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Treasury GENIUS proposal would require exchanges to audit foreign stablecoins
The rules would let US platforms continue offering some foreign-issued payment stablecoins only after “reasonable due diligence” on lawful order compliance, with limited access starting Jan. 18, 2027.
The US Treasury has released proposed rules under the GENIUS Act, the new stablecoin law, that would allow US exchanges and other digital-asset service providers to keep offering certain foreign-issued payment stablecoins only if they can explain why they trusted the issuer’s promise to comply with lawful US orders. Under the proposal, a covered platform could rely on a foreign issuer’s representation that it has the technology and intent to follow lawful orders, such as valid orders to freeze or seize tokens where applicable, but only after it conducts reasonable due diligence. Treasury says that due diligence at minimum should confirm the issuer is not subject to a public GENIUS Act prohibition on secondary trading, and that the check would not be sufficient on its own. Treasury also would require platforms to consider all reasonably available information about the issuer, and would bar reliance when the platform knows, has reason to know, or should know that the representation is false or that the issuer cannot or will not comply. The proposal is not a blanket ban on holding or directly transferring foreign stablecoins, and it includes exemptions. The proposal includes key timing points: Treasury expects the Act’s general regime to take effect on Jan. 18, 2027, unless final implementing rules trigger an earlier date, and a stricter offering limit to begin July 18, 2028. From the later date, a covered provider generally could offer or sell a payment stablecoin to someone in the US only if it comes from a permitted US issuer or a foreign issuer that meets specific Section 18 requirements, including comparable supervision, OCC registration, sufficient reserves for US customer liquidity, and restrictions related to US sanctions and money laundering concerns.