Federal Reserve Proposes GENIUS Act Rules Letting Banks Issue Stablecoins Under Tight Reserves

The Federal Reserve has laid out how banks it supervises could issue their own stablecoins, and the price of entry is steep. Every token would have to be fully backed by safe, liquid assets, and the issuer would have to hold capital against the risks of running the business.

The Fed Board requested public comment on two proposals implementing the GENIUS Act, the federal stablecoin law. Neither is final.

The first proposal sets the rules of the road. Payment stablecoins would need full backing with permissible reserve assets, meaning short-term Treasury bills and certain other high-quality liquid assets. Issuers would face standardized capital requirements for credit and operational risk, risk management standards, and rules on how the backing assets are kept safe.

It also clarifies which stablecoin activities Fed-supervised banks are allowed to engage in. And it takes a narrow view of third-party arrangements that pay interest or yield to holders, presuming them prohibited, in line with the approach the OCC has taken.

The second proposal is about getting in the door. A Fed-supervised bank that wants a subsidiary to issue payment stablecoins would file an application with a business plan, financial information, and its policies. The proposal also sets out how appeals, hearings, and final determinations would work.

Governor Michael Barr framed the stakes plainly. "Stablecoins will only be stable if they can be reliably and promptly redeemed at par in a range of conditions," he said, including during market stress and when the issuer itself is under strain.

The timing is awkward for regulators. The GENIUS Act required banking agencies and Treasury to have their rules in place by July 2026, and they are now past that statutory deadline, as CoinDesk noted.

This package is separate from the definitional proposals Treasury issued earlier. The comment period closes 60 days after the proposals appear in the Federal Register, so final rules for bank-issued stablecoins are still months away.