The U.S. Federal Reserve has proposed a set of rules to implement the country's new federal framework for stablecoins, setting requirements for reserves, capital, and risk management while laying out a path for banks under its supervision to issue their own tokens.

The proposals form part of the Federal Reserve's implementation of the Guiding and Establishing National Innovation for U.S. Stablecoins Act, or GENIUS Act, which was enacted in 2025 to establish federal rules for payment stablecoins. Payment stablecoins are digital tokens designed to maintain parity with the U.S. dollar and are intended for use in payments and settlement, the category the new law brings under a federal rulebook.

Full Reserve Backing and Capital Standards

Under the Fed's proposal, payment stablecoin issuers supervised by the central bank would be required to fully back their tokens with permitted reserve assets, including short-term U.S. Treasury securities and other high-quality liquid assets. Because the permitted reserves center on short-term government debt, the rules would tie the backing of Fed-supervised stablecoins directly to the U.S. Treasury market.

The rules would also introduce standardized capital requirements aimed at addressing the credit and operational risks associated with stablecoin activities, along with risk-management requirements for issuers.

The Fed would additionally establish separate requirements for firms that safeguard the assets backing stablecoins, and clarify which stablecoin-related activities would be permitted for banks under its supervision.

Tailored Application Process for Bank Issuers

The central bank also proposed a tailored application process for Fed-supervised banks seeking approval to issue payment stablecoins through a subsidiary. Applicants would have to provide information including a business plan and financial details, with the proposal setting out procedures for hearings, appeals, and final decisions.

The proposals come as U.S. banking regulators move to complete the rules required by the GENIUS Act. The law directed federal regulators and the Treasury Department to establish the framework by July 2026, although implementation has extended beyond that deadline, leaving the completion of remaining rulemaking central to when the regime becomes fully operational.

Stablecoin Rewards and Public Comment Period

The Fed's proposals also address stablecoin rewards, an area that has emerged as a point of debate in the development of the new regulatory framework. The central bank has sought to align its approach with rules previously proposed by the Office of the Comptroller of the Currency (CFTC), according to reports.

The Federal Reserve said it would accept public comments for 60 days after the proposals are published in the Federal Register.

Fed Governor Michael Barr said the framework needs to ensure that stablecoins can be redeemed at par, including during periods of market stress. He highlighted reserve-asset limits, standardized capital requirements, and clear redemption rights as important elements of the proposed rules.

The proposals mark another step toward bringing dollar-backed stablecoins into the U.S. regulated financial system, with banks potentially able to participate as issuers, custodians, and providers of related services under the new framework. With the 60-day comment window set to run and parallel rulemaking underway across other agencies, how the Fed's final rules align with the rest of the GENIUS Act implementation will shape the timeline for supervised banks entering the stablecoin market.

Source: BitcoinKE