On September 24, the U.S. Federal Reserve proposed two sets of rules to establish how payment stablecoin issuers and banks under its supervision would operate under the GENIUS Act.
Reserve Requirements for Stablecoin Issuers
Under the first proposal, Fed-supervised payment stablecoin issuers would be required to fully back the stablecoins they issue with permitted reserve assets, including short-term U.S. Treasury bills and other high-quality, liquid assets. The framework ensures that if an issuer has $1 billion worth of stablecoins outstanding, it must maintain qualifying reserve assets sufficient to support those tokens.
This requirement is designed to help ensure that holders can redeem their stablecoins for their underlying value, including during periods of market stress.
The proposal also introduces standardized capital requirements for supervised stablecoin issuers. Capital would serve as an additional financial cushion to absorb certain losses, particularly those arising from credit and operational risks. Issuers would additionally be required to follow risk-management standards designed to address the risks associated with running payment stablecoin businesses.
Tailored Process for Bank Applicants
The second proposal focuses specifically on Fed-supervised banks that want to issue their own payment stablecoins. Rather than using a standard banking application process, these institutions would undergo a tailored application procedure requiring information such as a business plan and financial data.
This allows the Federal Reserve to assess how the proposed stablecoin operation would function and whether the bank possesses the necessary resources and controls. The proposal also establishes procedures for appeals, hearings, and final decisions if an application is challenged or denied.
Public Comment Period
The Federal Reserve is seeking public feedback before deciding on the final framework. The comment period will close 60 days after the proposals are published in the Federal Register.
Regulatory Timeline
This development follows more than a year since President Donald Trump signed the GENIUS Act. U.S. regulators, including the OCC, Federal Reserve, FDIC, and Treasury, continue to finalize key rules covering stablecoin reserves, capital, liquidity, custody, risk management, and compliance. Although agencies were expected to complete implementation by July 18, 2026, full enforcement is still planned for January 18, 2027.
