As stablecoins have grown into critical infrastructure for blockchain payments and cryptocurrency trading, their expansion has drawn heightened regulatory scrutiny concerning issuer failures, redemptions, and reserves.
Following the enactment of the GENIUS Act into US law in July 2025, which established a federal regulatory framework for payment stablecoins, regulators have been translating these mandates into proposed operational rules addressing capital, supervision, financial-crime controls, and reserves.
Federal Reserve Proposes Stablecoin Rules
The Federal Reserve requested public comment on September 24, 2026, regarding two proposals that implement parts of the GENIUS Act for payment stablecoin issuers under Board supervision.
The first proposal mandates that issuers fully back outstanding payment stablecoins using permitted reserve assets, which can encompass short-term US Treasury bills alongside other high-quality, liquid assets.
Under the GENIUS Act, reserves must back outstanding stablecoins on at least a one-to-one basis. Permitted assets consist of US dollars, deposits held at eligible financial institutions, specific short-term Treasuries, and Treasury-backed reverse repurchase agreements.
These rules aim to bolster the capacity of issuers to honor redemptions whenever holders seek to exchange their stablecoins for cash.
Capital and Risk Management Requirements
While reserve backing forms a core piece of the proposed framework, the Federal Reserve also introduced standardized capital requirements to counter specific operational and credit risks linked to payment stablecoin activities.
Additionally, issuers would encounter risk-management standards, and Board-supervised institutions tasked with safeguarding stablecoin reserves would face tailored requirements.
Federal Reserve Governor Michael Barr emphasized that prompt and reliable redemption at par becomes especially critical during periods of market stress. He additionally pointed to reserve limitations, standardized capital requirements, and questions surrounding foreign-currency and interest-rate risks.
Banks Would Need Approval
A second proposal from the Federal Reserve outlines procedures for insured state member banks that want approval for subsidiaries to issue payment stablecoins. Interested applicants must submit a business plan, financial data, and supplementary documentation.
This framework additionally details procedures for final determinations, hearings, and appeals. Public comments for both proposals introduced in September are due 60 days following their publication in the Federal Register.
Stablecoin Rules Extend Beyond Reserves
The rollout of the GENIUS Act also addresses compliance with financial-crime regulations. A separate multi-agency proposal would classify permitted payment stablecoin issuers as financial institutions under the Bank Secrecy Act, mandating the maintenance of effective customer identification programs.
Furthermore, FinCEN and OFAC have proposed requirements focused on anti-money-laundering and sanctions-compliance programs for permitted stablecoin issuers.
In parallel, the Office of the Comptroller of the Currency put forward its own GENIUS Act framework in February, addressing issuers and select stablecoin custody operations falling under OCC jurisdiction.
Final Thoughts
The GENIUS Act is steering US stablecoins toward transparent rules governing compliance, custody, capital, and reserves. The September proposals from the Federal Reserve demonstrate how these mandates could apply to supervised banks and issuers, potentially aligning stablecoins more closely with regulated payment systems while preserving blockchain-based settlement.
Also Read: https://www.analyticsinsight.net/news/us-eyes-stablecoins-to-strengthen-dollar-and-treasury-demand
FAQs:
1. What is the GENIUS Act?
The GENIUS Act is a US federal law establishing a regulatory framework for payment stablecoins. It introduces requirements covering reserves, supervision, redemption, capital and issuer operations.
2. What reserve requirements does the GENIUS Act introduce?
Payment stablecoins must generally be backed at least one-to-one by permitted reserve assets. These can include US dollars, eligible bank deposits and certain short-term US Treasury assets.
3. What did the Federal Reserve propose in September 2026?
The Federal Reserve proposed rules covering reserve assets, capital, risk management and custody for Board-supervised stablecoin issuers. It also proposed an approval process for certain banks seeking to issue stablecoins.
4. Does the GENIUS Act include anti-money-laundering requirements?
Yes. Implementation includes customer identification and Bank Secrecy Act requirements, while FinCEN and OFAC have proposed additional AML and sanctions-compliance requirements for permitted issuers.
5. How could the GENIUS Act affect the US stablecoin market?
The framework could bring clearer regulatory standards for stablecoin issuers and banks participating in blockchain payments. Issuers would face defined requirements for backing tokens, managing risks and maintaining regulatory compliance.
