Short answer: On September 24, 2026 the Federal Reserve Board asked for public comment on two proposals that put the GENIUS Act into practice for the stablecoin issuers it supervises. The first sets rules on reserves, capital, risk management, custody of backing assets and permitted activities; the second creates an application process for insured state member banks that want a subsidiary to issue payment stablecoins. Reserves would be limited to cash, Fed balances, demand deposits, Treasuries maturing within 93 days, overnight Treasury repos, qualifying funds and tokenized versions of some of these, and operational-risk capital would run from 2% down to 1% of coins outstanding. The main proposal appeared in the Federal Register on September 29, 2026, and comments are due by November 30, 2026.
What did the Federal Reserve propose?
The GENIUS Act, signed in July 2025, allows only approved "permitted payment stablecoin issuers" to issue dollar stablecoins in the US and leaves each federal and state regulator to write the detailed rules for the issuers it oversees. The OCC, FDIC, NCUA and Treasury had already published their proposals over the past year; the Fed was one of the last major pieces, and like the others it is past the law's July 2026 target for implementing rules.
The Fed's scope is narrower than the headlines suggest. A Board-supervised issuer is either a subsidiary of an insured state member bank approved by the Fed, or an uninsured state-chartered institution with $10 billion or more of stablecoins outstanding that moves under the Fed's framework. The package also reaches further in three places: custody rules for Fed-supervised banks and holding companies that safekeep reserve assets or issuer private keys; amendments letting state member banks and holding companies engage in the stablecoin activities the Act allows; and the Act's anti-tying ban, which the Fed writes for every permitted issuer, whoever supervises it.
What can back a stablecoin under the Fed's rules?
Issuers would have to hold reserves whose fair value is at least equal to the par value of all coins in circulation at all times, kept separate from the issuer's other assets. The permitted list is short:
- US dollar cash and balances at a Federal Reserve Bank;
- demand deposits or insured shares at an insured depository institution;
- Treasury securities with 93 days or less to maturity;
- overnight repos and reverse repos backed by Treasuries;
- shares of funds that invest only in these permitted assets;
- tokenized versions of some of the above.
Rather than hard percentage caps, the Fed proposes principles-based diversification: issuers must avoid concentrating uninsured deposits at one or a few banks, or repo exposure with a few counterparties. If reserves fall below one-to-one, the issuer must notify the Fed and wind down by selling reserves and redeeming coins, unless the Board lets it proceed with a plan to promptly restore full backing. Redemptions must be paid within two business days, although the Board could extend that period in a crisis.
How much capital would issuers need?
| Element | Proposed rule |
|---|---|
| Operational risk, tier 1 | 2.0% of the first $20 billion of stablecoins outstanding |
| Operational risk, tier 2 | 1.5% of the next $30 billion |
| Operational risk, tier 3 | 1.0% of everything above $50 billion |
| Other activities | 25% of the three-year average of revenue not earned on reserves (for example custody fees) |
| Credit risk | 2% on reserves held as uninsured deposits or undercollateralized reverse repos |
| Loss scalar | Operational charge adjusted up or down based on actual operational losses |
| Capital shortfall | Short at quarter-end: plan required; still short a quarter later: liquidate reserves and redeem all coins |
| Supervision | Full-scope exam roughly every 12 months, confidential weekly reports on issuance, redemptions and reserves |
| Comment deadline | November 30, 2026 (60 days after Federal Register publication on September 29) |
For scale: under the tiered formula, a hypothetical issuer with $60 billion outstanding would need about $950 million of operational-risk capital before any other charges. Parent banks cannot count that capital twice: the proposal would deduct the subsidiary's required capital from the parent's common equity tier 1.
How can a bank get approval to issue a stablecoin?
The second proposal covers insured state member banks. The bank itself, not the future subsidiary, would apply to the Fed by letter with a business plan, financial information, policies and procedures, the proposed capital structure, biographical reports on management and required certifications. The Fed says it will reuse information it already holds as the bank's supervisor. Under the Act's timeline, the regulator has 30 days to say whether an application is substantially complete and 120 days after that to decide; a denied applicant can appeal through a written or oral hearing.
