Fed draft mandates 2 day stablecoin redemptions

TLDR

The Federal Reserve has proposed rules that would force supervised stablecoin issuers to honor redemptions within two business days, but the requirements are still only a draft.

1. Under the GENIUS Act, Fed-supervised payment stablecoin issuers would need 1:1 liquid reserves and a public policy promising redemption in at most two business days.
2. The rule targets issuer-level redemptions, not exchange withdrawals, and could favor well-capitalized bank issuers while raising compliance costs for others.
3. A 60-day comment period and coordination with other US regulators will determine the final scope, timing, and which stablecoins are actually covered.

Deep Dive

1. What The Fed Is Proposing

The draft rules implement the GENIUS Act by requiring Board?supervised payment stablecoin issuers to hold fully backed 1:1 reserves in highly liquid assets such as cash and short-term Treasuries and to process valid redemption requests within two business days. Reports from outlets like TokenPost and Cointelegraph note that redemption policies must be published and that the two?day window is a ceiling, not a target, meaning issuers can redeem faster but not slower in normal conditions. The same proposal layers on risk?based capital charges (for example 2% on the first 20 billion dollars of issuance, then tapering) to absorb operational and credit losses.

2. How It Affects Users And Issuers

The two?day mandate applies when a customer makes a qualifying redemption request to the issuer, not when they hit withdraw on an exchange account. Analyses of the proposal highlight that over 70 billion dollars in reserve?backed dollar stablecoins currently sit on centralized exchanges, where access is governed by venue terms rather than Fed timelines. In parallel, the capital and reserve constraints could push issuers toward very short?duration government paper and away from yield?seeking strategies, compressing margins and likely suiting larger banks better than smaller or non?bank issuers.

3. What To Watch Next

The rules are not in force yet. They enter a 60?day public comment window after Federal Register publication, and the GENIUS Act only fully bites on the earlier of January 18, 2027 or 120 days after final rules. Other agencies such as the FDIC and OCC are rolling out their own GENIUS?related frameworks, so a key open question is how Fed rules interact with state?chartered or non?bank issuers and whether some major stablecoins fall outside direct Fed supervision. Market watchers should track which issuers seek Fed?supervised status, how they change reserve disclosures, and whether redemption policies are tightened ahead of final implementation.

Conclusion

The draft 2?day redemption rule signals that US regulators want stablecoins to look more like narrow?bank payment instruments, with hard timelines and conservative reserves. For crypto users, the real impact will depend on whether the stablecoins they hold are issued by Fed?supervised entities, how exchanges handle withdrawal policies on top, and how the final rule balances consumer protection with issuer flexibility during stress events.