Fed proposes new rules for stablecoins

TLDR

The Federal Reserve has proposed detailed new rules for stablecoin issuers under the U.S. GENIUS Act, focusing on full-reserve backing, capital standards and strict redemption rules.

1. The Fed proposes that payment stablecoins it supervises be fully backed by short-term Treasuries or similar high quality liquid assets, with standardized capital and risk management requirements.
2. A separate proposal creates a formal path for Fed-supervised banks to issue stablecoins, while heavily restricting interest or yield programs on stablecoin holdings.
3. Both rules are only proposals with a 60-day comment period, but if finalized they could cement a bank-like, fully reserved model for U.S. dollar stablecoins by around early 2027.

Deep Dive

1. What The Fed Just Proposed

The Fed released two major proposed rules to implement the GENIUS Act, the federal stablecoin law passed in 2025. One rule targets "payment stablecoin" issuers supervised by the Fed, requiring every token to be backed one-to-one by "permissible" reserves like short-term U.S. Treasury bills and other highly liquid assets, plus standardized capital and risk controls.

The second rule defines a tailored application process for insured state member banks that want to issue stablecoins through subsidiaries, including business plans, financials and a 120-day decision clock after an application is deemed complete, as summarized by several outlets including Decrypt and CoinDesk.

Issuers would generally have to redeem customer requests within two business days, and falling below full-reserve backing would trigger remediation or forced liquidation of reserves to redeem all coins.

2. How This Hits Stablecoins And Users

For Fed-supervised issuers, the model is effectively "full-reserve, low-risk":

1. Reserves can sit only in cash, Fed balances, insured deposits, very short Treasuries and similar instruments.
2. Capital charges apply, for example a 2% operational risk buffer on the first tens of billions of tokens outstanding in some drafts.
3. Most third-party yield or interest arrangements on stablecoin holdings are presumed prohibited, aligning with OCC guidance, according to Fed-focused coverage.

This pushes U.S. regulated stablecoins toward being boring, transparent payment rails rather than yield products. Dollar-pegged tokens that want U.S. bank channels or Fed-supervised issuance will likely need to conform to this template.

3. Timeline And What To Watch

The proposals open a 60-day public comment window after publication in the Federal Register, with final rules expected as part of GENIUS Act implementation that targets an effective date around January 2027 or earlier if rules are finalized sooner.

Other agencies like the OCC, FDIC and Treasury are rolling out parallel rules, and Treasury has floated barring platforms from selling non compliant stablecoins to U.S. users, as noted in multi-agency coverage.

Key watchpoints are: how strict the final reserve list is, whether AML thresholds are tightened, whether yield bans are softened, and how offshore or non bank issuers react if U.S. access is conditioned on compliance.

Conclusion

The Feds proposals would turn regulated U.S. payment stablecoins into fully reserved, tightly supervised instruments, closer to financial utilities than speculative tokens. If finalized in their current form, they would likely boost transparency and redemption reliability while squeezing regulated yield and nudging risk taking into less supervised parts of the crypto ecosystem.