Federal Reserve proposes GENIUS Act rules on stablecoin reserves, capital, custody and bank applications

What happened

On 24 Sep 2026 the Federal Reserve Board released for comment two proposed rules under the GENIUS Act, enacted on 18 Jul 2025: one implementing the Board's responsibilities under the Act, and one setting how an insured state member bank seeks approval for a stablecoin-issuing subsidiary.

What changed

Under the first proposal, a Board-supervised issuer would always hold reserves worth at least its outstanding stablecoins. Permitted reserves would include US coins and currency, Federal Reserve Bank balances, eligible deposits, Treasury bills, notes or bonds with 93 days or less to maturity, overnight repo backed by such bills, overnight reverse repo collateralised by Treasuries, government money market funds holding only those assets, and tokenised forms of some of them. The issuer would publish its reserve composition monthly and redeem within two business days of a request, except in defined cases.

Uninsured deposits held as reserves would carry a 2 percent credit risk capital charge. Operational risk capital would be a baseline of 2 percent of the first $20 billion of outstanding stablecoins, 1.5 percent of the next $30 billion and 1 percent above $50 billion, plus 25 percent of three-year average non-reserve revenue, times a loss scalar of at least 0.8, or 1.5 without loss data. Those thresholds would rise with nominal GDP growth, never fall. A new issuer would hold at least $5 million, indexed to nominal US GDP, for its first three years. For a given issuer, the Board could change that period, or set another amount the Board finds sufficient to ensure the issuer's ongoing operations.

The first proposal would set custody rules, implement the Act's tying ban and clarify Board-supervised banks' permitted stablecoin activities.

Under the second, applicants would file a business plan, financial information and policies on redemption, reserves, custody and sanctions compliance. Restating section 5(d) of the Act, the Board would have 30 days to say whether an application is substantially complete, and 120 days from a substantially complete application to decide before it is deemed approved.

Who is affected

• Insured state member banks planning a stablecoin subsidiary. The Board estimates, with considerable uncertainty, that 5 to 10 of the 703 at 31 Dec 2025 may form one in the first few years after a final rule.
• Uninsured state-chartered depository institutions approved as state issuers, once their outstanding issuance passes $10 billion.
• Board-supervised custodians of stablecoin reserves, stablecoins used as collateral or issuing keys, including state member banks and bank and savings and loan holding companies.
• For the tying ban: every permitted payment stablecoin issuer, and any company approved by a unanimous Stablecoin Certification Review Committee vote, with that company's affiliates.

What happens next

The Federal Register published both proposals on 29 Sep 2026, and comments must be received on or before 30 Nov 2026. The Act takes effect 18 months after enactment or 120 days after federal regulators issue final implementing rules, whichever is earlier.