Key Highlights
Bipartisan Senators wrote to Treasury Secretary Scott Bessent, asking the department to clarify the state certification process under Section 4(c) of the GENIUS Act before final stablecoin rules are published.
The senators warned that Treasury's proposed principles offered no clear timelines or procedural steps for how states could apply for certification, creating a risk that the process functions as a one-time window that forecloses future participation from state legislatures that operate on biennial schedules or take longer to build qualifying frameworks.
The GENIUS Act permits stablecoin issuers with no more than $10 billion in outstanding issuance to choose state regulation if the state framework is substantially similar to the federal one, leaving major issuers such as Tether's USDt, USDC and USDS under federal oversight.
A bipartisan group of seven senators pushed back on how the Treasury Department is implementing the GENIUS Act's state certification process, warning that without written guidance on timelines and procedures, many state regulators could be effectively excluded from overseeing stablecoin issuers. In a June 16 letter to Treasury Secretary Scott Bessent, the lawmakers said Section 4(c) of the GENIUS Act explicitly gives states a pathway to certify their own stablecoin regulatory regimes, and that Treasury's April proposal left the mechanics of that process undefined. The letter was led by Senator Cynthia Lummis and co-signed by Senators Kirsten Gillibrand, Bill Hagerty, Kevin Cramer, Pete Ricketts, Angela Alsobrooks and Catherine Cortez Masto.
The senators' central concern is that the current proposed framework could function as a narrow one-time window rather than an ongoing process. Some state legislatures meet only every two years, and many are still in the early stages of developing stablecoin laws that would need to meet the GENIUS Act's substantial-similarity standard before they could seek federal certification. If Treasury treats the initial rulemaking period as the only opportunity, states whose frameworks are not yet ready would be permanently locked out of supervising stablecoin issuers operating within their borders, undermining the dual banking system Congress intended to preserve.
The GENIUS Act's state option applies specifically to issuers with no more than $10 billion in outstanding stablecoin issuance. Major stablecoins by market capitalization, including Tether's USDt, USDC and USDS, already exceed that limit and will fall under federal oversight regardless of state rules. Smaller issuers have the option to choose state supervision if their regulator earns federal certification, a provision the senators say could support competition by preserving regulatory diversity. New York's Department of Financial Services has already proposed updates to its stablecoin rules in anticipation of seeking certification under the GENIUS Act framework.
The letter arrives as Treasury moves into the final stage of GENIUS Act rulemaking, with the public comment period on the state-level principles having closed in early June. The senators asked the department to issue written guidance specifying how states can apply, how reviews will be conducted, and when decisions will be made, and to confirm that certification remains available on an ongoing basis rather than only during the initial implementation window. Treasury is simultaneously developing separate GENIUS Act rules on illicit finance controls that would treat licensed stablecoin issuers as financial institutions under the Bank Secrecy Act and require formal sanctions compliance programs, adding further regulatory complexity that state frameworks will need to mirror in order to qualify for certification.
