Congress passed a stablecoin law more than a year ago. The regulators were told to write the rules within twelve months. That deadline came and went in July, and the rulebook is still a stack of proposals asking the public what it thinks. Next Monday, October 19, the comment window closes on one of the most consequential pieces, Treasury’s proposal on who counts as issuing a stablecoin in the United States.
If you hold crypto, trade it, or just watch the sector for signs of whether Washington is serious, this is the quiet story worth your attention. Headlines this fall have been dominated by the Senate’s failed vote on the broader market structure bill and by weekly ETF flow numbers. Meanwhile the GENIUS Act, the law that already exists, is slowly being turned into operating instructions.
What Treasury actually proposed
On August 17, Treasury released a proposed rule defining what it means to “issue a payment stablecoin in the United States” and to “offer or sell” one to a person in the country. According to a law firm summary from Freshfields, it was published in the Federal Register the next day, with comments due October 19. Treasury Secretary Scott Bessent said in the announcement that Treasury welcomes input as it works to provide “the regulatory certainty businesses need.”
The proposal is more than a glossary. Under it, an issuance happens when the issuer first transfers a token in a way that gives someone else rights to use, transfer, or redeem it. Minting tokens into the issuer’s own treasury does not count. Issuance is treated as happening in the United States if either the issuer or the recipient is located here. Treasury says it chose this test over a broader measure of U.S. connections because it is simpler to apply, and it pairs the test with a safe harbor for foreign issuers that screen out U.S. recipients and do not market here.
Then come the dates. Treasury says the law’s effective date is expected to be January 18, 2027, and because no federal stablecoin regulator issued final rules by mid-September, that date is now effectively locked in. From July 18, 2028, digital asset service providers generally may not offer or sell payment stablecoins to persons in the United States unless they come from a licensed issuer or a foreign issuer that qualifies under the law. So there is a ramp, but it is a short one in regulatory terms, and the details that decide who is on the right side of it are being written right now.
The foreign issuer gap
Here is where it gets interesting. A foreign issuer can operate in the U.S. only if Treasury first determines that its home country has a comparable regulatory regime. The Freshfields summary points out that Treasury has not yet proposed the process for making that call. Yet the restriction on platforms offering foreign stablecoins starts on the law’s effective date. Treasury itself acknowledges that a platform cannot fully verify whether a foreign issuer can and will comply with lawful orders, and the same summary notes that eligibility for foreign issuers may stay unclear for a long stretch.
Think about what that means in practice. A U.S. exchange that lists a stablecoin issued abroad would be expected to do reasonable due diligence on whether the issuer can comply with lawful orders and meet the law’s reciprocity requirements. But the yardstick for a comparable regime does not exist yet. Reporting from CoinDesk noted that the industry is watching closely how the rule treats foreign issuers, and it cited Tether as a leading example of the kind of issuer in question.
Treasury also floated two alternatives it wants feedback on. One is a strict liability approach, where any offer or sale to a person located in the United States of a stablecoin not issued by a qualifying issuer would be unlawful, regardless of what the platform knew or how careful it was. The other is a conduct based test modeled on Regulation S, which looks at where an order comes from and how the offering is marketed. Those are very different worlds for an exchange’s compliance department. One is a bright line. The other is a judgment call that depends on facts.
The banking agencies are writing their own chapters
Treasury is only one author. On September 24, the Federal Reserve proposed two rules of its own, according to CoinDesk, both with 60 day comment periods. One covers capital, reserves, and the activities Fed supervised banks may undertake with stablecoins. The other sets out how a regulated bank can apply to start issuing its own, including submitting a business plan and financial information.
The Fed’s proposal also wades into the rewards question, which is the fight that helped sink the broader legislation. Under the proposal, certain arrangements involving third parties would be presumed to be prohibited interest or yield payments. CoinDesk reported that the Fed says this matches the approach of the Office of the Comptroller of the Currency, which may allow only narrow, credit card style reward programs. If you were hoping your stablecoin balance would earn you something through an exchange loyalty program, that language is worth reading.
Fed Governor Michael Barr framed the goal plainly. “Stablecoins will only be stable if they can be reliably and promptly redeemed at par in a range of conditions,” he said. That sentence is the whole regulatory philosophy in miniature. Everything about reserves, capital, and redemption is aimed at one scenario, a stressed market where everyone wants out at once.
The FDIC proposed its own rule in April covering reserve assets, redemptions, capital, and risk management for the issuers it supervises, according to the agency’s release. It also proposes that deposits held as reserves behind a stablecoin would not be insured to stablecoin holders on a pass through basis, only as the issuer’s own corporate deposits, and says tokenized deposits that meet the legal definition of a deposit would be treated like any other deposit. That is a subtle but important line between a bank deposit that happens to live on a blockchain and a stablecoin that does not carry the same protections. And the Freshfields summary says the Comptroller has said the OCC will finalize its rule by November.
Why the failed bill makes this more important, not less
It would be easy to dismiss all of this as paperwork. After all, the Senate’s failed cloture vote on the CLARITY Act in September was the big political event, and it left the broader market structure framework in limbo. But CoinDesk noted a consequence that many casual observers missed. Because the rewards question was a key dispute in that bill, and the bill failed, the GENIUS Act remains the main law governing stablecoin rewards. The agencies’ proposals therefore carry more weight than they otherwise would.
This is the pattern with American crypto policy right now. Big legislative swings capture attention, then stall. Slow rulemaking under laws already on the books keeps moving, one comment period at a time. A retail investor who only follows the headline votes could miss that the real rules of the road for the dollar tokens many people use to move in and out of crypto are being drafted in plain sight.
Markets, for their part, seem to be looking elsewhere. Daily data from Farside Investors show U.S. spot bitcoin ETFs lost about $679 million and spot ether ETFs about $542 million in the week of October 5 to 9, roughly $1.22 billion combined, and a Cubed analysis published October 11 pointed to Treasury yields near their 2026 highs and a stronger dollar. Macro is driving the tape. Stablecoin rules are not. Whether that stays true is a fair question, because the biggest practical effects of these rules will land on exchanges, issuers, and the banks that want to compete with them.
What to watch from here
Comment periods are not votes. Agencies read the feedback, then take months to finalize. CoinDesk observed that the law’s one year rulemaking deadline has already passed and that it is unlikely every rule will be final by the January 18 effective date, with transition periods typical. So expect a messy stretch where the law is technically live and the details are still moving.
Three things are worth tracking. First, whether Treasury lays out a real process for judging a foreign country’s regime as comparable, because without it the foreign issuer restriction has no clear way out. Second, whether the agencies settle on one consistent answer on stablecoin rewards, since the Fed says it is aligning with the OCC. Third, what the final versions do with the choice between a strict liability test and a conduct based one, because that decides how cautious platforms have to be.
None of this tells you what any token will do, and it is not a reason to buy or sell anything. It does tell you something about how the structure around digital assets is being assembled: unglamorously, agency by agency, with deadlines that slip. The people building compliance systems at exchanges and banks already know that. Everyone else may want to catch up before the final rules arrive.
This article is written for educational and informational purposes only and does not constitute financial or legal advice. The views and analytical frameworks presented draw on publicly available information and reported commentary from industry participants. Readers are encouraged to consult primary sources and form their own informed views on these complex topics.
