Treasury 2025 Stablecoin Policy Framework · PWG Recommendations and Dual-Track Charters

TL;DR

Treasury’s 2025 stablecoin policy framework operationalizes the GENIUS Act through three coordinated streams: (1) the President’s Working Group on Digital Asset Markets (PWG-DAM) — re-chartered under EO 14178 — published recommendations on issuer eligibility, reserve composition, redemption guarantees, and run-risk mitigation; (2) the federal-state dual-track charter structure was finalized so issuers can be licensed by OCC, the Federal Reserve, or a state regulator under a common federal floor with state-level additions; (3) T-bill reserve requirements were calibrated to ≤93-day maturity Treasuries, demand deposits at insured depositories, and reverse-repo backed by Treasuries — explicitly excluding longer-duration paper, corporate paper, and crypto collateral to address the run-risk that materialized in the March 2023 USDC episode. Redemption guarantees are T+1 at par by statute, with a liquidity-buffer sub-rule requiring same-day fungibility at minimum thresholds. The framework deliberately diverges from the EU MiCA single-passport model (favoring federalism) and from the Japan EPI three-type model (favoring fewer license categories). Compared to Federal Reserve and OCC charter routes evaluated standalone, Treasury’s role is policy coordination and reserve-asset specification, not direct supervision — the supervisor for any given issuer remains its primary federal or state regulator.

Wiki route

This entry sits under fintech index as the Treasury-side companion to US 2025 regulatory reset. Read it with OCC trust-bank charter and OCC national bank charter for crypto 2025 for the supervisor-side mechanics, and with GENIUS Act §501 and §501 implementation for the compliance-stack layer. For comparative international frameworks see EU MiCA, five-pole matrix, and three circles MRA.

Why this entry exists

Treasury’s role in the 2025 stablecoin framework is structurally distinct from the SEC reset (2025 reset) and from the OCC supervisor pathway (trust-bank charter and 2025 OCC charter). Treasury sets the reserve, redemption, and run-risk policy parameters but does not directly charter or supervise issuers; the President’s Working Group is the inter-agency coordination forum where those parameters are negotiated. This entry captures what Treasury actually published, the reserve-composition rationale that influenced the §4(d) reserve-asset list in GENIUS, and the federal-state coordination mechanism that resolves jurisdictional overlap between the OCC, Federal Reserve, and state regulators.

The President’s Working Group on Digital Asset Markets

The President’s Working Group on Financial Markets (PWG) was established by Executive Order in 1988 under President Reagan, originally to address concerns following the October 1987 stock-market crash. Its digital-asset extension existed in earlier forms (the 2021 PWG Report on Stablecoins; the 2022 inter-agency framework). EO 14178 (January 23 2025) re-chartered the group as the President’s Working Group on Digital Asset Markets (PWG-DAM) with a more specific composition and a 180-day deliverable timeline.

Composition and chair

Role	Holder
Chair	White House AI & Crypto Czar (David Sacks)
Treasury	Secretary of the Treasury
SEC	Chair (Paul Atkins)
CFTC	Chair
OCC	Comptroller of the Currency
Federal Reserve	Chair of the Board of Governors
FDIC	Chair
Commerce	Secretary of Commerce
FinCEN	Director
OFAC	Director (via Treasury)
Attorney General	Justice Department representation

The composition is explicitly broader than the historical PWG (which centered on Treasury, Federal Reserve, SEC, CFTC) and reflects the multi-agency coordination need for stablecoins, sanctions, AML/CFT, banking, and securities/commodities oversight all to converge.

Initial recommendations (delivered 2025-Q3)

The PWG-DAM’s first formal output (delivered within the 180-day EO 14178 window) covered six areas:

Issuer eligibility framework — dual-track federal and state, with a federal floor.
Reserve composition — limited to cash, demand deposits at insured depositories, ≤93-day Treasury bills, and reverse-repo backed by Treasuries.
Redemption guarantee — T+1 at par, with liquidity buffers.
Run-risk mitigation — daily reserve transparency, monthly attestation, liquidity stress testing.
Inter-agency coordination protocol — supervisory information sharing across OCC, Federal Reserve, FDIC, state regulators.
Cross-border framework — MRA-style mutual recognition with EU MiCA, UK FCA, Japan FSA, Hong Kong HKMA, Singapore MAS as priority jurisdictions.

