On 24 September 2026 the Federal Reserve Board voted unanimously to release two proposed rules implementing the GENIUS Act for payment stablecoin issuers that the Fed supervises. One sets the ongoing framework for reserves, capital and risk management. The other sets out how a bank applies to issue. The proposals matter because they turn a statute passed in July 2025 into operating detail: what backs a stablecoin, how fast holders can redeem, and where the limits on yield sit.
The proposals are not final. Comments are due 60 days after publication in the Federal Register, and the terms may change. They are also only one part of the picture, since they are described as closely coordinated with parallel rulemakings at the OCC and the FDIC.
Who the rules cover
The framework applies to Fed-supervised permitted payment stablecoin issuers and to related custodians. The companion application proposal is aimed at insured state member banks that want to issue stablecoins through a subsidiary. Issuers supervised by other regulators fall under those regulators' rules, although one provision, an anti-tying prohibition, is described as reaching all permitted issuers regardless of regulator.
Reserves: full backing, checked daily
According to Troutman Pepper's summary, issuers would hold identifiable, segregated reserves whose fair value equals or exceeds outstanding stablecoins at all times, checked at least daily. Permissible assets are limited to:
- cash;
- short-term Treasuries;
- eligible bank deposits; and
- related repurchase transactions.
The Fed asks whether firmer numerical diversification limits, buffers or stress testing should be added. A law firm newsletter also notes monthly audited reserve reporting with CEO and CFO certifications. For allocators, the open question is how tight the reserve menu ends up. A narrow menu reduces asset risk but can concentrate exposure to a small set of banks and to Treasury market liquidity.
Redemption and fee disclosure
Issuers would have to redeem within two business days, or faster if they choose. The safe harbours for delay are narrow: legally required anti-money-laundering or sanctions screening, or events genuinely outside the issuer's control. High redemption volume is explicitly not a reason to delay. Issuers would also give at least seven days' notice before changing fees and publish their redemption policies in plain language.
This is a meaningful design choice. A two-day outer limit makes redemption an enforceable obligation rather than a marketing promise, and it puts the burden on reserve liquidity management during stress.
Capital and risk management
The proposal includes standardised capital requirements tied to credit and operational risk, plus broader risk-management standards. Custodians that hold reserve assets or private keys would face separate standards. In his statement, Governor Michael Barr said public input was needed on reserve asset limitations and capital requirements, particularly around interest rate and currency risks, and that more work remains, as PYMNTS reports.
Yield: an anti-evasion presumption
The GENIUS Act bars issuers from paying interest or yield to holders. The Fed's proposal targets indirect routes: certain arrangements involving affiliates, white-label partners or other third parties would be presumed prohibited. The precise mechanics are left open for comment.
This is the area most likely to draw detailed responses. Reward programmes and partner-funded incentives are common in the stablecoin market, and where the line falls will shape how issuers and distributors share economics.
Applications on a fixed clock
The application proposal is designed to give banks a predictable path to issuance, and the timelines are the most concrete part of it.
The second proposal sets a 30-day window for the Fed to confirm an application is complete and a 120-day deadline to decide, with deemed approval if the Fed misses it. Denials would need a written explanation tied to statutory safety-and-soundness factors. Predictable timelines may help banks plan, though deemed approval is a feature some commenters may challenge.
What to watch
The proposals are a draft, and several of the choices described above remain open to comment. The items below are the ones most likely to move.
- Comment letters. Reserve diversification, capital calibration and the yield presumption are the likeliest points of debate.
- OCC and FDIC rules. Differences between the agencies' final texts would affect how comparable issuers are across regulators.
- Federal Register publication. The 60-day comment clock starts there.
- Final-rule changes. Anything the Fed adopts could differ from this draft, and each outcome carries its own legal and market risks.
Sources
- Troutman Pepper: Federal Reserve Proposes Comprehensive Regulatory Framework for Payment Stablecoins Under the GENIUS Act
- PYMNTS: Fed Proposes Stablecoin Reserve and Capital Rules Under GENIUS Act
- Consumer Financial Services Law Monitor: Digital Assets + Blockchain Newsletter, October 1, 2026
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