Fed proposes reserve and capital rules that would push stablecoins into Treasury bills

The Federal Reserve Board requested public comment on two proposals establishing a regulatory framework for Board-supervised payment stablecoin issuers under the GENIUS Act³. The Fed proposed new stablecoin rules covering Treasury bills and imposing capital requirements, and outlining the stablecoin-related activities it would permit¹. Reserves would have to be held in Treasury bills and other high-quality, liquid assets, and the proposal would also establish further standards².

The detail sets both the asset mix and the redemption clock. One proposal would require full backing by liquid reserve assets on a one-to-one basis, with a 93-Day limit on Treasury holdings⁴. The Fed also proposed tiered capital charges and a two-day redemption standard for issuers⁵. Fed Governor Michael Barr supported the proposal but said further work would be required for stablecoins to become reliable payment instruments⁶.

Why it matters to investors

The mechanical effect is a new, rule-bound bid at the front of the curve. The flow of stablecoin reserves into Treasury bills may drive demand for short-term US paper⁸, and the framework could push regulated stablecoin growth deeper into the Treasury market while making assets such as bitcoin, gold and longer-duration securities less usable as reserves⁴.

Not everyone is satisfied that the framework closes the risk. Better Markets argued the proposal leaves significant financial stability risks unaddressed, warning that banks would feel pressure to rescue affiliated stablecoin issuers to protect their reputations and customer relationships⁷. Barr flagged an anti-money-laundering enforcement gap alongside his support⁸, and said further work was needed before stablecoins could serve as reliable payment instruments⁶. The proposals also cover treasury management and capital market tokenisation⁸.

What to watch

The comment period is the first stage, since both proposals are out for public input rather than final^1,3. The reserve-eligibility list and the maturity limit are the provisions with the most direct market consequence⁴.

Legislation is the wider uncertainty. The stablecoin framework is advancing while Washington’s broader crypto legislation remains stalled, after the Senate failed to advance the CLARITY Act⁵. That leaves rulemaking under the GENIUS Act as the operative regime³. Watch too whether the capital charges and the two-day redemption standard survive comment in their proposed form⁵, and whether the concerns about bank support for affiliated issuers are addressed in the final text⁷.