The Federal Reserve has proposed two sets of rules implementing its responsibilities under the GENIUS Act, covering reserve backing, capital, risk controls and the authorization process for certain bank-owned stablecoin issuers. The proposals move the Fed into the detailed rulemaking phase for payment stablecoins, but neither framework is final yet. The Board opened both proposals for public comment on September 24.
Under the official Federal Reserve announcement, the broader proposal would require Board-supervised permitted payment stablecoin issuers to maintain qualifying reserve assets at least equal to outstanding issuance at all times. The reserve framework combines 1:1 backing with capital, risk-management, custody and redemption requirements rather than relying on reserve composition alone.
Reserves and Capital Get Detailed Requirements
Permissible reserves would include U.S. currency and eligible deposits, along with Treasury bills, notes and bonds carrying no more than 93 days of remaining maturity. Certain overnight repo and reverse-repo arrangements would also qualify. The proposal requires issuers to be capable of monetizing reserve assets quickly enough to meet redemption requests, making liquidity management a separate obligation from simply holding eligible assets.
Capital requirements would address credit, market and operational risks outside the 1:1 reserve backing. The proposal includes a $5 million capital floor during a three-year de novo period and a graduated operational-risk calculation tied partly to outstanding issuance. Reserve backing protects stablecoin liabilities, while regulatory capital is intended to absorb losses arising from the issuer’s broader operations.
The rules would apply primarily to Fed-supervised issuers such as subsidiaries of insured State member banks and certain State-qualified issuers that move into the Board’s federal framework. They are not a universal Fed rule for every U.S. stablecoin issuer, because the GENIUS Act distributes supervisory responsibilities among the Fed, OCC, FDIC, NCUA and state regulators depending on the issuer’s structure.
The proposal also addresses one of the more contested parts of U.S. stablecoin policy. Board-supervised issuers would be barred from paying interest or yield solely because a customer holds, uses or retains a payment stablecoin, with additional provisions targeting arrangements designed to route those payments through affiliates or related third parties. That treatment keeps the ongoing debate over stablecoin rewards and bank-deposit competition inside the implementation process rather than leaving it solely to market practice.
Banks Get a Separate Application Path
The second proposal focuses on insured State member banks seeking approval for a controlled subsidiary to issue payment stablecoins. Applications would need to include a business plan, financial information, capital structure, governance, relevant agreements and material third-party relationships. The Fed would evaluate the issuer subsidiary as a distinct regulated entity rather than simply treating stablecoin issuance as another activity conducted directly on the bank’s balance sheet.
Once an application is substantially complete, the Board would generally have 120 days to reach a decision. The GENIUS Act limits denial to circumstances in which the proposed activities would be unsafe or unsound under the statutory factors, while also establishing procedures for hearings and appeals. The pathway adds another regulated route for banks as stablecoins move deeper into conventional banking strategy.
The proposals also sit alongside other adjustments to traditional financial infrastructure. Stablecoins that meet specified conditions can already receive more favorable treatment in areas such as broker-dealer net-capital calculations, while regulators are separately examining market infrastructure for longer and near-continuous trading hours. The common thread is not deregulation, but adaptation of existing financial rules to assets and settlement systems operating on digital rails.
The timing is notable because Congress required primary federal stablecoin regulators, Treasury and state regulators to promulgate implementing regulations within one year of the GENIUS Act’s July 18, 2025 enactment. The September Fed proposals arrive after that statutory July 18, 2026 deadline, although the law itself has a separate effective-date mechanism. Unless final federal rules trigger the alternative timetable earlier, the Act becomes effective on January 18, 2027.
The immediate milestone is the public-comment process. Comments are due 60 days after the proposals are published in the Federal Register, not necessarily 60 days from the September 24 announcement. After reviewing those submissions, the Board can revise the proposals before adopting final rules, making the eventual reserve, capital, reward and bank-authorization standards the next concrete step in implementing the GENIUS Act.
