TLDR
- The Federal Reserve proposed two rules to implement its responsibilities under the GENIUS Act for stablecoin oversight.
- One proposal sets reserve, capital, and risk standards for stablecoin issuers supervised by the Fed.
- The Fed also addressed stablecoin rewards, with some third-party yield arrangements likely treated as prohibited interest payments.
- A second proposal creates an approval process for regulated banks that want to issue their own payment stablecoins.
- Both proposals now enter a 60-day public comment period before the Fed can revise and finalize the rules.
The Federal Reserve proposed two rules on Thursday to carry out its responsibilities under the GENIUS Act. The proposals cover reserve standards, capital rules, bank stablecoin activity, and formal application procedures. The Fed opened both measures for public comment for 60 days.Â
The GENIUS Act created a federal framework for payment stablecoins in 2025. It gave regulators one year to issue implementing rules, placing the deadline in July 2026. Federal agencies have continued releasing proposals after that deadline as they build the final framework.Â
Reserve Rules Cover Stability and Rewards
The first Fed proposal would require supervised issuers to back stablecoins with approved liquid assets. These include short-term Treasury bills and other high-quality reserves. It would also set capital and risk-management requirements and rules for banks that safeguard reserve assets.Â
The proposal also addresses interest and rewards. Certain third-party arrangements would count as prohibited interest or yield payments. The approach follows similar OCC language. A recent report on U.S. stablecoin expansion plans described a separate government effort to promote dollar-backed stablecoins overseas.Â
Banks Face New Issuance Process
The second proposal creates an application process for Fed-supervised banks that want to issue payment stablecoins. Applicants would need to provide a business plan, financial information, internal policies, procedures, and other supporting documents before receiving approval.Â
The Fed proposal arrives after the Senate failed to advance the Digital Asset Market Clarity Act. The failed CLARITY Act vote left the GENIUS Act as the main federal law governing stablecoin rewards. Lawmakers had debated broader limits on rewards offered by crypto platforms.Â
Agencies Continue Stablecoin Rulemaking
Treasury proposed separate rules in August defining when a company issues a payment stablecoin in the United States. The FDIC also began its GENIUS Act work earlier, including rules for banks seeking permission to issue tokens through subsidiaries.Â
Fed Governor Michael Barr said stablecoins need reliable redemption at par during normal and stressed markets. Recent data from a U.S. stablecoin adoption survey also showed that bank-style protections could affect consumer willingness to use stablecoins.Â
The Fed will review public comments before revising the proposals. Final rules could change after that process. The measures add to the federal oversight system that agencies are building under the GENIUS Act across supervised institutions.Â
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