Payments regulation: Fed proposes stablecoin reserve rules

The Federal Reserve on Thursday put the core of its stablecoin rulebook out for public comment. The Board requested comment on two proposals under the GENIUS Act that together set out how stablecoin issuers it supervises would hold reserves, meet capital standards and win approval to operate. For anyone watching payments regulation, the package answers a basic question: what a bank-affiliated dollar token has to look like on the balance sheet.

Key takeaways

• One proposal would require Board-supervised payment stablecoin issuers to back their coins fully with permissible reserve assets, set capital requirements and impose risk management standards.
• The second would create a tailored application process for Board-supervised banks that want to issue payment stablecoins.
• Both comment periods close 60 days after publication in the Federal Register.

The reserve and capital proposal

The first proposal covers issuers that the Board supervises. The release says they would have to fully back their stablecoins with certain permissible reserve assets, such as short-term Treasury bills and certain other high-quality, liquid assets. It would also set standardized capital requirements aimed at the credit and operational risks of payment stablecoin activity, along with risk management standards, as the law requires.

The staff memo to the Board, published with the release, adds detail. Reserve assets would have to be worth at least the par value of outstanding coins at all times and be segregated from the issuer’s other assets. The permitted list includes U.S. dollar cash, balances at Federal Reserve Banks, demand deposits at insured depository institutions, Treasury securities with remaining maturity of 93 days or less, overnight repurchase agreements backed by Treasuries, shares of eligible funds invested solely in those assets, and tokenized versions of some of them. An issuer that fell below full backing would have to notify the Fed and generally liquidate reserves and redeem coins, unless it had a plan to return promptly to one-to-one backing and the Board told it to proceed.

The reserve list reads like a money market fund’s holdings, which fits the law’s design: together with the ban on yield, it treats a payment stablecoin as a payment instrument rather than an investment product.

Who counts as Board-supervised

According to the memo, Board-supervised issuers are of two kinds: subsidiaries of insured state member banks that the Board has approved to issue coins, and state-qualified issuers that are uninsured state-chartered depository institutions with $10 billion or more in outstanding payment stablecoins and that move to the Board’s framework under the Act.

The same proposal would also cover firms that safekeep the assets backing payment stablecoins, clarify what stablecoin and related activities Board-supervised banks may conduct, and implement two statutory limits: a ban on paying yield or interest solely for holding or using a payment stablecoin, and a prohibition on tying, which prevents an issuer from conditioning service on a customer’s purchase of another product.

The application proposal

The second proposal addresses the front door. Board-supervised banks applying to issue payment stablecoins would submit a business plan and financial information, among other documents. The memo adds policies and procedures, capital structure documentation, biographical reports and certifications. The proposal would also create a process for appeals, hearings and final determinations on applications.

Timing and the other agencies

The GENIUS Act was enacted in July 2025. The memo says its effective date is the earlier of January 18, 2027, or 120 days after the primary federal payment stablecoin regulators issue final regulations. It notes that the OCC, FDIC and NCUA have already issued proposals for the issuers and institutions under their own jurisdiction, and that the Board’s proposal benefited from consultation with their staff.

What to watch

Comment letters will show how banks, fintech issuers and payment networks respond to the reserve list, the capital standards and the yield prohibition. The effective-date formula means final rules from any of the primary regulators start a 120-day clock, so the pace of finalization will matter as much as the content.