In the United States, a coalition of bipartisan senators is pressing the Treasury Department to uphold state authority in overseeing the regulation of stablecoins, particularly for smaller companies operating within state boundaries. Lawmakers are questioning the Treasury’s approach to the implementation of the GENIUS Act, advocating for significant state supervisory powers.
How Will the Treasury Respond?
Spearheaded by Wyoming Senator Cynthia Lummis, the initiative involves a letter sent to Treasury Secretary Scott Bessent. The letter seeks specific guidance on how states can qualify under the GENIUS Act, emphasizing that the certification process should facilitate state involvement without creating unnecessary obstacles.
According to the senators, the Treasury should not design the certification process as a one-time or time-limited opportunity, but instead ensure permanent access for states, which would better reflect the intent of the law.
The GENIUS Act, enacted in 2025, provides a federal regulatory framework for stablecoins and their issuers. States can oversee these entities if they align their regulations closely with federal standards. Stablecoins with a market cap of $10 billion or less may be monitored by states if specific conditions are met.
The senators argue that the Treasury’s initial approach lacks clarity, leaving states uncertain about establishing their regulatory environments. They urge the Department to issue written guidance detailing application procedures and deadlines.
Is the Dual Banking System in Jeopardy?
The objections stem from the United States’ dual banking system. The senators emphasize Congress’s intention to preserve states’ roles in financial oversight while drafting the GENIUS Act. They note that some states have biennial legislative schedules, highlighting the need for ongoing application opportunities.
The senators also underline the requirement for annual recertification, advocating for continuous collaboration between state and federal financial regulators.
The $10 billion market cap threshold set by the law defines whether stablecoin issuers are subject to federal or state oversight. Leading stablecoins like Tether, USDC, and USDS exceed this threshold, subjecting them to federal regulation.
– Smaller stablecoin issuers with market caps below $10 billion may fall under state supervision.
– The GENIUS Act aims to maintain a balance between state and federal regulatory roles.
– The Treasury’s final guidelines will clarify the eligibility for state regulatory participation.
The Treasury initiated a public consultation in April regarding state-level stablecoin regulation, concluding on June 2. The Department is now working on finalizing regulations for publication. The senators argue that flexible certification can promote healthy competition and ensure a competitive edge for smaller stablecoin issuers.
