The Federal Reserve Board has proposed rules for payment stablecoin issuers under its supervision. Released September 24, the proposal would put parts of the GENIUS Act into Board regulations covering reserves, capital, risk management and custody. It is open for public comment and has no final requirements yet.
The starting point is statutory: the GENIUS Act requires identifiable reserves backing outstanding payment stablecoins at least one-to-one, monthly public reporting of reserve composition, and capital, liquidity and risk-management requirements. The Fed’s proposed rule, Docket R-1899, develops operating standards for issuers under the Board’s supervision. It also includes a proposed tying prohibition that would apply generally to permitted payment stablecoin issuers. The operating standards are one part of a broader federal framework.
Reserve diversification without a fixed percentage cap
The Fed proposes a principles-based approach to reserve diversification. The Board says it generally believes reserves should consist predominantly of U.S. Treasuries, but the draft does not turn that view into a fixed Treasury quota or set percentage caps for individual reserve assets. It asks whether more prescriptive limits or buffers would be appropriate.
That distinction matters for anyone comparing current reserve portfolios with the draft. The Act’s one-to-one backing requirement is a statutory baseline; the proposed diversification standards are supervisory details still subject to revision.
A proposed floor for new issuers
For a newly established Board-supervised permitted payment stablecoin issuer, the draft proposes a $5 million de novo capital floor, indexed to nominal U.S. GDP, during an initial three-year period. The Board could adjust or extend that period under the conditions in the proposal. The figure is a floor for that proposed early-stage framework, not the total capital requirement for every issuer or a replacement for risk-based requirements.
The same proposal also addresses risk-management and custody standards, along with activities of Board-supervised banks. Those provisions, like the reserve and capital details, can change before any final rule.
What happens next
The Fed says comments will close 60 days after the proposal appears in the Federal Register. The reviewed proposal still has a placeholder for the comment date, so an exact deadline cannot yet be stated. Governor Michael Barr identified questions about interest-rate and foreign-currency risks and redemption rights; his statement is an individual governor’s view, not a final Board resolution.
The Board also issued a separate proposal for insured State member banks seeking approval for a stablecoin-issuing subsidiary. That application route addresses who can seek approval and how, while this proposal addresses operating standards for Board-supervised issuers.
The OCC’s separate GENIUS Act proposal concerns a different regulator and issuer scope.
Primary sources
Investment disclaimer: This article is provided for general information only and does not constitute investment, financial, legal or tax advice. Digital assets are volatile, and all investment decisions and their consequences are your own responsibility.