Treasury proposed GENIUS change forces US exchanges to audit foreign stablecoin or face delisting

Treasury’s proposed rules under the GENIUS Act, the new US stablecoin law, would let US exchanges and other digital-asset service providers keep offering some foreign-issued payment stablecoins, but only if they can defend why they trusted the issuer’s promise to comply with lawful US orders.Under the proposed rule, a provider could rely on a foreign issuer’s representation that it has the technology and intent to comply with lawful orders, such as valid orders to freeze or seize tokens where applicable, and reciprocal arrangements only after conducting reasonable due diligence. Reliance would be barred when the platform knows, has reason to know or should know that the representation is false or the issuer cannot or will not comply.Treasury says that diligence should, at minimum, confirm the issuer is not subject to a public GENIUS Act prohibition on secondary trading. That check would not be enough on its own. Platforms would also need to consider all reasonably available information about the issuer.That standard shifts the access decision to the businesses that list, sell, custody or otherwise make stablecoins available to US customers. The proposal does not identify qualifying...