BPI Comments on GENIUS Act State Substantial Similarity Standards

Ladies and Gentlemen:

The Bank Policy Institute^[1] ("BPI") appreciates the opportunity to respond to the notice of proposed rulemaking issued by the U.S. Department of the Treasury regarding the implementation of section 4(c) of the Guiding and Establishing National Innovation for U.S. Stablecoins (GENIUS) Act by establishing broad-based principles for determining when a State-level regulatory regime is substantially similar to the Federal regulatory framework.^[2]

It is critical that the Treasury Department and other relevant agencies craft regulations under the GENIUS Act that preserve the benefits of payment stablecoins for their intended use in payments and settlements, without causing undue and unnecessary risks for consumers, other stablecoin holders or users, competition, credit availability, illicit finance or financial stability.

The GENIUS Act provides that certain State qualified payment stablecoin issuers (generally those with a consolidated total outstanding issuance of payment stablecoins of no more than $10 billion) may opt for State regulation so long as the State-level regulatory regime is substantially similar to the Federal regulatory framework.^[3] The Treasury Department is required to establish broad-based principles for determining when a State-level regulatory regime is substantially similar to the Federal regulatory framework.^[4] A State payment stablecoin regulator must submit an initial certification to the Stablecoin Certification Review Committee ("SCRC") that the State-level regulatory regime meets the criteria for substantial similarity established by the Treasury Department no later than one year after the effective date of the Act.^[5] The GENIUS Act also requires State payment stablecoin regulators to submit re-certification to the SCRC annually.^[6]

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[1] The Bank Policy Institute is a nonpartisan public policy, research and advocacy group that represents universal banks, regional banks, and the major foreign banks doing business in the United States. The Institute produces academic research and analysis on regulatory and monetary policy topics, analyzes and comments on proposed regulations, and represents the financial services industry with respect to cybersecurity, fraud, and other information security issues.

[2] Department of the Treasury, GENIUS Act Broad-Based Principles for Determining Whether a State-Level Regulatory Regime Is Substantially Similar to the Federal Regulatory Framework, Notice of Proposed Rulemaking, 91 Fed. Reg. 16844 (April 3, 2026).

[3] 12 U.S.C. § 5903(c).

[4] 12 U.S.C. 5903(c)(2).

[5] 12 U.S.C. § 5903(c)(4)(A), (5).

[6] 12 U.S.C. § 5903(c)(4)(C). Pursuant to the GENIUS Act, the SCRC may approve or deny an initial certification or recertification. The GENIUS Act provides such a state payment stablecoin regulator with not less than 180 days to cure the reasons for a denial and resubmit the certification or recertification. If the SCRC again issues a denial, the State payment stablecoin regulator in receipt of a denial may appeal the denial to the United States Court of Appeals for the District of Columbia Circuit. However, the GENIUS Act does not address the treatment of existing state regulated stablecoin issuers if a state regime is not recertified and the deficiencies are not timely remedied, including during the pendency of the submission, resubmission, and/or appeals process. It is unclear whether issuers in such a state would be required to transition to Federal oversight, or what that transition process would entail. Treasury should clarify the treatment of state payment stablecoin issuers in such circumstances, coordinating with other agencies and regulators, as appropriate. Treasury should consider establishing a framework for continued oversight of issuers operating in non-recertified states, including any transition requirements to a Federal regime if the state regime fails to cure deficiencies and obtain recertification in a timely manner.