A bipartisan group of U.S. senators is pressing the Treasury Department to clarify how states can retain authority over smaller stablecoin issuers as federal rules under the GENIUS Act move toward finalization.
In a letter sent to Treasury Secretary Scott Bessent, lawmakers called for clear guidance on how states can gain approval to oversee issuers with market capitalizations of $10 billion or less, warning that the lack of detail is creating uncertainty for regulators and market participants.
Lawmakers seek clarity on state oversight
The senators said current proposals from the Treasury outline broad standards but stop short of defining timelines or specific benchmarks for certification. That gap, they argue, is slowing preparations by states aiming to supervise stablecoin issuers under the new federal framework.
Under the GENIUS Act, signed into law in 2025, smaller issuers can remain under state oversight if local regulations are deemed “substantially similar” to federal rules. The law marked the first nationwide framework for stablecoins, requiring full backing with U.S. dollars or equivalent liquid assets and imposing annual audits for issuers exceeding $50 billion in market value.
The bipartisan letter, signed by Senators Cynthia Lummis, Kirsten Gillibrand, Pete Ricketts, Catherine Cortez Masto, Kevin Cramer, Angela Alsobrooks, and Bill Hagerty, also urged flexibility in the approval process to accommodate varying state legislative schedules.
Growing market raises urgency
The push comes as the stablecoin market has expanded to roughly $316 billion to $320 billion in total capitalization as of early June 2026. The two largest tokens dominate the sector, accounting for more than $263 billion combined, highlighting the systemic importance of clear and coordinated regulation.
Lawmakers and regulators increasingly see the lack of a defined certification pathway as a risk that could fragment compliance standards across jurisdictions, particularly for issuers operating below the $10 billion threshold.
States move ahead without federal direction
Some states are already acting independently. New York’s Department of Financial Services announced a proposal on June 9 to align its existing stablecoin rules with anticipated federal requirements. The plan would formalize current guidance while incorporating new standards, positioning the state for early certification once federal procedures are finalized.
The proposal includes stricter reserve management and reporting requirements, along with a one-year transition period for existing issuers. It signals how proactive states could offer clearer compliance routes for smaller players while federal rulemaking remains incomplete.
Debate over federal versus state balance
State regulators and industry groups are also weighing in. The Conference of State Bank Supervisors has urged Treasury to allow states to go beyond federal minimum standards, framing national rules as a baseline rather than a limit.
This ongoing debate will shape how oversight evolves for a large segment of the stablecoin market. Whether the final framework leans toward uniform federal standards or preserves a more flexible, state-driven approach will determine how issuers adapt in the months ahead.
The Treasury Department has not indicated when it will complete its rulemaking under the GENIUS Act.
For deeper context on U.S. stablecoin rules, read why the GENIUS Act could be the turning point for stablecoins.
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