SS #127 - Treasury Proposes Stablecoin GENIUS Act Rules

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Good morning.

Treasury's decision to exempt stablecoins from securities-law treatment, on the explicit reasoning that investment rules would undermine their payment function, is less a technical drafting choice than a preview of how the agency plans to resolve the harder foreign-issuer question still buried in its 60-day comment period.

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In Today's Edition:

• Headline: Treasury Proposes Stablecoin GENIUS Act Rules

• Quick Bites: WLFI wins Bank Charter

• Yield of the Week: Apyx USDC's 20.45% APY

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HEADLINE

State of play: Treasury's proposal to exempt stablecoins from securities frameworks, reasoning that investment-law treatment would "frustrate" the law's payment goals, sets up a foreign-issuer question determining whether Tether faces the same rules as domestic competitors.

• Treasury proposed federal definitions for who qualifies as a US stablecoin issuer and what rules apply under the GENIUS Act.

• The department opted against applying traditional securities law frameworks, arguing that approach could undermine stablecoins' function as payment instruments.

• The public has 60 days to submit comments, with a mid-October deadline, before Treasury reviews feedback and issues a final rule.

• The GENIUS Act's one-year implementation deadline passed last month, with the law's effective date targeted for January 18.

• The proposal arrives as the Clarity Act, which would rewrite GENIUS provisions on stablecoin rewards programs, remains stalled after failing to advance before Senate recess.

What’s Next: The 60-day comment period runs through mid-October, with foreign issuer treatment as the key question before Treasury finalizes rules ahead of the January 18 effective date.

Why it Matters: How Treasury defines foreign issuer obligations will determine whether Tether faces the same compliance burden as domestic competitors like Circle.

Our Take: Treasury's rejection of securities-law framing is a deliberate industry-friendly choice, but punting dozens of interpretive questions to a comment period means the rules that actually matter are still months from settled.

QUICK BITES

• First HK Stablecoin is live but retail cannot touch it yet.

• US Treasury Department proposes GENIUS Act stablecoin rule.

• WLFI wins Bank Charter from Trump-appointed regulator for $4B stablecoin.

YIELD OF THE WEEK

Apyx USDC (Hyperithm): 20.45% APY

• The vault accepts USDC deposits and exclusively supplies liquidity to Morpho markets collateralized by Apyx ecosystem tokens, with ~$6.31M in total deposits and ~$319.89k in available liquidity.

• Capital is primarily deployed into PT-apyUSD-27AUG2026/USDC (~$3.37M, 96.94% utilization) and PT-apyUSD-5NOV2026/USDC (~$2.80M, 96.44% utilization).

• Yield is generated from lending demand across Apyx PT collateral markets, with individual market APYs ranging from 19.36% to 22.57%, net of an 8% performance fee and 0% management fee.

PT USP (USDC): 13.83% APY

• The market accepts USP deposits, a yield-optimized stablecoin governed by PikuDAO backed by a diversified basket of DeFi lending and delta-neutral FX strategies.

• Capital is deployed via Pendle Router through DEX swapping, with 1 USP converting to 1.12155 USDC at maturity, with native minting available through KYC and a 1-day native withdrawal wait.

• Yield is generated from PikuDAO's multi-strategy DeFi lending and FX yield portfolio, with the PT locking in a fixed 13.83% APY while YT holders capture remaining variable yield and points.

Flowdesk AUSD RWA Strategy: 10.70% APY

• The vault accepts AUSD deposits and allocates capital across Morpho markets backed by tokenized real-world asset collateral with a focus on equity exposure, with ~$6.98M in total deposits and ~$796.5k in available liquidity.

• Capital is primarily deployed into sUSDat/AUSD (~$5.32M, 76.21% at 91.42% utilization) and PT-USDat-27AUG2026/AUSD (~$1.60M, 23.02% at 90.00% utilization), with a smaller allocation to wSPYx/AUSD at 90.00% utilization.

• Yield is generated from lending demand across RWA-collateralized markets, with sUSDat driving the majority of returns at 14.20% APY, net of a 7.5% performance fee and 0% management fee.

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