US cryptocurrency exchanges and other digital-asset businesses could be barred from offering certain offshore stablecoins to American customers from 18 July 2028 under proposed rules from the US Treasury Department.
The restriction would not stop tokens such as Tether’s USDT from moving between blockchains, circulating overseas or being transferred directly between private wallets. Instead, it would govern whether regulated businesses in the United States could offer or sell them to customers.
The Treasury’s proposals implement the GENIUS Act, with the wider regulatory framework expected to begin on 18 January 2027. That would give issuers and platforms 18 months to prepare for the broader distribution rules taking effect in 2028.
The two dates mark separate stages of the regime. From January 2027, no company would be able to issue a payment stablecoin in the United States without entering the GENIUS framework. A US-based service provider carrying a foreign-issued token would also face requirements linked to the issuer’s ability and willingness to comply with lawful orders and relevant reciprocal arrangements.
From July 2028, covered businesses would only be able to offer stablecoins issued by permitted US entities or qualifying foreign issuers.
What the rules would cover
The term “digital asset service provider” extends well beyond cryptocurrency exchanges. It includes custodians, businesses that transfer digital assets and companies providing certain services connected with issuing them.
Any such company serving US customers for profit could have to establish that every stablecoin on its platform has a valid route into the US market.
Treasury has also proposed a broad interpretation of the phrase “offer or sell”. A business could fall within the rules by advertising a stablecoin, agreeing to complete a sale or telling a customer who approached it first that it was willing to make the transaction. Helping someone bypass geolocation controls could also be treated as part of the activity.
An exchange would therefore not necessarily avoid the rules simply because the customer had asked for a particular token without being prompted.
Centralised exchanges already record where their customers opened accounts and control which assets can be bought through their apps. Custodians decide which tokens they will hold, while hosted wallets determine which purchase and swap services they support. Treasury’s approach would use those existing controls to make the businesses closest to customers check an issuer’s legal status.
For individuals, the location test would generally be based on where the service is physically delivered. A US resident temporarily abroad would usually be considered outside the United States for a transaction conducted there. A non-US resident visiting the country would receive only a limited exception in specified circumstances.
The rules would not permanently apply to every wallet owned by an American. Self-custody would remain outside much of the framework, including individuals sending stablecoins on their own behalf, direct peer-to-peer transfers and software that simply helps people hold their own assets.
That means a US resident could continue to possess an offshore stablecoin or receive one directly even if a regulated exchange could no longer sell it. The potential difficulty would arise when that person attempted to buy, swap or deposit the asset through a covered business.
Foreign issuers and technical checks
Treasury acknowledges that the proposals could concentrate the market. Its analysis identifies switching costs and reduced consumer choice as possible consequences, while the agency has rejected a broader temporary safe harbour for smaller foreign stablecoins.
An exchange might find it commercially easier to list a token from a fully authorised US issuer than one requiring additional legal review, technical checks and continuous monitoring. High liquidity and a large market capitalisation could make a token attractive, but would not replace the need for an accepted regulatory route.
Foreign issuers would still have a possible path into the US market under Section 18 of GENIUS. Their home country would need to operate a stablecoin framework that Treasury considers comparable with the American system. The issuer would then have to register with the Office of the Comptroller of the Currency and demonstrate that it could comply with lawful US orders.
That requirement could bring an issuer’s technology directly into the regulatory process. Treasury is asking whether due diligence should include an examination of foreign issuers’ smart contracts, including whether they can seize, freeze or burn tokens when legally required.
Those functions can allow an issuer to block funds held at a particular address or remove specific tokens from circulation. Treasury has not yet required every platform to carry out such checks, but the proposal indicates the evidence an offshore issuer may eventually need to provide.
Reserve reports and redemption policies would show how a token is financially backed. Smart-contract controls would indicate whether its issuer could respond to a court order. Continued access to American exchanges could depend on both.
Tether faces a key decision
Tether’s USDT is the most prominent real-world example. The token is issued outside the United States but is currently available to US customers through platforms including Coinbase and Kraken, subject to each exchange’s eligibility rules.
Tether holds digital asset and stablecoin issuer licences in El Salvador and has demonstrated that it can freeze addresses while working with US authorities.
The company has also created a separate token aimed at the domestic market. Tether launched USA₮ in January as a federally regulated dollar stablecoin and said USDT was progressing towards compliance with GENIUS.
Tether could seek qualifying foreign-issuer status for USDT, direct more American activity towards USA₮, or pursue both options. Treasury’s proposal does not determine which route the company will choose, nor does it decide how exchanges will respond in 2028.
The three largest relevant dollar tokens approach the deadline from different positions. USDT has considerably greater global liquidity than the other two, while USDC and PYUSD are linked to domestic issuers. Exchanges will need to balance the commercial value of USDT’s liquidity against the legal and technical work required to keep each token available.
Stablecoins have become central to global cryptocurrency and financial markets because they can settle at any time across multiple exchanges and blockchains. Treasury’s proposal would leave that technical portability intact while dividing regulated access according to jurisdiction.
A platform could therefore offer one stablecoin to US customers and another to users elsewhere. Liquidity providers might need separate inventories for domestic and offshore venues, while customers transferring funds from private wallets to US exchanges could first have to convert one dollar token into another. Trading pairs could also be separated by region despite each stablecoin being designed to represent the same underlying dollar.
The regulatory boundary would appear when a token meets a supervised exchange, custodian or other regulated account, rather than when it moves across the blockchain itself.
Treasury is accepting public comments until 19 October. The agency can then amend its definitions and due-diligence requirements before issuing a final rule.
Under the current timetable, the main GENIUS regime would begin on 18 January 2027, followed by the wider service-provider restriction on 18 July 2028. By then, every exchange serving American customers could need a documented justification for carrying each stablecoin, making access depend less on whether the token can move across a blockchain and more on whether the business offering it is authorised to keep it on sale.