Yield, rewards and the AML debate
The Act bans paying interest or yield simply for holding a stablecoin. The Fed follows the OCC's approach: certain arrangements with third parties would be presumed to be prohibited yield paid by the issuer. That matters for exchange "rewards" programs, which regulators are scrutinizing. Governor Michael Barr backed the proposals but warned that the plan to act on anti-money-laundering failures only when they are "significant or systemic" could weaken supervision, and said more work will be needed for stablecoins to become reliable payment instruments.
Why it matters
The Fed's rules will directly govern only a small set of issuers today, but they show what a "bank-grade" dollar token looks like in the US: very short-dated government paper, two-day redemption, explicit capital and weekly reporting. As more banks explore issuing their own coins, these standards become the baseline, echoing the community-bank push covered in our Coinbase and Moov stablecoin story and parallel moves abroad such as Canada's tokenized deposit guidance. For the bigger picture across the US, EU and Asia, see our stablecoin regulation 2026 overview.
For USDC and USDT users, nothing changes today. Circle and Tether are not Fed-supervised issuers under this proposal; their US compliance runs through other regulators, and USDT is issued offshore. The Act's effective date is the earlier of January 18, 2027 or 120 days after final rules, so timelines may still shift after the comment period.
Practical checklist for people who hold or swap stablecoins
- Know who issues your coin. USDC, USDT and newer bank tokens have different issuers, regulators and redemption terms. Check the issuer's reserve reports.
- Treat yield offers carefully. Rules on stablecoin "rewards" are tightening; a program paying you for simply holding a token may change or end.
- Pick the network deliberately. Regulation does not change network fees or the risk of sending to the wrong chain; our USDT TRC20 vs ERC20 guide explains the trade-offs.
- Compare before you swap. Rates and fees between stablecoins and other assets vary by service; check the exchangers list before converting.
- Watch the dates. Comments close November 30, 2026; final rules and the January 2027 effective date follow.
FAQ
What did the Federal Reserve propose on September 24, 2026?
Two GENIUS Act proposals: one sets reserve, capital, risk-management, custody and activity rules for Fed-supervised stablecoin issuers, the other sets the process for insured state member banks to get approval for a subsidiary to issue payment stablecoins. Comments are due by November 30, 2026.
What assets can back a stablecoin under the Fed proposal?
Dollar cash, Federal Reserve Bank balances, demand deposits at insured institutions, Treasuries maturing within 93 days, overnight Treasury repos and reverse repos, funds holding only these assets and tokenized versions of some of them. Reserves must equal or exceed coins outstanding at all times.
How much capital would a Fed-supervised stablecoin issuer need?
An operational-risk charge of 2% on the first $20 billion outstanding, 1.5% on the next $30 billion and 1% above $50 billion, plus 25% of average non-reserve revenue and a 2% charge on uninsured deposits and undercollateralized reverse repos held as reserves.
Does the Fed proposal affect USDC and USDT?
Not directly. It covers issuers supervised by the Fed, such as subsidiaries of state member banks and large uninsured state-chartered issuers. Circle and Tether fall under other regulators or operate offshore, although the anti-tying rule applies to all permitted issuers.
When do the GENIUS Act rules take effect?
The GENIUS Act takes effect on the earlier of January 18, 2027 or 120 days after regulators issue final implementing rules. The Fed must first review comments, which close on November 30, 2026, before finalizing.
Sources
- Federal Reserve Board: request for comment on two GENIUS Act proposals
- Federal Reserve Board: staff memo on the GENIUS Act implementing proposal (PDF)
- Federal Register: Implementing the Federal Reserve Board's Responsibilities Under the GENIUS Act
- CoinDesk: U.S. Federal Reserve moves on proposals to implement GENIUS Act for stablecoins
- American Banker: Fed proposes stablecoin rules under GENIUS Act
- The Block: Fed proposes reserve limits, capital standards for stablecoin issuers