The Federal Reserve has unveiled two proposed rules to establish regulatory oversight for stablecoin issuers under the Guiding and Establishing National Innovation for US Stablecoins (GENIUS) Act. The central bank announced the proposals on Thursday, opening a 60-day public comment period following their official publication in the Federal Register.
Core Provisions of the Fed's Stablecoin Framework
The first proposal mandates that payment stablecoin issuers supervised by the Fed must fully back their tokens with approved reserve assets, specifically short-term US Treasury bills and other high-quality liquid assets. Additionally, this proposal sets capital requirements for credit and operational risks, establishes risk management standards for stablecoin operations, and specifies permitted stablecoin activities for Fed-supervised banks.
The second proposal outlines the application process for supervised banks seeking to issue payment stablecoins. Under these rules, applicants must submit detailed business plans, financial documentation, and secondary records, while establishing formal procedures for application appeals and hearings.
Key Takeaways
- Reserve Mandate: Supervised payment stablecoin issuers must fully back tokens with short-term US Treasury bills and high-quality liquid assets.
- Risk Standards: Proposals establish formal capital requirements for credit and operational risks for Fed-supervised entities.
- Application Guidelines: Supervised banks issuing payment stablecoins must provide detailed business plans and financial information.
- Public Comment Period: The public comment window will remain open for 60 days following publication in the Federal Register.
Statutory Framework and Agency Background
The GENIUS Act moved through Congress before President Donald Trump signed the legislation into law on July 18, 2025, creating a federal framework for stablecoin regulation. The move follows regulatory steps by other agencies, including rules proposed last month by the Treasury Department regarding issuer definitions, an FDIC process started in December, and a joint initiative in June requiring stablecoin issuers to verify and identify users under existing financial rules.
Addressing the proposed rules, Fed Governor Michael Barr stated that stablecoins can only remain stable if users can rapidly redeem them at full value during market stress or issuer distress. Barr noted that public feedback will be crucial to evaluate whether the framework adequately addresses interest rate and foreign currency risks.
Why It Matters
By restricting reserve assets primarily to short-term Treasuries and high-quality liquid instruments, the Federal Reserve is integrating dollar-pegged digital assets directly into traditional monetary oversight. This framework forces non-bank issuers to adopt institutional-grade risk management while offering a clear regulatory pathway for supervised banks to issue their own tokenized settlement media. Over time, these requirements should mitigate run risks during market distress, although high operational compliance standards may raise barriers for smaller issuers.
