Stablecoins Just Got a Seat at the Fed's Table — Pass the GENIUS

The U.S. Federal Reserve has released two proposals aimed at implementing the GENIUS Act and establishing a regulatory framework for payment stablecoin issuers, with a 60-day public comment period set to begin following publication in the Federal Register.

The first proposal focuses on the reserves that stablecoin issuers must hold to fully back their tokens. It calls for issuers to maintain certain reserve assets, including short-term Treasury bills and "certain other high-quality, liquid assets," while also introducing standardized capital requirements to address risks tied to payment stablecoin activities. The Fed stated the framework is designed to ensure that every stablecoin in circulation is matched by an equivalent pool of qualifying assets.

The second proposal targets supervised banks seeking to issue stablecoins under the GENIUS Act, laying out rules for institutions that would mint the tokens directly. It also introduces oversight requirements for firms that safekeep the reserves backing GENIUS Act-compliant stablecoins, extending the regulatory perimeter beyond issuers themselves.

According to the Fed's press release, the dual-track approach reflects the agency's effort to align bank and non-bank participants under a single federal standard while leaving room for industry input. Federal Reserve officials have framed the proposals as a step toward clarifying the legal status of dollar-pegged tokens and reinforcing confidence in their redemption mechanisms.

The GENIUS Act, which provides the statutory basis for the Fed's rulemaking, requires payment stablecoins to be fully backed by liquid assets and subjects issuers to federal supervision. The Fed's proposals operationalize those statutory requirements by specifying which assets qualify as reserves, how capital must be allocated, and how custodial arrangements will be examined.

The comment period will run for 60 days after the proposals appear in the Federal Register, after which the Fed is expected to review submissions and move toward finalizing the rules.