Fed proposes reserve and capital rules for payment stablecoin issuers

The Federal Reserve Board requested public comment on two proposals that would establish a regulatory framework for Board-supervised payment stablecoin issuers under the GENIUS Act¹. The Fed described the step as two new rulemaking packages covering issuers it supervises⁸, and one account calls it a major step toward implementing the federal stablecoin statute passed the year before⁵.

The first proposal would require stablecoin issuers under Fed supervision to fully back their issuance with permitted high-liquidity assets, such as short-dated government paper⁷, with Treasury bills named among the qualifying assets⁵. The package also sets a capital floor and covers reserve ratios, capital surcharges and bank treatment⁴. The Fed followed other regulators in seeking comment on implementation of the legislation, which passed in 2025² and was signed into law on July 18 of that year⁶.

Why it matters to investors

A full-reserve requirement in short-term government paper turns stablecoin growth into direct demand for Treasury bills^5,7. That links a fast-growing corner of digital payments to the front end of the government curve, and it means issuers earn the bill yield rather than taking credit or duration risk with customer money.

The framework also decides who competes. Capital surcharges and the treatment of banks that issue stablecoins set the relative cost of entry between banks and non-bank issuers⁴, and the Fed is asking for comment rather than finalising, so the parameters are still open^1,8.

Fed Governor Michael Barr, in a statement issued alongside the proposals, tied the stability of these instruments to whether holders can rely on being made whole³, and warned that the framework as drafted leaves a run risk and a gap on anti-money-laundering⁴.

What to watch

The comment file. Because both proposals are out for public comment¹, the questions to follow are which assets count as permitted reserves⁷, how high the capital floor is set⁴, and whether the final text closes the run-risk and anti-money-laundering gaps Barr flagged^3,4.

The second point is coordination. The Fed is one of several regulators implementing the same statute², so investors in payment and banking businesses need the combined rulebook, not this piece alone^6,8.

The third is scope. These proposals apply to issuers the Board supervises^1,8, which leaves open how issuers outside that perimeter are treated and whether the reserve standard becomes the market default even where it is not mandatory⁷.