The US Department of the Treasury has introduced a new proposal under the GENIUS Act, allowing states to regulate stablecoins with a market cap under $10 billion. However, this flexibility comes with strict conditions — state frameworks must closely align with federal standards and cannot fall below them in terms of investor protection.

Key requirements include full 1:1 reserve backing using cash or high-quality equivalents, along with mandatory monthly disclosures. States must also enforce federal anti-money laundering rules and bans on practices like rehypothecation, ensuring that even decentralized financial innovations operate within a tightly controlled regulatory environment.