulations. The purpose of these notices is to give interested persons an opportunity to participate in the rule making prior to the adoption of the final rules. ========================================================================

Federal Register / Vol. 91, No. 158 / Tuesday, August 18, 2026 / Proposed Rules

DEPARTMENT OF THE TREASURY

12 CFR Chapter XV

GENIUS Act Regulations on Payment Stablecoin Issuance, Offer, and Sale

Department of the Treasury.

Notice of proposed rulemaking (NPRM).

The Department of the Treasury (Treasury) proposes to issue regulations to implement section 3 of the Guiding and Establishing National Innovation for U.S. Stablecoins (GENIUS) Act regarding the statutory prohibitions and limitations on payment stablecoin issuance, offer, and sale in the United States.

Comments on the NPRM must be received on or before October 19, 2026.

Written comments may be submitted through one of two methods: Electronic Submission: Comments may be submitted electronically through the Federal Government eRulemaking portal at https://www.regulations.gov. Mail: Send to U.S. Department of the Treasury, Attention: Office of General Counsel, 1500 Pennsylvania Avenue NW, Washington, DC 20220. We encourage comments to be submitted via https://www.regulations.gov. All comments should be captioned with "GENIUS Act Regulations on Payment Stablecoin Issuance, Offer, and Sale." Please include your name, organizational affiliation, address, email address, and telephone number in your comment. In general, all comments received, including attachments and other supporting materials, will be part of the public record and subject to public disclosure. Do not submit any information in your comment or supporting materials that you consider confidential or inappropriate for public disclosure.

Brendan Costello and Cody Gaffney, Attorney-Advisors, Office of the General Counsel, and Jonathan Hurowitz, Senior Advisor, Office of Financial Institutions, Treasury, at [email protected] or 202-622-0480.

The GENIUS Act, enacted on July 18, 2025, establishes a comprehensive framework for the regulation of payment stablecoins.\1\ As defined in the GENIUS Act, a payment stablecoin is a digital asset \2\ (i) that is, or is designed to be, used as a means of payment or settlement, and (ii) the issuer of which is obligated to convert, redeem, or repurchase for a fixed amount of monetary value (not including a digital asset denominated in a fixed amount of monetary value) and represents that the issuer will maintain, or create the reasonable expectation that it will maintain, a stable value relative to a fixed amount of monetary value.\3\

\1\ See Public Law 119-27 (codified at 12 U.S.C. 5901 et seq.). The GENIUS Act is referred to throughout this proposal simply as "the Act." \2\ The term "digital asset" means any digital representation of value that is recorded on a cryptographically secured distributed ledger. See section 2(6) of the Act (12 U.S.C. 5901(6)). \3\ See section 2(22) of the Act (12 U.S.C. 5901(22)). Digital assets that are (i) national currencies, (ii) deposits (as defined in section 3 of the Federal Deposit Insurance Act), including deposits recorded using distributed ledger technology, or (iii) securities (as defined in certain federal securities laws) are not considered payment stablecoins. See id.

Section 3 of the Act (12 U.S.C. 5902) delineates the fundamental architecture of the payment stablecoin market in the United States, prescribing who may issue, offer, sell, or otherwise make available payment stablecoins. Section 3 "is intended to have extraterritorial effect if conduct involves the offer or sale of a payment stablecoin to a person located in the United States." \4\

\4\ Section 3(e) of the Act (12 U.S.C. 5902(e)).

