The Federal Reserve has taken a significant step toward bringing payment stablecoins deeper into the regulated U.S. financial system, proposing a framework that would govern stablecoin issuers under the GENIUS Act.
The proposals, released on September 24, 2026, would establish requirements for reserves, capital, risk management and bank applications, while giving the public 60 days to comment after publication in the Federal Register.
At the center of the proposal is a straightforward regulatory principle: a stablecoin should be backed by assets capable of supporting redemption when holders want their money back.
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The Federal Reserve would require Board-supervised payment stablecoin issuers to fully back their tokens with permitted reserve assets, including short-term U.S. Treasury bills and other high-quality, liquid assets.
That requirement addresses one of the most important questions surrounding stablecoins. Their value depends not simply on blockchain technology, but on confidence that a token advertised as redeemable for one dollar can actually be converted into dollars at par.
Federal Reserve Governor Michael Barr said reliable and prompt redemption must remain possible even during periods of market stress, when supposedly liquid assets can themselves experience pressure.
The proposed framework would introduce standardized capital requirements designed to address credit and operational risks associated with stablecoin activities. Risk-management standards would accompany those requirements.
While separate rules would cover institutions responsible for safeguarding the assets backing stablecoins. The Federal Reserve would also clarify which stablecoin-related activities are permissible for banks under its supervision.
For banks seeking to enter the stablecoin market, the proposal creates another important layer: authorization. Board-supervised insured state member banks would need approval to establish subsidiaries that issue payment stablecoins.
Applicants would provide information including business plans and financial details, while the proposed process would establish procedures for hearings, appeals and final regulatory determinations. The significance extends beyond individual issuers.
Stablecoins increasingly sit at the intersection of cryptocurrency markets, payments and traditional financial infrastructure. Federal Reserve officials have previously identified potential applications in remittances, global trade, treasury management and other payment activities.
While highlighting concerns around money laundering, terrorist financing and financial stability. The GENIUS Act therefore represents more than a licensing framework. It creates the legal foundation upon which regulators are now constructing operational rules.
The Federal Reserve’s latest proposals are part of that implementation process, translating statutory requirements into standards that banks and other supervised institutions would have to follow.
There is an important distinction between the proposal and a finalized regulatory regime. The Federal Reserve is seeking public comment, meaning industry participants, banks, technology companies and other stakeholders can still raise concerns or recommend changes.
The Board’s comment period will close 60 days after publication in the Federal Register. The next phase will consequently be less about whether regulation is coming and more about what the final operating architecture will look like.
Reserve quality, redemption rights, capital buffers, custody arrangements and supervisory requirements could determine how easily stablecoin issuers integrate with conventional finance.
The Federal Reserve’s proposal signals that stablecoins are increasingly being treated not merely as crypto instruments, but as payment technologies with potential consequences for banking and financial stability.
The GENIUS Act supplied the legal framework; the Federal Reserve is now working to build the regulatory machinery around it.