Treasury is seeking public input as it develops rules to implement GENIUS Act
WASHINGTON DC – In a comment letter submitted to the Treasury Department today, Consumer Reports called on regulators to adopt a number of rules to protect consumers and the financial system from the potential risks of the growing stablecoin market. Stablecoins are a type of cryptocurrency where the value of the digital asset is tied to a government-issued currency, exchange-traded commodity, or another cryptocurrency.
CR’s letter was submitted in response to the Treasury’s request for public input as part of an advance notice of proposed rulemaking on questions related to the implementation of the GENIUS Act, which was passed this summer by Congress to create a regulatory framework for stablecoins.
CR’s letter notes, “We recognize the opportunity stablecoins present to modernizing the payments system, enhancing financial inclusion, and promoting broader innovation in the financial and payments ecosystem….The rapid growth of stablecoins highlights their appeal, but as the trajectory seemingly propels them toward becoming integral to the plumbing of the payments system, effectively functioning as core payment utilities, their regulation must evolve to meet their increasing significance and attendant risks.”
CR emphasized several key points for Treasury to keep in mind as it begins to develop the proposed rules implementing the GENIUS Act:
Safeguarding Stability and Consumer Trust
Treasury should ensure that reserve, liquidity, and redemption standards under the GENIUS Act are clear, enforceable, and resilient under stress. Transparent disclosures and strong capital and liquidity rules are essential to prevent digital “bank-run” dynamics and maintain confidence in stablecoin-based payments.
Drawing Clear Boundaries Between Payments and Investments
Regulators must prevent stablecoin issuers from offering “rewards” or other yield-like features that mimic deposits without protections. These products introduce systemic risk. At the same time, Treasury should preserve space for user-directed innovation, for example, active participation in decentralized systems, while keeping passive yield out of the payment space.
Ensuring Truthful Marketing and Unified Oversight
Consumer protection depends on consistent, non-deceptive communications. Treasury should explore aligning with FTC standards to prohibit misleading terms or government-like imagery and require standardized, plain-language disclosures on redemption and reserve backing. A strong federal floor of protections should apply across both state and federal regimes to avoid regulatory arbitrage.
Modernizing Compliance and Identity Safeguards
The GENIUS framework should leverage technology, such as privacy-preserving digital identity and zero-knowledge proofs, to strengthen AML, sanctions, and due diligence without eroding consumer privacy. Treasury should coordinate internationally to promote interoperable, secure, and privacy-centric verification systems.
Measuring Success by Consumer Outcomes
Implementation should be evaluated through measurable improvements in consumer safety, transparency, and trust—reducing fraud, redemption failures, and confusion—while fostering stable, responsible innovation in digital payments.
For a more detailed explanation of these recommendations, see CR’s full comment letter.
Media Contact: Michael McCauley, michael.mccauley@consumer.org