From Enforcement To Framework: Treasury Advances Stablecoins Under GENIUS Act

Over the past several years, US crypto policy has reflected two competing regulatory approaches in Washington. Under the Biden administration, agencies took an enforcement-forward posture, with the Securities and Exchange Commission (SEC) bringing high-profile actions against digital asset platforms and market participants such as Coinbase¹ and Binance,² while the Department of Justice pursued criminal enforcement against Binance³ and its founder⁴ for anti-money laundering (AML) and sanctions violations. At the same time, the Department of the Treasury addressed these same AML and sanctions risks through guidance.⁵ This approach, often described as “regulation by enforcement,” left industry participants navigating evolving interpretations of law rather than working within a tailored regulatory framework.

By contrast, the Trump administration quickly abandoned this approach, with the SEC dropping both enforcement actions against Coinbase and Binance, and issuing a pardon to Binance’s founder, Changpeng Zhao, while declaring that “the Biden administration’s war on crypto is over.” At the same time, the administration has advanced a more structured regulatory approach through the Guiding and Establishing National Innovation for the US Stablecoins Act (GENIUS Act), which establishes a federal regulatory framework for payment stablecoins — digital assets designed to maintain a stable value, typically pegged to the US dollar.

Treasury has now begun to implement this shift. On April 8, 2026, Treasury’s Financial Crimes Enforcement Network (FinCEN) and the Office of Foreign Assets Control (OFAC) issued a joint proposed rule to implement key provisions of the GENIUS Act. The proposal would bring permitted payment stablecoin issuers (PPSIs) squarely within the US anti-money laundering and sanctions compliance framework, treating them as financial institutions for the purpose of the Bank Secrecy Act.

The proposal is grounded in national security concerns. Treasury emphasized that while payment stablecoins may transform payment systems, the scale and centrality of the US financial system make these instruments an attractive target for illicit finance. To address this, the rule would require PPSIs to implement risk-based AML programs and maintain effective sanctions compliance programs, aligning PPSIs with a framework long applied to traditional financial institutions. Practically, stablecoin issuers should expect regulator scrutiny not only of their transaction monitoring and customer due diligence processes, but also of their sanctions screening protocols, their record of blocking sanctioned entities and their compliance with reporting obligations.

This development comes during a broader policy debate over the role of stablecoins in the financial system. On the same day Treasury issued its joint proposal, the White House’s Council of Economic Advisers supported a proposal to allow stablecoin issuers to offer yield to their holders, or, in other words, pay investors a return on their holdings. These parallel actions underscore the dual track emerging in Washington. On one hand, policymakers are exploring ways to expand the utility of stablecoins. On the other hand, regulators are moving to ensure that any such expansion is accompanied by robust safeguards against illicit finance and national security risks. As this regulatory landscape continues to evolve rapidly, those operating in the digital assets space should closely monitor further rulemaking and guidance in this area and we will continue to track developments as they unfold.

Public comment to the joint proposal will be available for 60 days after its publication in the Federal Register, ending on June 9, 2026.

Footnotes

1. SEC v. Coinbase, Inc., 23-cv-04738 (S.D.N.Y. 2023).

2. SEC v. Binance Holdings Limited, et al., 23-cv-1599 (D.D.C. 2023).

3. United States v.Binance Holdings Limited, et al., 23-cr-178 (W.D. Wash. 2023).

4. United States v. Zhao, 23-cr-179 (W.D. Wash. 2023).

5. Treasury, Illicit Finance Risk Assessment of Decentralized Finance.

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