With respect to issuance of payment stablecoins, section 3(a) of the Act (12 U.S.C. 5902(a)) makes it unlawful for any person other than a permitted payment stablecoin issuer to issue a payment stablecoin in the United States.\5\ Knowing participation in a violation of section 3(a) is punishable by a fine of not more than $1 million for each violation, imprisonment for not more than five years, or both under the Act.\6\

\5\ See section 3(a) of the Act (12 U.S.C. 5902(a)). The term "permitted payment stablecoin issuer" means a person formed in the United States that is (i) a subsidiary of an insured depository institution that has been approved to issue payment stablecoins under section 5 of the Act (12 U.S.C. 5904), (ii) a Federal qualified payment stablecoin issuer (as defined in section 2(11) of the Act (12 U.S.C. 5901(11))), or (iii) a State qualified payment stablecoin issuer (as defined in section 2(31) of the Act (12 U.S.C. 5901(31))). See section 2(23) of the Act (12 U.S.C. 5901(23)). Permitted payment stablecoin issuers are regulated by the primary Federal payment stablecoin regulators or State payment stablecoin regulators, as appropriate. \6\ Section 3(f) of the Act (12 U.S.C. 5902(f)).

Section 3(b) of the Act (12 U.S.C. 5902(b)) addresses the offer, sale, or otherwise making available of payment stablecoins in the United States by digital asset service providers. Under the Act, a digital asset service provider is a person (such as a digital asset exchange) that, for compensation or profit, engages in the business in the United States (including on behalf of customers or users in the United States) of exchanging digital assets for monetary value or for other digital assets, transferring digital assets to a third party, acting as a digital asset custodian, or participating in financial services relating to digital asset issuance.\7\

\7\ See section 2(7) of the Act (12 U.S.C. 5901(7)).

Section 3(b) (12 U.S.C. 5902(b)) contains two distinct prohibitions. First, under section 3(b)(1) of the Act (12 U.S.C. 5902(b)(1)), beginning on July 18, 2028 (i.e., the date that is three years after the date of enactment of the GENIUS Act), it shall be unlawful for a digital asset service provider to offer or sell a payment stablecoin to a person in the United States, unless the payment stablecoin is issued by a permitted payment stablecoin issuer.\8\ Second, section 3(b)(2) (12 U.S.C. 5902(b)(2))--which unlike section 3(b)(1) becomes applicable on the effective date of the Act-- specifically addresses payment stablecoins issued by foreign payment stablecoin issuers,\9\ providing that it shall be unlawful for any digital asset service provider to offer, sell, or otherwise make available in the United States a payment stablecoin issued by a

foreign payment stablecoin issuer unless the foreign payment stablecoin issuer has the technological capability to comply, and will comply, with the terms of any lawful order and any reciprocal arrangement pursuant to section 18 of the Act (12 U.S.C. 5916).\10\

\8\ See section 3(b)(1) of the Act (12 U.S.C. 5902(b)(1)). \9\ The term "foreign payment stablecoin issuer" means an issuer of a payment stablecoin that is organized under the laws of or domiciled in a foreign country, a territory of the United States, Puerto Rico, Guam, American Samoa, or the Virgin Islands, and is not a permitted payment stablecoin issuer. See section 2(12) of the Act (12 U.S.C. 5901(12)). \10\ See section 3(b)(2) of the Act (12 U.S.C. 5902(b)(2)). The effective date of the GENIUS Act is expected to be January 18, 2027 (i.e., the date that is 18 months after the date of enactment of the GENIUS Act). See section 20 of the Act (Pub. L. 119-27, 20, 139 Stat. 466, set out as a note under 12 U.S.C. 5901).

Various provisions of the Act create exemptions from certain of these general prohibitions relating to the issuance, offer, sale, or making available of payment stablecoins. First, section 3(h) (12 U.S.C. 5902(h)) contains rules of construction that expressly exempt three categories of transactions from section 3: (i) the direct transfer of digital assets between two individuals acting on their own behalf and for their own lawful purposes, without the involvement of an intermediary, (ii) any transaction involving the receipt of digital assets by an individual between an account owned by the individual in the United States and an account owned by the individual abroad that are offered by the same parent company, and (iii) any transaction by means of a software or hardware wallet that facilitates an individual's own custody of digital assets.\11\

\11\ See section 3(h) of the Act (12 U.S.C. 5902(h)).

