US Treasury Seeks Public Input on Crypto Oversight After GENIUS Stablecoin Act Becomes Law

The U.S. Treasury Department is inviting public feedback on how financial institutions should address illicit activity involving cryptocurrencies, following the passage of the Guiding and Establishing National Innovation for U.S. Stablecoins Act (GENIUS Act). The law, signed by President Donald Trump in July, marks the first comprehensive federal framework for stablecoins in the United States.

Treasury’s Call for Comment

On Monday, the Treasury issued a formal request for comment, asking stakeholders to share insights on “innovative methods” to monitor and combat illicit finance tied to digital assets. Specifically, the agency is seeking input on tools such as artificial intelligence, blockchain analytics, digital identity verification, and application programming interfaces (APIs).

Treasury Secretary Scott Bessent highlighted the potential upside of stablecoins, writing on X (formerly Twitter):

“Stablecoins will expand dollar access for billions across the globe and lead to a surge in demand for U.S. Treasuries, which back stablecoins. It’s a win-win-win for everyone involved: stablecoin users, stablecoin issuers, and the U.S. Treasury Department.”

The feedback gathered will be analyzed and presented to congressional leaders on the Senate Banking Committee and the House Financial Services Committee, which could eventually lead to new rulemaking.

What the GENIUS Act Does

The GENIUS Act establishes clear regulatory requirements for stablecoin issuers. Key provisions include:

• Stablecoins must be fully backed by U.S. dollars or highly liquid assets.
• Issuers with a market capitalization above $50 billion must undergo annual audits.
• New guidelines govern the issuance of stablecoins by foreign entities operating in U.S. markets.

The law also aims to strengthen oversight by mandating Treasury’s public consultation on tools to fight illicit finance, including money laundering and terrorist financing through crypto.

Industry Concerns

Despite broad support for the law, some of the largest U.S. banking associations have raised concerns about what they see as gaps in its restrictions—particularly regarding stablecoin issuers offering interest to holders. While the law technically prohibits interest payments, critics argue the rules can be sidestepped by affiliates such as exchanges and brokers.

Banking groups warn this could transform stablecoins from simple payment tools into store-of-value instruments and quasi-credit products, potentially disrupting the financial system.

Jaret Seiberg, an analyst at TD Cowen, echoed those concerns in a client note:

“We saw a flight to money market mutual funds during the Financial Crisis when the government offered a 100% backing to the industry. We believe the flight to stablecoins would be a bigger threat because it would be fast and simple for consumers to convert deposits to stablecoins.”

A Pivotal Moment for Stablecoins

The GENIUS Act signals Washington’s intent to bring stablecoins firmly under federal oversight, even as global regulators debate how best to balance innovation with financial stability. By requesting public input, the Treasury is aiming to tap expertise from industry players, technologists, and financial institutions as it shapes next steps.

While the law is still in its early stages of implementation, its long-term impact could be significant—both in expanding the role of stablecoins in global finance and in reshaping how regulators police the fast-moving crypto economy.