The Federal Reserve has proposed its first two rules under the GENIUS Act, opening a formal path for banks to apply to issue payment stablecoins in the United States. The proposals cover reserve requirements, capital standards, risk management and the application process itself. A 60-day public comment period starts once the text appears in the Federal Register.
The package is the first concrete implementation step since the GENIUS Act became law and built a federal framework for payment stablecoins. The Act requires issuers to back tokens with liquid reserves, disclose holdings monthly and submit to supervision, but it left the details to regulators. The Fed's two proposals are the first attempt to fill that space for banks, and Treasury and other agencies are expected to follow with rules of their own.
The draft rules ask applicants to hold reserves matching tokens in circulation one to one in high quality liquid assets, maintain capital against operational losses, and run a risk management program covering redemption, custody and anti-money-laundering controls. The Fed has not published the exact numeric thresholds in its summary, and those details will matter most during the comment fight.
A second proposal covers how a bank holding company or subsidiary files, what examiners review, and what triggers supervisory action if an issuer's reserves slip. Banks that already custody digital assets have been waiting on this process since the Act passed.
Filling the legislative gap
The Fed's move lands weeks after the Senate failed to advance the CLARITY Act, the broader market structure bill. The cloture vote on September 15 fell 49 to 50, short of the 60 needed, with four Republicans joining Democrats in opposition. Industry figures now expect no comprehensive crypto legislation before the midterms. The failure came down to politics rather than policy design. Democrats objected to ethics language around presidential crypto holdings, and four Republicans, Susan Collins, Josh Hawley, Jerry Moran and Thom Tillis, voted against the motion. Leaders released a revised version with new ethics restrictions the weekend before the vote, and it was not enough.
With Congress stalled, agencies are acting alone. The CFTC issued recordkeeping guidance last week letting registered firms use blockchains and tokenized assets for their books. The SEC's Regulation Crypto Assets proposal remains open for comment until October 20. The Fed's stablecoin rules now sit at the front of that regulatory queue, because they touch banks directly rather than markets at the edge.
Banks are already moving
Payment companies have not waited for final rules. SoFi and Mastercard rolled out a stablecoin settlement system for traditional payment rails on September 25. Anchorage Digital, the first federally chartered crypto bank, partnered with LayerZero on stablecoin issuance. Circle and Tether now face the prospect of bank-issued competitors with deposit franchises behind them, something neither has had to price in before.
Stablecoins have become the busiest part of the crypto economy. Chainalysis data put stablecoins at 32.1 percent of cross-border crypto value in Latin America by June 2026, with Brazil's quarterly turnover almost entirely stablecoin-driven. TRON alone has processed more than $30 trillion in lifetime settlement volume. Rules that bring banks into that flow rewire a market now dominated by two private issuers.
The demand side is already visible. Cross-border payment pilots by major correspondent banks have run on tokenized deposits for two years. Card networks have built settlement bridges for issuers that want to move value between closed loops. What was missing was a licensing path, and that is what the Fed proposal supplies.
What the rules actually require
Under the framework, an issuer would need to match every token in circulation with reserves in cash, short-term Treasury bills or repo-grade collateral. Redemption must run at par and on demand. Monthly attestations by an independent auditor become mandatory, and issuers must disclose their reserve composition in public filings. The capital proposal, the second of the two, ties supervisory intervention to reserve shortfalls rather than trading losses, which fits how stablecoin risk actually works.
Application standards cover governance as well. The Fed wants board-level accountability for reserve management, named compliance officers and stress testing of redemption scenarios. None of this is exotic by bank standards, but it is new for crypto issuers accustomed to lighter state-level regimes.
Market reaction was muted. Bitcoin held near $84,000, up about 0.3 percent over 24 hours, as traders weighed the rules against a 10-year Treasury yield above 5 percent. Spot bitcoin ETFs posted a fifth straight session of inflows, more than $2.65 billion over the stretch. Traders treated the proposal as a slow-moving structural story rather than a same-day catalyst.
The Fed's posture toward bank crypto activity has loosened over the past two years. It withdrew earlier guidance that discouraged banks from serving the sector and has approved custody and settlement activity case by case. The stablecoin proposals extend that shift from permission by avoidance to a written rulebook, which is what treasury departments said they needed all along.
Analysts read the proposal as supportive for institutional adoption, since clear bank rules reduce the compliance risk that kept treasury departments out of stablecoins. But the comment period means final rules are months away, and litigation or a shift in priorities could stretch that further. The 60-day window will draw comment letters from the banking lobby, from incumbent issuers and from state regulators who see the federal track stepping on their licensing regimes.
For issuers, the calculus splits. Nonbank stablecoin issuers gain legitimacy from a working federal track but lose the moat of being the only regulated option. Community banks gain an entry path they did not have before, though scale questions remain, since running a compliant reserve desk is expensive for a small balance sheet.
The Fed will accept comments for 60 days after Federal Register publication, then respond before finalizing. Watch the docket for pushback on capital treatment from banks, on reserve composition from incumbents, and on preemption from state regulators.