Second, section 18(a) of the Act (12 U.S.C. 5916(a)) provides that the prohibitions under section 3 (12 U.S.C. 5902) shall not apply to a foreign payment stablecoin issuer if certain conditions are met, including that (i) the foreign payment stablecoin issuer is subject to regulation and supervision by a foreign payment stablecoin regulator of a foreign country that has a regulatory and supervisory regime with respect to payment stablecoins that the Secretary of the Treasury determines, pursuant to section 18(b) of the Act (12 U.S.C. 5916(b)), is comparable to the regulatory and supervisory regime established under the GENIUS Act, and (ii) the foreign payment stablecoin issuer is registered with the Office of the Comptroller of the Currency (OCC).\12\

\12\ See section 18(a) of the Act (12 U.S.C. 5916(a)).

Third, section 5(f) of the Act (12 U.S.C. 5904(f)) authorizes the primary Federal payment stablecoin regulators to waive the application of the requirements of the Act for a period not to exceed 12 months beginning on the effective date of the Act with respect to subsidiaries of insured depository institutions and Federal qualified payment stablecoin issuers with a pending application on the Act's effective date.\13\

\13\ See section 5(f) of the Act (12 U.S.C. 5904(f)). "Primary Federal payment stablecoin regulator" is defined in section 2(25) of the Act (12 U.S.C. 5901(25)) and may refer, depending on the entity in question, to the OCC, the Board of Governors of the Federal Reserve System (Board), the Federal Deposit Insurance Corporation (FDIC), or the National Credit Union Administration (NCUA). "Federal qualified payment stablecoin issuer" is defined in section 2(11) of the Act (12 U.S.C. 5901(11)).

Finally, the Act vests Treasury with authority to issue regulations providing certain safe harbors that are consistent with the purposes of the Act, limited in scope, and apply to a de minimis volume of transactions, and to provide certain other limited safe harbors in unusual and exigent circumstances.\14\

\14\ See section 3(c) of the Act (12 U.S.C. 5902(c)).

The Act directs Treasury to issue regulations to implement section 3, including regulations to define terms.\15\ On September 19, 2025, Treasury published in the Federal Register an Advance Notice of Proposed Rulemaking (ANPRM) to solicit public comment on questions relating to the implementation of the Act.\16\ In drafting this NPRM, Treasury carefully considered comments received in response to the ANPRM that were material and relevant to the subjects addressed herein.\17\

Consistent with its obligation to faithfully implement the GENIUS Act, in crafting this proposal, Treasury focused on the text of the GENIUS Act itself as the starting point for these proposed regulations and did not start from any pre-existing regulatory baseline. Nevertheless, throughout the proposal, Treasury considered certain discrete aspects of existing legal and regulatory regimes where Treasury believes these regimes may be instructive to the regulation of payment stablecoin activities under section 3 of the Act. For example, in developing this proposal, Treasury considered several comments to the ANPRM that suggested that the federal securities laws, in addition to the text of the GENIUS Act, should serve as a reference point for implementing section 3 of the Act. Treasury recognizes that there are longstanding legal regimes that address the issue, offer, and sale of other financial instruments, such as securities, including offshore activities. However, the GENIUS Act clearly distinguishes among payment stablecoins, securities, and commodities, expressly providing that payment stablecoins are not securities or commodities.\18\ Unlike many existing financial instruments that are designed for investment and capital appreciation, payment stablecoins are, or are designed to be, used as a means of payment or settlement and are expected to maintain a stable value. Treasury believes that the Act evinces a clear intent for payment stablecoins to serve as an effective means of payment and settlement, including across borders, and application of traditional investment rules to payment stablecoins may frustrate that goal. Similarly, some operational mechanics of payment stablecoins (such as payment stablecoin minting and redemption) may differ from traditional securities and commodities in material ways that may not be properly accounted for by applying those existing regulatory regimes to payment stablecoins.\19\

