Senators Urge Treasury to Preserve State Stablecoin Authority

A bipartisan group of senators led by Cynthia Lummis urged Treasury Secretary Scott Bessent on Tuesday to preserve states' authority to regulate stablecoins as the department prepares rules to implement the GENIUS Act.

The letter was signed by Senators Kirsten Gillibrand (D-N.Y.), Pete Ricketts (R-Neb.), Catherine Cortez Masto (D-Nev.), Kevin Cramer (R-N.D.), Angela Alsobrooks (D-Md.) and Bill Hagerty (R-Tenn.).

The GENIUS Act, signed into law last year, creates a federal framework for stablecoins. It requires issuers to back tokens fully with U.S. dollars or similarly liquid assets, mandates annual audits for firms with market capitalizations above $50 billion, and sets rules for foreign issuance. The law allows issuers with $10 billion or less in market value to remain under state oversight if a state’s regulatory regime is judged “substantially similar” to federal standards.

The Treasury published a notice of proposed rulemaking in April that outlines broad principles for determining whether a state framework meets the federal standard. The senators said the proposal did not include clear timelines, detailed standards or a process for states to apply for certification, creating uncertainty about when and how states can seek recognition.

The letter notes that some states, including New York, have already developed detailed digital-asset rules. The New York Department of Financial Services last week proposed a formal rule change to align its stablecoin framework with the GENIUS Act.

The senators argued that state legislative processes vary and that some states operate on biennial cycles. “States must be able to develop and seek certification of stablecoin regulatory regimes as demand for these charters materializes and as legislative schedules permit,” the letter said, calling for a flexible, ongoing certification framework so states can participate over time.

The lawmakers asked Treasury to ensure state regulators can continue to supervise stablecoin issuers with $10 billion or less in market capitalization, provided state rules meet the “substantially similar” test. They also requested guidance “clarifying the application, review, and certification process for State regimes.”

The Treasury Department did not immediately respond to a request for comment on the senators' letter or on the proposed rulemaking timeline.