Preserve state authority in GENIUS Act implementation, a bipartisan group of U.S. senators has urged the Treasury Department, expressing concerns that proposed stablecoin rules could sideline state regulators. Led by Republican Cynthia Lummis, the senators sent a letter to Treasury Secretary Scott Bessent on Tuesday, June 16, 2026, highlighting ambiguities in the process for state certification under the Guiding and Establishing National Innovation for U.S. Stablecoins (GENIUS) Act.
The GENIUS Act, signed into law in July 2025 by President Donald Trump, established a federal regulatory framework for stablecoins across the United States. This landmark legislation mandates that stablecoins be fully backed by U.S. dollars or similar highly liquid assets, requires annual audits for issuers with a market capitalization exceeding $50 billion, and sets clear rules for offshore issuance to ensure market stability and investor protection.
Clarifying State Certification for Stablecoins
A crucial aspect of the GENIUS Act, and the primary focus of the senators’ letter, is the provision allowing stablecoin issuers with a market capitalization of $10 billion or less to be regulated at the state level. This is permissible provided the state’s regulatory framework is deemed “substantially similar” to the federal requirements. The senators contend that the Treasury’s proposed rules, issued in April 2026, lack essential clarity regarding the timeline and standards for state regulatory system applications, reviews, and certifications. This ambiguity, they argue, creates significant uncertainty for states and could limit their future participation in regulating stablecoins, potentially stifling innovation.
“The lack of clarity on state certification creates uncertainty and could hinder states’ ability to regulate stablecoins effectively.”
The bipartisan group of senators emphasized the need for a flexible and continuously open certification mechanism. They recognize that state legislative cycles vary significantly, with some states even adopting biennial cycles, making a rigid application window impractical. This flexibility is essential to ensure states can apply for certification as demand arises, preventing timing mismatches from hindering innovation and competition within the stablecoin market. The ability to preserve state authority in GENIUS Act processes is seen as vital for a dynamic regulatory landscape.
Bipartisan Support for State-Led Innovation
The letter garnered support from a diverse group of senators, including Cynthia Lummis (R-Wyo.), Kirsten Gillibrand (D-N.Y.), Pete Ricketts (R-Neb.), Catherine Cortez Masto (D-Nev.), Kevin Cramer (R-N.D.), Angela Alsobrooks (D-Md.), and Bill Hagerty (R-Tenn.). This bipartisan alignment underscores the widespread recognition of states’ historical role in financial regulation and the desire to maintain that balance in the evolving crypto landscape. The New York Department of Financial Services recently proposed a formal rule to align its stablecoin framework with the GENIUS Act, highlighting the proactive steps some states are already taking to support crypto innovation while ensuring robust oversight.
The Path Forward for Stablecoin Regulation
The Treasury Department has not yet responded to the senators’ request for comment, leaving the stablecoin regulatory landscape in a state of anticipation. The core issue revolves around how to effectively integrate state-level regulatory capabilities within a federal framework without stifling innovation or creating undue burdens. Ensuring that states can adequately preserve state authority in GENIUS Act implementation is critical for fostering a competitive and secure stablecoin ecosystem. The outcome of this dialogue will significantly impact the future of stablecoin regulation and the broader digital asset market in the United States, determining the extent to which states can continue to play a meaningful role in this rapidly evolving sector.