\18\ Specifically, section 17 of the Act (Pub. L. 119-27, 17, 139 Stat. 459, amending 7 U.S.C. 1a and 15 U.S.C. 77b, 78c, 78lll, 80a-2, 80a-3, and 80b-2) clarifies that payment stablecoins are not securities for purposes of the federal securities laws, nor commodities for purposes of the Commodity Exchange Act. \19\ Several commenters on the ANPRM expressed similar sentiments. For example, one commenter on the ANPRM noted that while Securities and Exchange Commission (SEC) rules may be a useful example, not all aspects of those rules are appropriate in the context of digital assets. Another commenter noted that while the territorial approach of certain SEC rules could be a possible starting point, unique issues may be presented by digital assets that would require updating that approach.

Treasury welcomes comment on whether this approach is appropriate or whether, in the alternative, these

regulations should adopt an approach that is more similar to existing securities or commodities regulatory frameworks, such as Regulation S under the Securities Act.\20\

\20\ See 17 CFR 230.901-905.

This proposal would add new part 1523 to subchapter C of chapter XV of title 12 of the Code of Federal Regulations.\21\ Part 1523 would define key terms and implement section 3's prohibitions related to the issuance, offer, sale, and making available of payment stablecoins.

\21\ On April 3, 2026, Treasury proposed broad-based principles for determining whether a State-level regulatory regime is substantially similar to the Federal regulatory framework under section 4(c) of the Act (12 U.S.C. 5903(c)). See 91 FR 16844 (Apr. 3, 2026). Those principles would be codified at Part 1521 within a new Subchapter C of Chapter XV of the Code of Federal Regulations. This proposal would add new part 1523 to subchapter C, reserving part 1522 for other regulations.

Proposed Sec. 1523.1 sets out the scope of Part 1523 and defines key terms. Consistent with the Act, proposed Sec. 1523.1 makes clear that this part is intended to have extraterritorial effect if conduct involves the offer or sale of a payment stablecoin to a person located in the United States. Proposed Sec. 1523.1 also defines terms such as "issue" and "located in the United States." Significantly, proposed Sec. 1523.1 makes clear that a payment stablecoin issuer may also be considered a digital asset service provider, and thus, the rules that apply to issuers and the rules that apply to digital asset service providers are not mutually exclusive. Proposed Sec. 1523.2 implements the prohibition on payment stablecoin issuance in the United States under section 3(a) of the Act (12 U.S.C. 5902(a)). First, proposed Sec. 1523.2(a) makes clear that foreign payment stablecoin issuers that meet the criteria set out in section 18(a) of the Act (12 U.S.C. 5916(a)), including registration with the OCC, may issue payment stablecoins in the United States in addition to permitted payment stablecoin issuers. Next, proposed Sec. 1523.2(b) provides that a person will be considered to have issued a payment stablecoin in the United States only if, at the time of issuance, the person is located in the United States (as defined in proposed Sec. 1523.1) or the person issues the payment stablecoin to a person located in the United States (as defined in proposed Sec. 1523.1). By contrast, proposed Sec. 1523.2(c) describes activities that would be deemed not to be issuances of payment stablecoins in the United States. Finally, proposed Sec. 1523.2(d) provides examples of activities that, when conducted by a person in connection with the issuance of a payment stablecoin that violates section 3(a) of the Act (12 U.S.C. 5902(a)), may constitute participation in an unlawful issuance for purposes of the criminal penalty in section 3(f) of the Act (12 U.S.C. 5902(f)), such as acting as a market maker for newly- issued payment stablecoins or coordinating with the issuer to facilitate key steps in the issuance. Proposed Sec. 1523.3 implements the GENIUS Act's prohibitions on the offer, sale, and making available of payment stablecoins by digital asset service providers under section 3(b) of the Act (12 U.S.C. 5902(b)). First, proposed Sec. 1523.3(a) and (b) codify sections 3(b)(1) and 3(b)(2) of the Act (12 U.S.C. 5902(b)(1), (2)), respectively, with some clarifications. Second, proposed Sec. 1523.3(c) describes a digital asset service provider's obligations with respect to a foreign payment stablecoin issuer's compliance with lawful orders and reciprocal arrangements. Next, proposed Sec. 1523.3(d) enumerates examples of activities that constitute the offer or sale of payment stablecoins, such as directly soliciting a person located in the United States, advertising a payment stablecoin as available for purchase by persons located in the United States, and advising potential purchasers on how to evade generally applicable location detection or restriction mechanisms. Finally, proposed Sec. 1523.3(e) describes activities that would be deemed not to be offers or sales of payment stablecoins to persons located in the United States. Proposed Sec. 1523.4 sets out exemptions and safe harbors from the section 3 framework, and Treasury requests comment on whether to create additional safe harbors. Proposed Sec. 1523.5 includes a severability provision. Proposed Appendix A provides a number of interpretations intended to clarify the application of proposed Part 1523 to certain common or complex scenarios.

