Key points

  • The proposals would require at least one-to-one backing with permissible liquid reserve assets.
  • Supervised issuers would face capital, risk-management, custody and public redemption-policy requirements.
  • A separate framework would govern bank applications to issue stablecoins through subsidiaries.

The Federal Reserve has proposed two regulatory frameworks for payment stablecoin issuers under its supervision, moving another part of the GENIUS Act from legislation toward detailed implementation. The measures remain proposals, not final rules, and are open to public comment. They would shape how covered issuers protect token holders, manage reserves and seek permission to enter the market.

Backing and redemption standards

The broader proposal would require Board-supervised permitted payment stablecoin issuers to maintain identifiable reserves with a fair value at least equal to their outstanding tokens. The Federal Reserve said eligible reserves would include short-term Treasury bills and other high-quality liquid assets. Its accompanying notice says issuers would have to demonstrate compliance with the one-to-one requirement at least once each calendar day, while remaining fully backed at all times.

Related reporting: U.S. banking groups seek tighter stablecoin reward limits in CLARITY Act

The framework would also require a clear public redemption policy. Under the proposed text, a supervised issuer generally would need to complete a redemption no later than two business days after a valid request. If an issuer fell below full backing, it would have to notify its supervising Federal Reserve Bank within 24 hours and submit a remediation plan. The proposal describes liquidation and redemption steps if the shortfall is not corrected or addressed through an approved plan.

Capital, custody and operating controls

Beyond reserves, the Fed would establish standardized capital requirements intended to cover credit, market and operational risks. Eligible capital would center on tangible equity, while goodwill and other intangible assets would be excluded because they may not be available to absorb losses or support redemptions. The package also includes risk-management, reporting, audit and supervisory standards.

Firms that safeguard stablecoin reserve assets would face separate custody rules, including protections for custodial property and requirements governing segregation and omnibus accounts. The Fed said the proposal would also clarify which stablecoin and related activities are permissible for banks under its supervision. These details matter because a token can be fully backed on paper while still exposing holders to operational, custody or liquidity failures.

A separate route for bank issuers

The second proposal would create an application process for Fed-supervised insured depository institutions seeking approval for a subsidiary to issue payment stablecoins. Applicants would need to provide a business plan, financial information and other supporting documents. The framework would also set procedures for appeals, hearings and final determinations, giving banks a defined route to seek authorization without guaranteeing approval.

What changes now

The proposals build on the GENIUS Act, signed into law on July 18, 2025. Reuters reported at the time that the law established a U.S. stablecoin framework built around liquid backing assets and recurring reserve disclosures. The Fed's action supplies more operational detail for entities within its jurisdiction, but it does not immediately authorize a new issuer or replace other agencies' responsibilities.

Comments are due 60 days after the notices are published in the Federal Register. Issuers, banks, custodians and users will therefore need to watch whether the final rules alter reserve composition, capital calculations, redemption timing or application requirements. Until that process is complete, the standards should be described as proposed obligations rather than enacted supervisory requirements.

Sources

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