Federal Reserve Seeks Comment on Two GENIUS Act Stablecoin Proposals

The Federal Reserve Board on Thursday, September 24, 2026, requested public comment on two proposals that would establish a regulatory framework for Board-supervised payment stablecoin issuers under the GENIUS Act. The first proposal would require full reserve backing and set standardized capital, risk management, and custody requirements, while the second would create a tailored application process for Board-supervised banks seeking approval to issue payment stablecoins through a subsidiary. Comments on both proposals are due 60 days after publication in the Federal Register.

The GENIUS Act was enacted on July 18, 2025, and generally prohibits anyone other than a permitted payment stablecoin issuer, or PPSI, from issuing payment stablecoins in the United States. The Act takes effect on the earlier of January 18, 2027, or 120 days after primary federal payment stablecoin regulators issue final implementing rules. The Office of the Comptroller of the Currency, the Federal Deposit Insurance Corporation, and the National Credit Union Administration have issued their own GENIUS Act proposals for the institutions they regulate, beginning with an FDIC notice on December 19, 2025, and the Board previously joined the other federal banking agencies and the Treasury Department in proposing a customer-identification-program rule on June 22, 2026.

Reserve, Capital, and Supervision Standards

Under the implementation proposal, Docket No. R-1899, each Board-supervised PPSI would have to hold reserve assets whose aggregate fair value at all times equals or exceeds the par value of its outstanding stablecoins, segregated from the issuer’s other assets. Eligible reserves would be limited to U.S. dollar cash, Federal Reserve Bank balances, demand deposits or insured shares at insured depository institutions, Treasuries with 93 days or less of remaining maturity, overnight Treasury-backed repurchase and reverse repurchase agreements, shares of eligible investment funds, and tokenized versions of certain of those assets, according to a staff memo released with the proposal. An issuer that falls below the one-to-one requirement would have to notify the Federal Reserve and liquidate its reserves and redeem outstanding stablecoins unless it has a plan to promptly restore full backing that the Board directs it to follow. Issuers would also have to diversify reserves so the one-to-one requirement is met at all times, including under stress, and publicly disclose a redemption policy with a redemption period of no more than two business days unless a specific safe harbor applies; the Board could extend the period for safety-and-soundness, financial-stability, or public-interest reasons.

The proposal would impose a 2 percent capital requirement on reserve assets that are uninsured deposit claims and undercollateralized reverse repurchase agreements, with a look-through for such assets held by eligible investment funds. A separate operational-risk charge would be graduated at 2.0 percent of the first $20 billion of outstanding stablecoins, 1.5 percent of the next $30 billion, and 1.0 percent of amounts above $50 billion, plus a charge equal to 25 percent of the three-year average of annual non-reserve asset revenue, adjusted upward or downward by a loss scalar tied to realized operational losses. Failure to meet minimum capital at a quarter-end would trigger automatic consequences, starting with a compliance plan; if noncompliance persisted through the next quarter, the issuer would have to liquidate all reserve assets and redeem outstanding stablecoins.

Permitted activities would be limited to issuing and redeeming payment stablecoins, managing reserves, providing custody, and activities that directly support those functions. The proposal would implement the statutory prohibition on paying interest or yield solely in connection with holding, using, or retaining a payment stablecoin, with a rebuttable presumption that certain affiliate and third-party arrangements are prohibited payments, consistent with the OCC’s approach. Reserve assets could not be pledged, rehypothecated, or reused except for limited purposes, and a stablecoin’s name could not combine terms relating to the U.S. government, such as United States or USG, although abbreviations tied to the pegged currency, such as USD, would remain permitted. Marketing could not suggest that a stablecoin is legal tender, issued or guaranteed by the U.S. government, or covered by federal deposit insurance, according to the proposal’s Federal Register notice.

The Board would generally conduct a full-scope examination of each Board-supervised PPSI at least once every 12 months, extendable to 18 or 36 months if certain conditions are met, and issuers would file confidential weekly reports on issuance, redemptions, trading volume, and reserve assets, along with quarterly financial reports. A Bank Secrecy Act or anti-money laundering deficiency would have to be significant or systemic for the Board to take supervisory or enforcement action against a PPSI, aligning with a standard the Board proposed for banks in a separate July 9, 2026 rulemaking. The proposal would also implement the Board’s back-up enforcement authority over state-qualified PPSIs in unusual and exigent circumstances, subject to 48 hours’ prior written notice to the state regulator, and set a transition process for uninsured state-chartered depository institutions with at least $10 billion in outstanding stablecoins, including an initial examination within six months and criteria for waivers.

Board-supervised firms that safekeep reserve assets, payment stablecoins used as collateral, or private keys would face minimum principles-based requirements. The Board’s capital rule would be amended so that a parent banking organization deconsolidates a PPSI subsidiary and deducts the PPSI’s minimum capital requirement from its common equity tier 1 capital, and Regulations H, K, and Y would be amended to clarify permissible stablecoin activities for state member banks, holding companies, Edge and agreement corporations, and uninsured state branches and agencies of foreign banks. The Board would also use its exclusive authority under the Act to bar tying by all PPSIs, including those it does not supervise.

Application Process for State Member Banks

The second proposal, Docket No. R-1900, would require an insured state member bank seeking approval for a subsidiary to issue payment stablecoins to apply by letter to the appropriate Federal Reserve Bank, according to a companion Federal Register notice. The application would include a business plan, financial information with three years of projections, policies and procedures, capital-structure documentation, biographical reports with fingerprints for certain principals, and certifications that officers and directors have no disqualifying felony convictions and that the filing contains no material misrepresentations. The Board would notify an applicant within 30 days whether an application is substantially complete and would have to render a decision within 120 days of the submission date; an application would be deemed approved if the Board misses that deadline. Both proposals would be codified in a new Regulation UU at 12 CFR part 247.

The Board could deny a substantially complete application only upon determining that the proposed activities would be unsafe or unsound, and would have to provide a specific written explanation with actionable recommendations within 30 days. Issuing a stablecoin on an open, public, or decentralized network would not be a valid ground for denial. A denied applicant could request a written or oral hearing within 30 days; the Board would hold the hearing within 30 days of the request and issue a final determination within 60 days after it, and a denial would not bar a subsequent application. A safe harbor would let the Board waive GENIUS Act requirements for up to 12 months after the Act’s effective date for a proposed PPSI with a pending application.

There were 703 insured state member banks as of December 31, 2025, of which 439 are small entities, the notice states. The Board estimates that five to ten banks may seek approval for a stablecoin subsidiary, assumes five respondents at about 80 hours per application for a total of 405 annual burden hours and $30,112 in cost, and estimates application compliance costs of $5,772 per small institution.

Governor Michael S. Barr said in a statement that he supports the proposal, adding that stablecoins “will only be stable if they can be reliably and promptly redeemed at par in a range of conditions.” Barr said he was encouraged by the reserve-asset limitations and the transparent, standardized capital requirements, and that he wants public input on whether the rule adequately addresses interest-rate and foreign-currency risks and on clarity around universal redemption rights. He also said that in any final rule he will want addressed his concern that the “significant or systemic” standard for anti-money laundering enforcement may have unknown effects on the Board’s ability to substantiate that institutions maintain compliant programs.