The reserve-composition recommendation flowed directly into GENIUS §4(d) statutory text; the redemption-guarantee recommendation flowed into GENIUS §4(e); the run-risk recommendations were codified through OCC, Federal Reserve, and FDIC implementing rules under GENIUS §6.

Federal-state dual-track architecture

The GENIUS Act establishes a dual-track structure rather than the EU MiCA single-passport approach:

Track	Regulator	Scope	Circulation ceiling	Capital floor
Federal (OCC)	OCC	National payment stablecoin issuer charter	Unlimited	~$50M tier-1 floor (OCC discretion)
Federal (Federal Reserve)	Federal Reserve Board	Bank holding company subsidiary issuer	Tied to BHC structure	Per BHC framework
State	Primary state regulator + secondary federal review	State-qualified payment stablecoin issuer	$10 billion outstanding	Set by state regulator, with federal floor

The federal floor comprises:

the §4(d) reserve-composition list;
the §4(e) T+1 par redemption requirement;
the §501 denylist mandate;
the §6 supervisory floor (capital, liquidity, governance);
the §7 attestation and transparency requirements.

State regulators may impose additional consumer protections, capital cushions, or operational requirements, but may not relax the federal floor. When a state-qualified issuer exceeds the $10 billion outstanding ceiling, it must either transition to a federal charter or restrict issuance.

This structure is influenced by the dual banking system that has existed since the 1860s and is operationally similar to the state-vs-federal trust bank distinction visible in OCC trust-bank charter. The choice of dual-track over single-passport reflects:

the existing US dual banking precedent;
the political constituency of state regulators (NYDFS, California DFPI, Texas Department of Banking) who would have opposed a single-federal-passport regime;
the desire to preserve state-level innovation experiments (Wyoming SPDI, Nebraska digital-asset depositories, Utah industrial banks).

For the parallel state-banking compliance map see US crypto licensing multi-layer system.

Reserve composition · T-bill requirement and rationale

The §4(d) reserve-asset list is intentionally narrow:

Permitted reserve asset	Rationale
US currency	Zero credit risk, perfect par
Demand deposits at insured depository	Backed by FDIC up to insurance limit; bankruptcy-remote at higher amounts
Treasury bills, ≤93-day maturity	Sovereign credit + short duration = minimal price risk in stress
Reverse-repo backed by Treasuries	Collateralized, daily liquidity, used by money-market funds for analogous purpose

Excluded from the permitted list:

Longer-dated Treasuries (>93 days) — to avoid the duration-loss episode that contributed to the SVB collapse and the March 2023 USDC depeg.
Corporate paper (commercial paper, corporate bonds) — to avoid the credit-risk spectrum that materialized in Tether’s pre-2023 reserve composition (see Tether business model).
Crypto collateral (BTC, ETH, other stablecoins) — to avoid wrong-way risk (the SC depegs when crypto markets stress).
Money-market fund shares — formally excluded; tokenized MMF shares such as BUIDL are not permitted reserves at present, although the framework leaves room for future inclusion.

The 93-day maturity ceiling is calibrated to:

Match the SEC Rule 2a-7 definition of “weighted-average maturity” eligible assets for government money-market funds.
Ensure reserve assets can be liquidated within the T+1 redemption window at minimal price impact.
Provide a margin of safety against a Federal Reserve rate-shock scenario (a 100bp move on a 93-day bill produces ~0.25% mark-to-market loss, recoverable within 90 days).

For the broader reserve-asset flywheel dynamics see circular reserve flywheel and the risk-case analysis in circular reserve risk cases.

