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The U.S. Federal Reserve has proposed two frameworks under the GENIUS Act governing payment stablecoins. Fed-supervised issuers would be required to fully back their stablecoins with qualifying reserve assets, such as short-term U.S. Treasury bills and other highly liquid assets, while maintaining capital to absorb credit and operational losses. The proposals also establish risk-management standards and a tailored application process for Fed-supervised banks seeking to issue payment stablecoins. The public comment period will remain open for 60 days after publication in the Federal Register.
On 24th September, the U.S Federal Reserve proposed two sets of rules to establish how payment stablecoin issuers and banks under its supervision would operate under the GENIUS Act.
, Fed-supervised payment stablecoin issuers would have to fully back the stablecoins they issue with permitted reserve assets. These could include short-term U.S Treasury bills and other high-quality, liquid assets. Here, the basic idea is that if an issuer has $1 billion worth of stablecoins outstanding, it would need to maintain qualifying reserve assets sufficient to support those tokens.
This is intended to help ensure that holders can redeem their stablecoins for their underlying value, including during periods of market stress.issuers. In this, capital will act as an additional financial cushion that can absorb certain losses, particularly those arising from credit and operational risks. Alongside this, issuers would have to follow risk-management standards designed to address the risks associated with running payment stablecoin businesses.
At the same time, the second proposal focuses specifically on Fed-supervised banks that want to issue their own payment stablecoins. Rather than using a standard banking application process, these institutions would have a tailored application procedure. Herein, applicants would need to provide information such as a business plan and financial information, allowing the Fed to assess how the proposed stablecoin operation would function and whether the bank has the necessary resources and controls.
Needless to say, the proposal would also establish procedures for appeals, hearings, and final decisions if an application is challenged or denied. Right now, the Fed is seeking public feedback before deciding what the final framework should look like. For this, the comment period will close 60 days after the proposals are published in the Federal Register.acknowledging that a year has passed since President Donald Trump signed the GENIUS Act.
As it stands, U.S regulators are still finalizing key rules covering stablecoin reserves, capital, liquidity, custody, risk management, and compliance. Although agencies were expected to complete implementation by 18th July 2026, the OCC, Federal Reserve, FDIC, Treasury, and others continue to seek public feedback. Full enforcement is still planned for 18th January 2027. Fed-supervised payment stablecoin issuers would have to fully back the stablecoins they issue with permitted reserve assets.
Fed proposal also addresses banks and other Fed-supervised firms that safekeep the assets backing stablecoins.
Payment Stablecoins GENIUS Act Federal Reserve Reserve Requirements Bank Supervision
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