C. Scope, Applicability, and Definitions (Proposed Sec. 1523.1)

1. Scope and Applicability Proposed Sec. 1523.1 sets forth the scope and applicability of Part 1523. Paragraph (a) provides that Part 1523 is issued by Treasury to implement section 3 of the Act (12 U.S.C. 5902) regarding statutory prohibitions and limitations on issuing, offering, selling, and otherwise making available payment stablecoins in the United States. 2. Extraterritorial Effect Proposed paragraph (b) makes clear that, consistent with section 3(e) of the Act (12 U.S.C. 5902(e)), proposed Part 1523 is intended to have extraterritorial effect if conduct involves the offer or sale of a payment stablecoin to a person located in the United States. Question 1: Is the extraterritorial effect of section 3 of the Act (12 U.S.C. 5902) (as described in this proposed Part 1523) clear or should Treasury provide additional clarity? For example, should Treasury specify in regulatory text the extent to which Part 1523 has extraterritorial effect as to the issuance of payment stablecoins to persons located outside of the United States? Question 2: Are there any scenarios in which issuing or making available a payment stablecoin would not reasonably be considered an offer or sale? If so, would such activity nonetheless fall within the extraterritorial scope of the Act and this Part? Are there any scenarios in which other conduct or transactions involving a payment stablecoin contemplated by Part 1523 would not reasonably be considered within the extraterritorial scope of the Act? 3. Definitions Proposed paragraph (c) sets forth a number of definitions for purposes of Part 1523.\22\

\22\ These definitions are proposed only for the purposes of part 1523 and this proposal does not propose to define terms that may be defined by any other statute or regulation, including other sections of the Act and regulations issued thereunder. For example, the proposed definition of "issue" is designed for and based on section 3 of the Act (12 U.S.C. 5902), which is meant to proscribe issuance by persons that are not permitted payment stablecoin issuers; this context is distinct from other contexts that may use facially similar terminology, such as the concepts of "outstanding issuance value" that are used by the primary Federal payment stablecoin regulators for purposes of prudential reserve requirements for permitted payment stablecoin issuers.

Under the proposal, the terms "digital asset," "federal qualified payment stablecoin issuer," "foreign payment stablecoin issuer," "insured depository institution," "lawful order," "monetary value," "offer," "payment stablecoin," "permitted payment stablecoin issuer," "person," "primary Federal payment stablecoin regulator," "State," and "subsidiary" \23\ would be defined by cross-reference to the corresponding statutory definitions in section 2 of the

Act (12 U.S.C. 5901) without further elaboration.

\23\ With respect to this term, proposed paragraph (c) cites both sections 2(32) and 2(33) of the Act (12 U.S.C. 5901(32), (33)) to ensure subsidiaries of insured credit unions are appropriately captured. See 91 FR 6531, 6532 n.13 (Feb. 12, 2026).

