The Federal Reserve has proposed capital, redemption, and other regulatory requirements for stablecoin issuers under its supervision, moving to implement the GENIUS Act.

The law already requires stablecoin issuers to maintain reserves backing their tokens on a one-to-one basis and limits the types of assets they can hold, including cash, bank deposits, and short-term US Treasurys. It left federal regulators to establish more detailed capital, reserve-diversification, and risk-management requirements.

Under the Fed proposal (related documents), issuers would face an operational-risk capital charge equal to 2% of the first $20 billion in stablecoins outstanding, 1.5% of the next $30 billion, and 1% of amounts above $50 billion, along with additional capital requirements tied to credit and operational risks. The tiered structure means the marginal capital cost of issuing each additional token declines as an issuer scales past each threshold, with the largest issuers facing the lowest rate on their biggest tranche of stablecoins outstanding.

Issuers would generally be required to process redemptions within two business days. If reserves fell below the required one-to-one backing, an issuer would have to notify the Fed and either restore its reserves under a remediation plan or liquidate them and redeem the outstanding stablecoins — meaning a shortfall would trigger regulatory escalation rather than being absorbed while the issuer continues operating as usual.

Issuers would also have to publish monthly reports detailing their outstanding stablecoins and the value and composition of their reserves. Those disclosures would have to be examined by a registered public accounting firm and certified by the issuer's CEO and CFO, attaching named executive sign-off to the reserve data.

A separate proposal would establish an application process for Fed-supervised banks seeking approval to issue payment stablecoins through subsidiaries, including requirements to submit a business plan and financial information. Together, the two drafts define both the ongoing obligations of issuers already under Fed supervision and the entry path for supervised banks seeking approval to join them.

The proposals are open for public comment for 60 days after publication in the Federal Register — the formal window during which issuers, banks, and other respondents can seek to shape the requirements before they are finalized.

Barr says stablecoins must remain redeemable during market stress

Fed Governor Michael Barr supported the proposal on Thursday but said further work would be required for stablecoins to become reliable payment instruments.

"Stablecoins will only be stable if they can be reliably and promptly redeemed at par in a range of conditions. This includes during market stress, when pressure can be put on the value of even otherwise liquid government debt, and episodes of strain on the individual issuer or its related entities," Barr said in a statement.

Barr added that he was encouraged by the proposed limits on reserve assets and standardized capital requirements, while calling for public feedback on whether the framework adequately addresses interest-rate and foreign-currency risks. He also said universal redemption rights should be clearly established in the final rule and raised concerns about a standard that would prevent the Fed from taking supervisory or enforcement action over an anti-money laundering deficiency unless the issue is considered "significant or systemic." Taken together, his remarks flag interest-rate and foreign-currency risk treatment, universal redemption rights, and the AML enforcement threshold as the open questions the comment period and final rule will need to resolve.

The GENIUS Act is set to take effect on Jan. 18, 2027, or 120 days after federal regulators issue final implementing rules, whichever comes first — so the timing of final rules emerging from this comment process will itself determine which trigger sets the compliance clock.