Permitted-reserve-asset comparison · GENIUS vs MiCA vs Japan EPI

Regime	Cash	Demand deposits	≤93-day Treasuries	Longer Treasuries	MMF shares	Corporate paper	Crypto
US GENIUS	✓	✓	✓	✗	✗	✗	✗
EU MiCA (EMT)	✓	✓ (≤60% if non-systemic, ≤30% if significant)	✓	Limited	Limited	✗	✗
Japan EPI (trust type)	✓	✓	✓	Limited	✗	✗	✗
Japan EPI (bank type)	Per bank prudential
HK Stablecoin Ord.	✓	✓	✓	Limited	✗	✗	✗
MAS SCS	✓	✓	✓	Limited	✗	✗	✗

The convergence across the five poles is striking: all five permit cash, demand deposits, and short Treasuries; all five exclude crypto collateral and corporate paper; all five restrict longer-duration paper. The divergence is in MiCA’s deposit-concentration limits (a response to the SVB / USDC episode that hit Europe second-hand) and in Japan’s bank-prudential overlay. For the full cross-walk see five-pole matrix.

Redemption guarantee · T+1 at par

GENIUS §4(e) requires redemption at par within T+1 for any holder presenting tokens to the issuer. The Treasury framework operationalizes this through:

Requirement	Detail
By redemption	Issuer must redeem at 1:1 face value, regardless of secondary-market price
T+1 settlement	Funds must reach the holder’s account by close of the next business day after the redemption request
Minimum threshold	Issuers may set reasonable minimum redemption sizes (typical: $100,000 wholesale tier; $1 retail tier)
KYC gating	Redemption may be conditioned on the holder satisfying KYC requirements
Liquidity buffer	Issuer must hold a buffer (typical: 5–10% of circulating supply) immediately convertible to cash for routine redemptions

The buffer requirement is the most important technical sub-rule. It addresses the March 2023 USDC episode in which Circle’s $3.3B exposure to Silicon Valley Bank deposits became frozen over a weekend, producing a sharp depeg in USDC before Federal Reserve / Treasury / FDIC announced the bank-deposit guarantee on Monday. Under the new framework, an issuer with comparable concentration in a single uninsured depository would face supervisory action.

Run-risk mitigation

The Treasury framework treats the stablecoin as a quasi-money-market-fund for run-risk purposes and applies several MMF-style mitigations:

Diversification requirement. Reserve assets must be diversified across at least three counterparties or issuers (Treasuries, depositories) to avoid single-point-of-failure exposure.
Daily reserve disclosure. Issuers publish a daily reserve composition snapshot (already standard for Circle USDC; new mandate for less-transparent issuers).
Monthly attestation. A registered public accounting firm attests to the reserve composition and segregation at month-end.
Liquidity stress testing. Issuers conduct quarterly stress tests against scenarios such as (a) 20% redemption in a single day, (b) 50% redemption in a week, (c) failure of one of the top three depository counterparties.
Recovery and resolution planning. Issuers above a threshold (~$10B outstanding) submit living-will-style plans for orderly wind-down.
Liquidity-buffer minimum. A statutory 5% same-day liquidity floor for retail-facing issuers.

These provisions explicitly draw on lessons from SVB / USDC March 2023 and from the money-market reform track post-2008 and post-2020. The conceptual ancestry is the Securities and Exchange Commission’s 2010 and 2014 reforms of Rule 2a-7 governing MMFs.

For the parallel circular-reserve-flywheel risk surface see circular reserve risk cases.

Treasury vs Federal Reserve vs OCC · who does what

A common point of confusion is whether Treasury, the Federal Reserve, or the OCC charter a payment stablecoin issuer. The answer differs by track:

Track	Charter authority	Primary supervisor	Resolution authority	Reserve custodian
OCC national PPSI charter	OCC	OCC	FDIC (for insured deposit liabilities) + OCC	Depository or Fed master account
Federal Reserve BHC subsidiary	Federal Reserve	Federal Reserve	FDIC (insured) + Federal Reserve	Per BHC framework
State PPSI charter	State regulator + secondary federal review	State + secondary federal	State + FDIC (insured)	Depository or Fed master account if eligible

Treasury in this map is policy coordinator (via PWG-DAM), OFAC sanction authority, AML/CFT policy (via FinCEN), and fiscal interface (Treasury cash management as the issuer of the underlying Treasury bills that fill stablecoin reserves). Treasury does not charter or directly supervise PPSI issuers.

This separation is the same separation that governs money-market funds (SEC charters/supervises, Treasury sets sovereign-debt issuance policy, Federal Reserve operates discount window) and is mirrored in the digital-asset stack. For the comparative trust-bank-charter analysis see OCC trust-bank charter.

