Treasury has proposed to settle who counts as being in the United States for stablecoin purposes, and the test it chose is where a person is standing rather than where that person lives

Treasury picked the narrower test.

The department filed a proposed rule for public inspection on Monday morning implementing section 3 of the GENIUS Act, the part of the statute that governs who may issue a payment stablecoin in the United States, who may offer or sell one, and to whom. It would add a new part 1523 to title 12 of the Code of Federal Regulations. Comments close 60 days after publication, which is set for Tuesday. Along the way Treasury asks 87 numbered questions, which is a fair measure of how much of this the department regards as still open.

Where a person is, not where a person lives

Section 3 turns repeatedly on whether somebody is located in the United States, and it never defines the phrase. Proposed section 1523.1(c) would define it separately for individuals and for entities.

For an individual, the test is physical presence on American soil, with one carve-out: a person who is not a resident of the United States and whose presence here is merely temporary is not located here. For a company, partnership, trust or estate, the test is incorporation or organisation under United States or state law, or a principal place of business in the United States. Either limb is enough.

Treasury says it considered the simpler rule, under which everybody physically present counts, and rejected it. Its stated reason is that the Act does not compel that reading and that it would create administrability concerns and punitive results. The example the preamble gives is a foreign resident issued a stablecoin by a foreign issuer while on holiday in the United States, whose foreign residency the issuer had already verified and whose travel plans it did not know.

The definition cuts the other way as well. A United States resident who is temporarily abroad is not located in the United States for these purposes, which Treasury justifies by pointing at an American traveller in a country where stablecoins are ordinary payment instruments, unable to buy a small amount to spend there.

The date is 2028

Proposed section 1523.3(a) makes it unlawful, beginning on July 18, 2028, for a digital asset service provider to offer or sell a payment stablecoin to a person located in the United States, unless the coin was issued by a permitted payment stablecoin issuer or by a foreign issuer meeting the criteria in section 18(a). That is three years after enactment, and it sits in the statute rather than in Treasury's gift.

What counts as an offer or a sale is where the proposal adds. Proposed section 1523.3(d) names directly soliciting a person located in the United States, advertising a stablecoin as available for purchase by persons located in the United States, and advising potential purchasers how to evade generally applicable location detection or restriction mechanisms.

That third one is the interesting one. It makes the advice itself the offer.

The valve, and who gets told

Section 3(c) gives the Secretary two ways to create a safe harbour. The first, section 3(c)(1), covers a de minimis volume of transactions and says on its face that any such safe harbour must be issued by regulation. Treasury proposes none, and asks at Question 73 whether it should.

The second is for unusual and exigent circumstances. Treasury reads the absence of the words "by regulation" from that paragraph as authority to act without notice and comment, and says it generally expects to provide those safe harbours by order. The statute requires a justification to go first to the chairs and ranking members of the Senate Banking Committee and the House Financial Services Committee, and it permits that justification to sit in a classified annex.

Treasury adds one caution in a footnote. The phrase means what it means here and nowhere else, and in particular it is not an interpretation of the same words in section 13(3) of the Federal Reserve Act, which is the emergency lending provision.

What Treasury declined to borrow

Commenters on last year's advance notice urged the department to build this on the federal securities laws, and on Regulation S in particular, which is the rule that puts offshore securities offers outside American law. Treasury declined to start there. Its reasoning is that the Act itself says a payment stablecoin is neither a security nor a commodity, that these instruments are built to be spent rather than held for appreciation, and that minting and redemption do not behave like anything in the securities regime.

Then it asks whether that was the right call.