TechFlow News, April 2, 2024: According to the Notice of Proposed Rulemaking (NPRM) issued by the U.S. Department of the Treasury, the Treasury proposes establishing broad principles to clarify when a state-level stablecoin regulatory regime may be deemed “substantially similar” to the federal regulatory framework, thereby implementing Section 4(c) of the U.S. Stablecoin National Innovation Guidance and Establishment Act (GENIUS Act).
Key provisions are as follows:
1. State-level regulatory regimes must satisfy or exceed the federal standards set forth in Section 4(a) of the GENIUS Act, ensuring that core prudential requirements—including reserve assets, redemption, capital requirements, liquidity management, and risk management—are no less stringent than the federal regulatory baseline;
2. The term “federal regulatory framework” encompasses both the statutory text of the Act and interpretive guidance and regulations issued by the Office of the Comptroller of the Currency (OCC) in the Federal Register; Bank Secrecy Act (BSA)/sanctions compliance requirements are governed by Treasury regulations, while anti-tying provisions are governed by Federal Reserve regulations;
3. Regulatory requirements are divided into two categories: “uniform requirements” and “state-determined requirements.” Uniform requirements mandate that state-level regimes be substantively identical to the federal framework; state-determined requirements permit states to adopt their own rules, provided the resulting regulatory outcomes are at least equally stringent;
4. State-level regimes must include supporting frameworks covering transition to federal regulation, licensing applications, supervision and enforcement, custody, and bankruptcy proceedings, and may impose additional requirements so long as they do not conflict with federal law.
