Substantial Similarity
Definition
A determination that a foreign or alternative regulatory and supervisory regime produces outcomes equivalent to a designated U.S. regime, evaluated against the substantive standards the U.S. regime imposes — not the form, label, or procedural design through which that regime delivers them.
Notes
In the payment stablecoin context, the term derives from Section 18 of the GENIUS Act and 12 U.S.C. § 5916, which condition foreign-issuer access to U.S. markets on a Treasury determination that the foreign regime is comparable to the standards established under 12 U.S.C. § 5903(a).1 Treasury's implementing rulemaking reads the statutory phrase as a substance test: deviations in form or procedure do not, by themselves, defeat a finding of comparability where the foreign regime meets or exceeds the U.S. substantive standards.2
A substantial similarity determination is not a rating, a treaty obligation, or a passport. It is a unilateral, rescindable determination by the U.S. authority, made on a regime-by-regime basis and conditioned on continued comparability. A regime that drifts loses recognition; a regime that hardens may earn it.
See also
Operational Suitability · Methodology Authority · Trust Fabric
References
- ↩ 12 U.S.C. § 5916 — Exception for foreign payment stablecoin issuers and reciprocity for payment stablecoins issued in overseas jurisdictions. uscode.house.gov
- ↩ U.S. Department of the Treasury, Notice of Proposed Rulemaking: Principles for Substantial Similarity Determinations under the GENIUS Act. home.treasury.gov