Treasury’s stablecoin-as-Treasury-buyer thesis

Treasury’s interest in the framework extends beyond consumer-protection policy. The reserve-composition rules effectively turn the stablecoin industry into a Treasury-bill buyer at scale:

Issuer category	Estimated outstanding (2026-Q1)	Estimated T-bill demand created
Tether (USDT)	~$120B	~$80B in T-bills (per public attestation; non-PPSI internationally)
Circle (USDC)	~$45B	~$30B in T-bills
Paxos (USDG, USDP, BUSD legacy)	~$5B	~$4B in T-bills
PayPal (PYUSD)	~$1B	~$0.8B in T-bills
Other	~$10B	~$7B in T-bills
Total stablecoin sector	~$180B	~$120B in T-bills

At ~$120B today (and on plausible growth paths reaching $400B–$1T over the next 5–7 years), the stablecoin sector becomes a structural new buyer of short-dated Treasury debt — comparable in size to a single foreign central bank’s reserve allocation. This dynamic underwrites Treasury’s policy interest in growing rather than constraining the regulated stablecoin sector, subject to consumer-protection guardrails. The circular-reserve flywheel dynamic (issuance grows → T-bill demand grows → yield earns → reserves grow → more issuance) is documented at length in circular reserve flywheel and contrasted with risk in risk cases.

International coordination · MRAs and Treasury bilateral channels

Treasury’s PWG-DAM recommendations include a bilateral mutual-recognition agreement (MRA) track for priority jurisdictions:

Counterparty	Status (Q1 2026)	Lead Treasury contact
EU (Commission + EBA)	Framework MOU under negotiation	Treasury international office + State Department
UK FCA + HM Treasury	Bilateral discussions active	UK-US dialogue
Japan FSA	Standing channel active (post-SBI/Circle JPYC route)	Treasury Asia office
Hong Kong HKMA	Discussions opening (post-Stablecoin Ordinance)	Limited
Singapore MAS	Discussions active	Treasury Asia office
Canada OSFI	Early-stage	Limited
Switzerland FINMA	Existing channel re: bank-secrecy framework	Active

The MRA track is the international counterpart to the federal-state dual-track domestically: rather than requiring foreign issuers to obtain a US PPSI license to access US markets, an MRA allows recognition of comparable foreign frameworks (subject to §501 equivalent compliance). For the three-circle MRA framework that pre-dated this policy work see three circles MRA and three circles MRA 2030 scale.

Implementation timeline

Date	Action
2025-01-23	EO 14178 re-charters PWG-DAM with 180-day deliverable
2025-04	PWG-DAM working-group structure operational
2025-07-18	GENIUS Act signed into law
2025-Q3	PWG-DAM initial recommendations published
2025-Q4	OCC notice of proposed rulemaking on PPSI charter
2026-Q1	Federal Reserve, FDIC, and OCC joint final rule on reserve composition and supervision
2026-Q2	FinCEN reporting standards finalized
2026-Q2 expected	First federal PPSI charters issued under final rule
2026-H2 expected	First MRA bilateral with EU finalized

For the surrounding policy environment see US 2025 regulatory reset.

Sources

Treasury digital assets policy: https://home.treasury.gov/policy-issues/financial-markets-financial-institutions-and-fiscal-service/digital-assets
Treasury press releases: https://home.treasury.gov/news/press-releases
President’s Working Group on Financial Markets: https://home.treasury.gov/policy-issues/financial-markets-financial-institutions-and-fiscal-service/presidents-working-group-on-financial-markets
FinCEN news: https://www.fincen.gov/news-room
Federal Reserve press releases: https://www.federalreserve.gov/newsevents/pressreleases.htm
OCC news and issuances: https://occ.treas.gov/news-issuances/
White House EO 14178: https://www.whitehouse.gov/presidential-actions/
GENIUS Act statutory text (Public Law as enacted July 2025)
Federal Register filings on implementing rules: https://www.federalregister.gov/
PWG 2021 Report on Stablecoins (predecessor document): https://home.treasury.gov/system/files/136/StableCoinReport_Nov1_508.pdf