The Federal Reserve has opened two proposed rules for public comment as it implements its responsibilities under the GENIUS Act. Together, the proposals cover the operating standards for payment stablecoin issuers supervised by the Board and the process that certain banks would use to seek approval for a stablecoin-issuing subsidiary.
Both documents are proposals, so their requirements may change before any final rules take effect. The comment period is scheduled to close 60 days after publication in the Federal Register. For banks and stablecoin companies, the drafts show which balance-sheet, operational and application details the Fed expects to examine.
Reserve backing comes with broader controls
The larger proposal would require Board-supervised payment stablecoin issuers to maintain permissible reserve assets sufficient to back outstanding coins at all times. The Federal Reserve names short-term Treasury bills and other high-quality liquid assets as examples, while the detailed notice also discusses reserve diversification.
Backing is only one part of the framework. The draft includes standardized capital requirements aimed at credit and operational risks, along with risk-management standards. It would apply related safeguards to Board-supervised firms that custody reserve assets, stablecoins used as collateral, private keys used to issue stablecoins, and certain other property.
The proposal would also implement the GENIUS Act restriction on issuers paying yield or interest solely because a customer holds, uses or retains a payment stablecoin. The draft contains tests for arrangements involving affiliates and other parties, making the commercial relationship around a reward program relevant to the regulator’s analysis.
Banks would face a tailored application
A separate proposal addresses insured state member banks that want a subsidiary to issue payment stablecoins. The application would require a business plan, financial information, policies and procedures, capital-structure documents, biographical reports and specified certifications.
The proposed process includes rules for appeals, hearings and final decisions. Federal Reserve staff said the review would prioritize the safety and soundness of the applicant and its proposed issuing subsidiary. That gives prospective issuers a clearer list of materials to prepare, but filing an application would not guarantee approval.
What the proposals cover
The two dockets divide the work between ongoing supervision and entry into the market. Docket R-1899 addresses the operating framework, including reserves, capital, permitted activities, risk controls and custody. Docket R-1900 describes how eligible banks would request permission for an issuing subsidiary.
This scope is narrower than a single rule for every stablecoin business in the United States. The documents focus on entities within the Federal Reserve Board’s jurisdiction and on specific GENIUS Act duties. Market participants assessing the proposals should therefore check which regulator supervises the issuer or custodian before applying these requirements to a particular company.
Companies that combine issuance, reserve custody and customer rewards will need to map each activity separately against the proposed provisions. Banks considering an issuing subsidiary can also use the application notice to identify missing governance, financial or risk documents before the rules are finalized.
Adapted from Federal Reserve Proposes Stablecoin Rules Under the GENIUS Act.