Fed Drops GENIUS Act Rulebook: Stablecoins Now Need Receipts, Reserves, and a Really Good Lawyer 💸

The U.S. Federal Reserve on Thursday unveiled two proposed rules to implement the GENIUS Act, opening a 60-day public comment period following publication in the Federal Register as it moves to construct a federal framework for payment stablecoin issuers. The first proposal would require Board-supervised payment stablecoin issuers to fully back their tokens with permissible assets, including short-term Treasury bills and "certain other high-quality, liquid assets," while establishing standardized capital requirements, risk-management standards, and rules for firms that safekeep the underlying reserves.

Under the operational-risk capital charge outlined in the proposal, issuers would face a requirement equal to 2% of the first $20 billion in stablecoins outstanding, 1.5% of the next $30 billion, and 1% of amounts above $50 billion, alongside additional capital charges tied to credit and operational risks. Issuers would generally be required to process redemptions within two business days, and if reserves fall below the required one-to-one backing, an issuer would have to notify the Fed and either restore its reserves under a remediation plan or liquidate them and redeem outstanding stablecoins. Issuers would also have to publish monthly reports detailing their outstanding stablecoins and the value and composition of their reserves, with those disclosures examined by a registered public accounting firm and certified by the issuer's CEO and CFO.

The second proposal would create a tailored application process for Board-supervised banks seeking to issue payment stablecoins through subsidiaries, requiring them to submit a business plan and financial information, and would establish procedures for appeals, hearings, and final decisions. Fed Governor Michael Barr supported the proposal on Thursday but said further work would be required for stablecoins to become reliable payment instruments, stating: "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 added that he was encouraged by the proposed limits on reserve assets and standardized capital requirements, while calling for public feedback on whether the framework adequately addresses interest-rate and foreign-currency risks. He also said universal redemption rights should be clearly established in the final rule and raised concerns about a standard that would prevent the Fed from taking supervisory or enforcement action over an anti-money laundering deficiency unless the issue is considered "significant or systemic."

The Fed's action adds its piece to a multi-agency rollout of the GENIUS Act, which President Donald Trump signed in July 2025 and which set the first federal framework for dollar-pegged tokens. The Office of the Comptroller of the Currency has been racing to finalize its own stablecoin rules by November ahead of a January statutory deadline, while the Treasury Department has separately proposed rules that would bar platforms from selling noncompliant stablecoins to U.S. customers. The GENIUS Act is set to take effect on Jan. 18, 2027, or 120 days after federal regulators issue final implementing rules, whichever comes first.