Question 3: Should any of the terms that would be defined solely by cross-reference to section 2 of the Act (12 U.S.C. 5901) be clarified? For example, should Treasury clarify the application of the term "person" to various entities that may be involved with payment stablecoins, including those that are or may be affiliated with a government entity. If a term's definition depends on other defined terms in the Act, should those nested definitions be spelled out? Should any of the definitions be reproduced in the text of Part 1523 rather than by cross-reference to the Act? Question 4: Should Treasury make any modifications to the definition of "lawful order" as proposed for part 1523, including clarifications, such as to define terms within the definition of "lawful order" as considered by FinCEN for its proposed definition of the term "lawful order" or otherwise to align more closely to FinCEN regulatory definitions? See 91 FR 18582, 18594-5 (Apr. 10, 2026). Question 5: For purposes of section 3 of the Act (12 U.S.C. 5902) and Part 1523, should Treasury interpret the term "payment stablecoin" and related definitions to include a digital asset that the issuer is obligated to redeem in other forms of value that may be the functional equivalent of those forms of "monetary value" enumerated in section 2(17) of the Act (12 U.S.C. 5901(17)) (i.e., national currencies or deposits as defined in section 3 of the Federal Deposit Insurance Act)? For example, should a digital asset that is redeemable only in credit union shares be considered a payment stablecoin within the scope of section 3 of the Act (12 U.S.C. 5902) and these proposed regulations? Does the ubiquitous convertibility of credit union shares and bank deposits in the U.S. financial system bear on this question? Similarly, should digital assets redeemable only in non-deposit liabilities of a company that are commonly viewed by the public as ubiquitously convertible to bank deposits be considered to be payment stablecoins? What are the practical or evasion risks of possible interpretations? By contrast, the proposal would define several key terms other than solely by cross-reference to the Act either because the Act does not define the term or because Treasury has determined that additional clarity is needed to provide regulatory certainty. Act or GENIUS Act. Proposed Sec. 1523.1(c) would define "Act" or "GENIUS Act" to mean the Guiding and Establishing National Innovation for U.S. Stablecoins Act (12 U.S.C. 5901 et seq.). Digital asset service provider. Proposed Sec. 1523.1(c) would define "digital asset service provider" by cross-reference to section 2(7) of the Act (12 U.S.C. 5901(7)), with the additional clarification that the term includes a person that, for compensation or profit, engages in the business in the United States of issuing payment stablecoins. Treasury considered whether the Act should be read as treating issuers of payment stablecoins and digital asset service providers as mutually exclusive categories, but concluded that the better reading of the Act is that issuers of payment stablecoins can simultaneously be digital asset service providers. Notably, the Act does not specify that issuers of payment stablecoins cannot be digital asset service providers, but in other instances does specify when two categories are mutually exclusive.\24\ Further, some of the core activities of payment stablecoin issuers (such as the activities of permitted payment stablecoin issuers listed in section 4(a)(7) of the Act (12 U.S.C. 5903(a)(7))) clearly fall within the list of digital asset service provider activities in section 2(7) of the Act (12 U.S.C. 5901(7)). For example, redeeming payment stablecoins (section 4(a)(7)(A)(ii) of the Act (12 U.S.C. 5903(a)(7)(A)(ii))) necessarily involves exchanging digital assets for monetary value (section 2(7)(A)(ii) of the Act (12 U.S.C. 5901(7)(A)(ii))). For this reason, Treasury not only determined that the categories of payment stablecoin issuer and digital asset service provider are overlapping, but that all persons that, for compensation or profit, engage in the business in the United States of issuing payment stablecoins will constitute digital asset service providers as defined in the Act.

