The U.S. Treasury has released a first draft of implementing rules for the GENIUS Act, which includes guidelines on stablecoin issuance and use, and has begun seeking comments on state-level supervisory standards that would apply to smaller issuers.

Blockchain outlet The Block reported on Tuesday that Treasury published a notice of proposed rulemaking (NPRM) and will gather public comments for 60 days through the Federal Register.

The draft’s core is to set out broad principles for judging whether a given state’s regulatory system is substantially similar to the federal GENIUS Act regulatory framework. In a statement, Treasury described the NPRM as “the first regulation proposed by Treasury to implement the GENIUS Act.”

The GENIUS Act includes an exemption for smaller stablecoin issuers. It leaves a path for issuers with under $10 billion in issued assets to choose state regulation instead of full federal oversight, provided the state regime is recognized as substantially similar to the federal framework. The NPRM is an effort to spell out this similarity test in regulation. It would keep the door open for smaller issuers to opt into state rules, while the federal government sets checklist-like principles for which state regimes meet federal standards.

Market participants are focusing on the process as a first gateway to turning the GENIUS Act’s high-level guidelines into an enforceable form. Federal regulators are currently interpreting and organizing how the GENIUS Act fits with existing funds-transfer rules and which agencies will retain oversight authority in which areas.

This is not Treasury’s first request for comments related to the GENIUS Act. Treasury sought views last August, shortly after the law passed, on digital forensic tools and stablecoins, and in September it also ran an advance notice of proposed rulemaking (ANPRM) that asked for broad implementation input, including tax and information-collection issues. Banking regulators the Federal Deposit Insurance Corp (FDIC) and the Office of the Comptroller of the Currency (OCC) have also each issued NPRMs, with multiple agencies working at the same time on the regulatory puzzle around enforcing the GENIUS Act.

A key point to watch is how widely state-level regulation will be opened up as an alternative. Issuers under $10 billion could gain more options for regulatory paths, but if the substantially similar standard is designed strictly, states could end up requiring federal-level conditions in practice. If the standard is loose, differences in state-by-state rules could influence the structure of the stablecoin market.

Another issue is that the GENIUS Act did not include guidelines for interest-bearing, yield-generating stablecoins. The Block reported that this gap is becoming a serious obstacle as Congress pushes a broader market-structure bill known as Clarity. Even if talks advance on GENIUS Act implementing rules, a policy gap around yield-generating stablecoins could still lead to separate legislative and regulatory debate.