- The Federal Reserve on Sept. 24 proposed full 1:1 reserve backing and standardized capital rules for Board-supervised payment stablecoin issuers under the GENIUS Act.
- Operational-risk capital would start at 2% of the first $20 billion outstanding, stepping down to 1% above $50 billion.
- Issuers would generally have to redeem tokens within two business days and publish monthly, accountant-examined reserve reports.
- A second proposal sets a bank application process; comments close 60 days after Federal Register publication.
- Governor Michael Barr backed the package but flagged anti-money-laundering enforcement limits and redemption rights in stress.
The Federal Reserve Board on Thursday requested public comment on two proposals that would implement the GENIUS Act for payment stablecoin issuers it supervises, requiring full one-to-one reserve backing with short-term Treasuries and other high-quality liquid assets and setting standardized capital and risk-management standards.
The first notice of proposed rulemaking would require Board-supervised permitted payment stablecoin issuers to hold reserve assets whose fair value equals or exceeds outstanding issuance at all times. Permissible holdings include U.S. currency and Federal Reserve balances, eligible deposit claims, Treasury securities with a remaining maturity of 93 days or less, qualifying overnight repurchase and reverse-repurchase agreements, shares of funds invested solely in those instruments, and tokenized versions of the same assets that confer identical legal rights.
On capital, the draft would apply an operational-risk charge equal to 2% of outstanding issuance up to $20 billion, $400 million plus 1.5% of the amount between $20 billion and $50 billion, and $850 million plus 1% of issuance above $50 billion, plus additional charges for uninsured deposit claims and undercollateralized reverse repos. Newly approved issuers would face a $5 million de novo capital floor, indexed to nominal U.S. GDP.
Holders would have the right to redeem at par no later than two business days after a request, with limited safe harbors for Bank Secrecy Act reviews and events outside an issuer’s control. If reserves slip below 1:1, the issuer would have to notify the Board within 24 hours and either restore backing or begin liquidating reserves and redeeming tokens. Issuers would also publish monthly reserve composition reports by noon on the last day of each month, examined by a registered public accounting firm and certified by the CEO and CFO.
A companion proposal on application procedures would require Board-supervised banks seeking to issue payment stablecoins through a subsidiary to file a business plan and financial information, and would set processes for appeals, hearings and final determinations. The comment period on both packages closes 60 days after publication in the Federal Register.
The GENIUS Act, enacted July 18, 2025, takes effect on the earlier of 18 months after enactment or 120 days after federal regulators issue final implementing rules. In a accompanying statement, Governor Michael S. Barr said he supported the proposals but wanted further work before treating stablecoins as reliable payment instruments. “Stablecoins will only be stable if they can be reliably and promptly redeemed at par in a range of conditions,” Barr wrote, including “during market stress, when pressure can be put on the value of even otherwise liquid government debt.” He also objected to a standard that would bar Board enforcement of an anti-money-laundering deficiency unless the issue is deemed “significant or systemic.”
Issuers and banks that rely on dollar stablecoins for trading, settlement and payments now have a concrete view of the capital, liquidity and disclosure costs that federal supervision would impose if the drafts are finalized in current form.