\24\ Compare section 2(7) of the Act (12 U.S.C. 5901(7)) (defining "digital asset service provider" without carving out issuers of payment stablecoins) with section 2(12) of the Act (12 U.S.C. 5901(12)) (defining "foreign payment stablecoin issuer" and clearly noting that a permitted payment stablecoin issuer is not a foreign payment stablecoin issuer).

A contrary reading in which payment stablecoin issuers are deemed not to be digital asset service providers could further have the effect of exempting persons who engage in significant payment stablecoin offer and sale activities in the United States from the operative restrictions of section 3 (12 U.S.C. 5902) merely because they are also engaged in payment stablecoin issuance. For example, such an interpretation would, theoretically, allow a permitted payment stablecoin issuer to offer and sell a payment stablecoin that a digital asset service provider is not permitted to offer or sell, such as a payment stablecoin issued by a foreign payment stablecoin issuer that does not have the technological capability to comply, or will not comply, with the terms of any lawful order and any reciprocal arrangement pursuant to section 18 of the Act (12 U.S.C. 5916).\25\ This interpretation would likewise allow a foreign payment stablecoin issuer to offer and sell a payment stablecoin issued by another issuer that is not compliant with the GENIUS Act. Such an interpretation would facilitate the evasion of section 3's prohibitions and obviate the GENIUS Act's otherwise clear boundaries ensuring that payment stablecoins offered and sold to persons in the United States comply with the Act's requirements.

\25\ See section 3(b)(2) of the Act (12 U.S.C. 5902(b)(2)).

Question 6: Does Treasury's determination that all persons that, for compensation or profit, engage in the business in the United States of issuing payment stablecoins constitute digital asset service providers reflect the best reading of the statute? Assuming payment stablecoin issuers can also be digital asset service providers, is additional clarity needed with respect to how any of section 3's prohibitions regarding the offer or sale of payment stablecoins apply to payment stablecoin issuers? Are there certain digital asset service provider restrictions that should not apply to payment stablecoin issuers, and if so, should it depend on whether the issuers are registered or unregistered under the Act? By contrast, if issuers of payment stablecoins and digital asset service providers are mutually exclusive categories, what changes would be necessary to the proposal to clarify the application of section 3? Question 7: Should any additional clarification (beyond the one clarification proposed) be provided on the statutory definition of the term "digital asset service provider"? Issue. The term "issue" is not defined in the Act. Proposed Sec. 1523.1(c) defines "issue" to mean, except as required by a lawful order, the first transfer of a payment stablecoin by the issuer, whether directly or indirectly, including by crediting an account, that results or will result in a person other than the issuer having the right to use or transfer the payment stablecoin or to have the payment stablecoin converted, redeemed, or repurchased. Because the term "issue" is not defined in the Act, in order to implement the limitation on payment

stablecoin issuance in section 3(a) (12 U.S.C. 5902(a)), it is necessary for Treasury to determine when in the process of creating a new payment stablecoin the payment stablecoin should be considered to have been issued.\26\ The proposed definition contains several elements designed to ensure that the definition captures the appropriate payment stablecoin activities consistent with the text and purposes of the Act. The proposed definition also contains an exception to allow for compliance with a lawful order notwithstanding proposed Sec. 1523.2.\27\

\26\ For a description of how payment stablecoins are created, see Strengthening American Leadership in Digital Financial Technology at 90 (July 2025), https://www.whitehouse.gov/wp-content/uploads/2025/07/Digital-Assets-Report-EO14178.pdf. \27\ The Act calls for compliance with lawful orders in various provisions. See, e.g., sections 3(b)(2), 4(a)(6), and 8 of the Act (12 U.S.C. 5902(b)(2), 5903(a)(6), and 5907). Treasury's proposed regulatory provisions accordingly seek to implement the language provided in the GENIUS Act regarding lawful orders.

