The Federal Reserve Board on September 24 requested public comment on two proposals to build out the regulatory framework for payment stablecoin issuers under its supervision, marking the first detailed operational rules to emerge from the GENIUS Act passed last year.
The first proposal would require Board-supervised payment stablecoin issuers to fully back their tokens with permissible reserve assets — short-term Treasury bills and other high-quality, liquid assets — while imposing standardized capital requirements and risk-management standards. The second would establish a tailored application process for banks seeking approval to issue payment stablecoins, requiring applicants to submit a business plan and financial information, according to the Fed's announcement.
The public will have 60 days to comment once the proposals are published in the Federal Register. As of Sunday, that window has not yet opened.
"The Federal Reserve Board on Thursday requested public comment on two proposals related to establishing a regulatory framework for Board-supervised payment stablecoin issuers under the GENIUS Act," the Fed said in its announcement.
The proposed reserve rules are narrow by design. According to reporting from KuCoin, eligible reserve assets would be limited to cash, balances held at Federal Reserve banks, qualifying bank deposits, U.S. Treasury securities with remaining maturities of no more than 93 days, qualifying overnight repurchase and reverse repurchase agreements, and specific money market funds. Issuers would be required to record reserves at fair value at least once daily, at 5:00 p.m. in the time zone of the supervising Federal Reserve Bank, and ensure reserve value never falls below the redemption amount of outstanding stablecoins.
The framework also addresses what happens when an issuer's capital falls below required levels. Under the proposal, a bank that remains undercapitalized after the required compliance period would face restrictions that could ultimately require reserves to be liquidated and outstanding stablecoins redeemed.
The Fed is additionally proposing limits on payments that could effectively function as a return for simply holding a stablecoin. The GENIUS Act prohibits interest payments based solely on holding a payment stablecoin, and the proposal would presume certain arrangements involving affiliates or third parties to be prohibited payments unless the issuer can rebut that presumption.
Fed Governor Michael S. Barr voiced support for the direction of the rulemaking. "I am encouraged by provisions for reserve asset limitations, as well as transparent and standardized capital requirements," Barr said in a September 24 statement. In a separate statement, Barr added: "Stablecoins will only be stable if they can be reliably and promptly redeemed at par in a range of conditions. This includes during market stress, when pressure can be put on the value of even otherwise liquid government debt, and during episodes of strain on the individual issuer or its related entities."
Barr also cautioned that the proposal, while an important step, leaves more work ahead. "I support the proposed rulemaking as a step in that direction within the framework provided by the GENIUS Act, particularly as the rulemaking identifies key questions on which public feedback will be important," he said. He noted that additional work will be required "if stablecoins are to be reliable payment instruments."
The rules apply directly to payment stablecoin issuers and related banks supervised by the Federal Reserve. According to KuCoin's reporting, they will also serve as reference points for banks, custodians, and institutional clients evaluating stablecoin businesses — meaning issuers must restructure reserve accounting, redemption processing, risk measurement, and regulatory reporting to bring compliance into daily operations.
Financial Regulation News reports that the first proposal would also introduce rules for firms that protect the assets backing payment stablecoins and would clarify the permissibility of stablecoin and related activities for banks. The second proposal would create a process governing appeals, hearings, and final determinations for applications.
The GENIUS Act requires stablecoins to be backed 1:1 by qualified assets, and the Fed draft clarifies how that ratio is calculated and verified in practice.
Our Take
Here's the thing patriots: this is what happens when Congress actually does its job and passes a law instead of letting unelected bureaucrats rule by decree. The GENIUS Act came out of a Republican-controlled government that understands digital assets aren't going away — and the Fed is now being forced to implement a framework written by elected representatives, not conjured in a back room at the Eccles Building.
That matters. For years, the administrative state treated crypto as a problem to be smothered. Now the Fed is publishing rules for how stablecoin issuers can operate legally, with transparent reserve requirements and defined capital standards. The 1:1 backing rule and the 93-day Treasury maturity limit aren't radical — they're basic prudence. If you're issuing a token that people treat like a dollar, you'd better be able to make good on it.
But read the fine print. Barr — a Biden-era holdover at the Fed — is already signaling that this is just the beginning, that "more work will be required." Translation: the central bank isn't done. The 60-day comment period is your shot. If you're in the stablecoin space, if you run a bank, if you just hold USDC or USDT and want to know the government won't pull the rug out — weigh in.
The GENIUS Act was a win. Implementation is where the fight moves now. Stay loud.
