Proposed Treasury rules under the GENIUS Act would require US crypto platforms to audit foreign stablecoin issuers or risk delisting, shifting compliance responsibility to exchanges and raising new hurdles for non-US stablecoins
US cryptocurrency exchanges and digital asset service providers could soon face sweeping new obligations when listing foreign-issued stablecoins, as the Treasury Department moves forward with proposed rules under the GENIUS Act. The draft regulations, which are not yet finalized, would require US platforms to conduct thorough due diligence on foreign stablecoin issuers to ensure they can comply with lawful US orders-such as freezing or seizing tokens-before making those assets available to American users.
Due Diligence and Compliance Burden
Under the proposal, US exchanges would be allowed to rely on a foreign issuer's claim that it has the technology and intent to comply with US legal orders, but only after performing what the Treasury calls "reasonable due diligence." This process would go beyond simply checking that an issuer is not banned under the GENIUS Act. Platforms would need to review all reasonably available information about the issuer's ability and willingness to comply with US law. If an exchange knows, has reason to know, or should know that an issuer's representation is false or that the issuer cannot or will not comply, reliance on that claim would be prohibited. The responsibility for determining whether a foreign stablecoin can be listed would shift from regulators to the businesses themselves, increasing legal and operational risk for US platforms.
Stricter Rules and Timeline
The Treasury's proposal sets out a two-stage timeline. The general regime is expected to take effect on January 18, 2027, unless final rules are implemented earlier. A stricter regime would begin on July 18, 2028, after which US exchanges could only offer payment stablecoins to US users if the tokens are issued by a permitted US entity or by a foreign issuer that meets specific Section 18 requirements. These requirements include supervision under a regulatory regime deemed comparable by the Treasury, registration with the Office of the Comptroller of the Currency, and holding sufficient reserves at a US financial institution for US customer liquidity-unless a reciprocal arrangement is in place. Jurisdictions under comprehensive US sanctions or designated as primary money laundering concerns would be excluded. Even if a foreign issuer meets these criteria, exchanges would still need to perform their own diligence on lawful-order compliance before listing the token.
Exemptions and Unsettled Standards
The proposed rules do not amount to a blanket ban on holding or transferring foreign stablecoins. Exemptions would allow for direct transfers between individuals without intermediaries, certain transfers between a person's US and foreign accounts under the same parent, and transactions using self-custody wallets. However, what constitutes adequate due diligence by platforms remains unsettled. The Treasury is seeking public comment on whether final rules should require written or regularly updated issuer representations, record retention, smart contract reviews, or technical checks for freeze, seize, and burn functions. These are open questions, not current mandates. The comment period for the proposal closes on October 19, 2026. Until the rules are finalized and regulators make issuer-specific decisions, US access to foreign stablecoins will depend on how platforms interpret and implement these evolving requirements.
As of June 2026, Tether (USDT) remains the largest foreign-issued stablecoin by circulating supply, with over $110 billion in tokens outstanding according to public blockchain data. USDC, issued by Circle Internet Group, is the largest US-based stablecoin, with a circulating supply of approximately $32 billion. The GENIUS Act's proposed rules do not specify which tokens will qualify under the new regime, leaving the status of major stablecoins like USDT and others uncertain until further regulatory guidance is issued.
Stablecoins are digital tokens designed to maintain a fixed value, typically pegged to the US dollar or another fiat currency. While many stablecoins are backed by reserves held by the issuer, the quality, liquidity, and custody of those reserves can vary widely. Regulatory scrutiny has increased as stablecoins have become central to crypto trading, payments, and decentralized finance. The GENIUS Act's approach reflects a broader trend of shifting compliance responsibility from regulators to exchanges and service providers, raising the stakes for how platforms vet and monitor the stablecoins they list. For US users, these changes could affect which stablecoins remain available, how quickly tokens can be frozen or seized in response to legal orders, and the overall risk profile of holding or transacting with foreign-issued stablecoins.