First, the proposed definition focuses on the first transfer of the payment stablecoin by the issuer. This element is consistent with the plain meaning of "issue" \28\ as well as existing definitions of "issue" for other financial instruments.\29\ A consequence of this element is that a digital asset that has been minted but is held in the issuer's treasury would not be considered to have been issued as a payment stablecoin because the digital asset has not yet been transferred to a third party.\30\ However, the direct minting of a payment stablecoin to a holder's wallet would be considered a first transfer of the payment stablecoin.

\28\ See Black's Law Dictionary, "Issue" (12th ed., 2024) ("to be put forth officially," "to send out or distribute officially"); Merriam-Webster Online ("to put forth or distribute usually officially," "to send out for sale or circulation"). \29\ See UCC Sec. 3-105(a) (defining "issue" to mean "the first delivery of an instrument by the maker or drawer, whether to a holder or nonholder, for the purpose of giving rights on the instrument to any person"); id. at Sec. 1-201(b)(15) (defining delivery, with respect to an instrument, as "voluntary transfer of possession"). Treasury believes that reference to negotiable instruments under Article 3 of the Uniform Commercial Code (UCC) is a helpful analogy because such instruments share certain characteristics with payment stablecoins--namely that they are, or are designed to be, used as a means of payment or settlement. Treasury further believes that concepts of transfer with respect to controllable electronic records under Article 12 of the UCC also serve as helpful analogies. See, e.g., UCC Sec. 12-104(d) ("A purchaser of a controllable electronic record acquires all rights in the controllable electronic record that the transferor had or had power to transfer . . ."); id. at Sec. 12-105(a) (providing that a person has control over a record if it, among other things, gives the person exclusive power to "transfer control of the electronic record to another person"). However, Treasury does not take a position in this proposal on appropriate treatment under the UCC of any transactions involving payment stablecoins, either before or after the effective date of the Act. \30\ Treasury notes that the OCC proposed to define "outstanding issuance value" to exclude payment stablecoins held in the issuer's treasury. See 91 FR 10202, 10208 (Mar. 2, 2026).

Second, the proposed definition clarifies that the first transfer of the payment stablecoin may be effected directly or indirectly by the issuer. This element is intended to address situations where the first transfer of the payment stablecoin is effected by the issuer through an agent or intermediary acting on behalf of the issuer, such as an underwriter or distributor. Third, the proposed definition clarifies that the transfer of a payment stablecoin includes the crediting of an account. This element is intended to address situations where rights associated with the payment stablecoin have been transferred to a person other than the issuer, but the payment stablecoin remains in the issuer's wallet, for example, because the issuer also serves as custodian. In this situation, even though the payment stablecoin has not transferred to a different wallet address, Treasury believes that an issuance has occurred. Fourth, the first transfer of the payment stablecoin by the issuer must result or will result in a person other than the issuer having the right to use or transfer the payment stablecoin or to have the payment stablecoin converted, redeemed, or repurchased. This element reflects the key features that make a digital asset a payment stablecoin as defined in the Act: its usability as a means of payment or settlement and its convertibility into a fixed amount of monetary value.\31\ As such, in defining when a payment stablecoin is considered to have been issued, Treasury believes that it is appropriate to focus on the transaction that gives rise to these key features of a payment stablecoin.\32\ Further, existing definitions of "issue" include similar language focused on the vesting of rights in a third party.\33\

\31\ See section 2(22) of the Act (12 U.S.C. 5901(22)) (defining "payment stablecoin" as a digital asset that, among other things, is, or is designed to be, used as a means of payment or settlement, and the issuer of which is obligated to convert, redeem, or repurchase for a fixed amount of monetary value). \32\ Treasury notes that the OCC similarly concluded that the concept of issuance should be understood consistent with the defined term "payment stablecoin." See 91 FR 10202, 10208 (Mar. 2, 2026) (discussing "outstanding issuance value"). \33\ In particular, under Article 3 of the UCC, a negotiable instrument is not issued unless the first delivery is "for the purpose of giving rights on the instrument to any person." See UCC Sec. 3-105(a).