State banking regulators have asked the US Treasury to create safe harbors so state licensed stablecoin issuers can keep operating when the GENIUS Act takes effect on January 18. But the New York Department of Financial Services (NYDFS), the regulator that has historically overseen the largest US stablecoin issuers, says no safe harbor is needed because the statute already permits continued operations. The real risk, NYDFS argues, is that Treasury’s proposed rules are too soft on foreign stablecoins. Separately, Mastercard submitted comments focused on a different concern, asking Treasury to clarify when a service provider crosses the line into being classified as an unlicensed issuer.
The state challenge stems from a timing gap. For state issuers to qualify under the GENIUS Act, their state’s regulatory regime must be “substantially similar” to the federal framework. States certify this themselves, and the Stablecoin Certification Review Committee (SCRC) then reviews. But states have up to a year from the effective date to file, and Treasury has already missed the July 2026 deadline set by the Act for finalizing the principles states are supposed to measure against. No state is expected to have SCRC approval by January. Treasury’s proposal gives federal applicants a safe harbor while their applications are pending. It asks whether state issuers need equivalent protection but does not offer one.
The Conference of State Bank Supervisors (CSBS), writing jointly with three other state organizations, wants Treasury to fix this with multiple safe harbors covering the SCRC review period, the 180 day window the Act gives states to fix deficiencies after a denial, and states that haven’t yet legislated but file a conditional certification promising rules by January 2028. They also want a safe harbor for issuers if a state later revises its framework and temporarily loses recertification. Without these protections, CSBS argues, issuers will drift to the federal pathway through the OCC, and the state route Congress intended will wither.
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