Treasury limits U.S. exchange access to offshore stablecoins

The Treasury Department’s proposed GENIUS regulations would require foreign payment stablecoin issuers to meet specific conditions before U.S. exchanges, custodians or wallet providers could offer those tokens to American customers after July 18, 2028. An initial set of issuer and platform requirements would take effect on Jan. 18, 2027.

The proposal defines a broad category of “digital asset service provider” that covers cryptocurrency exchanges, custodians, transfer agents and other firms that profit from offering services tied to token issuance. The rule adopts a wide interpretation of “offer or sell,” saying that advertising a token, agreeing to a sale, responding to a customer request with a willingness to complete a trade, or helping a customer bypass geolocation controls could trigger the obligation.

The regulation targets how regulated businesses place tokens in front of U.S. users rather than preventing tokens from moving on blockchains or being held in private wallets. Direct peer-to-peer transfers, individuals sending stablecoins on their own behalf, and software that only assists with private key custody are generally excluded. An American could therefore continue to own or receive an offshore token directly but would face restrictions when using a covered exchange, wallet provider or custodian to buy, swap or deposit that token.

Under Section 18 of GENIUS, a foreign issuer seeking access to U.S. markets must operate in a jurisdiction with a stablecoin regime Treasury considers comparable, register with the Office of the Comptroller of the Currency and demonstrate the ability to comply with lawful U.S. orders. The draft rule asks whether due diligence should include examining an issuer’s smart contracts to verify functions such as freezing, seizing or burning tokens to satisfy court orders. Treasury also expects financial disclosures such as reserve reports and redemption policies to be part of an issuer’s application.

The proposal identifies how major dollar tokens could be affected. Tether’s USDT, issued outside the United States, is available on U.S. platforms today and holds licenses in El Salvador; Tether has previously frozen addresses while cooperating with U.S. authorities and has launched a separate federally regulated U.S. dollar token, USA₮. Circle’s USDC and PayPal USD issued by Paxos are anchored to domestic issuer paths, with Circle holding final OCC approval for Circle National Trust Bank and Paxos issuing PYUSD through a U.S. trust company.

The Treasury paper notes that platforms will have to document why they carry each stablecoin for U.S. customers. The agency is seeking public comment on the draft until Oct. 19 before finalizing the rule. After July 18, 2028, regulated access on U.S. platforms to any stablecoin will depend on whether the issuer fits an approved path, while tokens may continue to circulate on blockchains outside regulated channels.