The Federal Reserve voted 7-0 on Thursday to release two proposed rules that, for the first time, spell out what a bank under its supervision must hold and prove before it can issue a payment stablecoin. Every token would need to stay fully matched, at all times, by permitted reserve assets such as short-dated Treasury bills, and the proposals arrive on a GENIUS Act clock that runs to a January 2027 effective date.
The vote was unanimous, but the agreement was not quiet. Governor Michael Barr backed both proposals and then used his accompanying statement to flag the parts he thinks are not finished. Reserve limits, capital design and the anti-money-laundering carve-out all drew doubts from the same governor who voted for the text.
Public comments stay open for 60 days once the proposals hit the Federal Register. After that, the Fed revises and adopts final rules. The direction is already clear: federal stablecoin supervision is converging on hard reserve math and standardized capital, not case-by-case charter approvals.
What the two proposals actually require
The first proposal covers the money itself. A supervised issuer must hold a pool of permitted reserve assets that matches every stablecoin in circulation at all times, not just at quarter-end reporting dates. The asset list centers on short-dated Treasury bills and other high-quality liquid instruments. On top of the reserve requirement, the rule layers standardized capital requirements and detailed safeguards governing how the backing assets are held and protected.
The second proposal covers the door. It creates a dedicated application process for supervised banks that want to issue stablecoins, requiring a business plan and financial disclosures before approval. Firms the Fed turns down would get formal appeal and hearing procedures, a detail that matters because rejection has real consequences for a bank’s broader crypto ambitions.
Both rules chase the same underlying number: whether a stablecoin is actually worth a dollar, backed by something real, at any given moment. That is the promise the entire product rests on, and the proposal is an attempt to write it into federal regulation rather than trust issuer attestations.
Who falls under the Fed’s net
The GENIUS Act splits stablecoin oversight between three regulators, and the Fed’s slice is narrower than it might look. National banks answer to the Office of the Comptroller of the Currency, which is why Circle, Paxos and Anchorage have spent the past year lining up OCC trust charters rather than Fed approvals.
| Regulator | Who it covers | Notable firms |
|---|---|---|
| Federal Reserve | State member banks, their subsidiaries, and non-federally-insured state-chartered institutions holding $10 billion or more in stablecoins | Bank subsidiaries entering issuance |
| OCC | National banks and federal trust banks | Anchorage, Circle, Paxos (pending charters) |
| State regulators | Smaller state-chartered issuers below federal thresholds | Regional and new entrants |
The $10 billion threshold is the line that pulls in players well outside traditional banking. It sits low enough to catch mid-sized issuers well before they reach Tether or Circle’s scale, meaning the next stablecoin wobble large enough to move markets would increasingly involve a firm already inside this supervisory net.
Barr’s doubts, in his own words
"While the Board’s proposal is an important step in GENIUS Act implementation, further work will undoubtedly be required if stablecoins are to be reliable payment instruments."
Barr wrote that public feedback would be especially useful on reserve limits and capital design, including whether interest-rate and foreign-currency risks are handled well enough. He also flagged the anti-money-laundering carve-out built around a "significant or systemic" threshold, saying it may have unknown effects the Board has not fully worked through.
Reading a governor’s dissent-in-agreement is a useful signal for anyone tracking the final rule. The comment period will likely draw heavy input on exactly those three points, and Barr has effectively pre-announced his concerns. Firms drafting comment letters now know where the pressure points are.
The industry split the rules sharpen
The proposals land on an industry that has already been choosing regulators. Circle, Paxos and Anchorage pursued OCC trust charters because the national bank route offers a clearer federal path. Under Thursday’s text, the Fed’s route applies to state member banks and to large state-chartered nonmembers, a different population with different existing supervision.
For Tether, the timing is awkward in a different way. The company announced plans this week to launch USAT, a US-focused stablecoin led by a former Trump adviser, extending its push into the American market just as the federal rulebook starts taking shape. Tether’s existing offshore reserve practices would not satisfy the Fed’s proposal as written, so its US strategy depends on which regulator and which structure it ultimately uses.
Banks reading the proposal will note the application process is not optional window dressing. Business plans and financial disclosures upfront, plus appeal rights, mean the Fed intends to screen issuers the way it screens mergers or new activities, not simply register them.
Why the reserve question keeps coming back
Stablecoin credibility rests on redemption, and redemption rests on reserves. The GENIUS Act’s three-way regulatory split left each agency to fill in the details for its own supervised firms, and the Fed’s version is now the most concrete of the three. Its insistence on continuous matching, rather than periodic attestation, is the sharpest departure from how offshore issuers have historically reported.
The practical test will come in stress conditions. Treasury bills are liquid, but a large redemption wave forces issuers to sell into the same market everyone else is selling into. The proposal’s capital requirements are partly an answer to that: a buffer exists so that mark-to-market losses on reserves do not immediately break the dollar peg. Whether the buffer is sized correctly is one of the questions Barr explicitly invited comment on.
There is also the question the proposal does not answer. Interest-bearing stablecoins, yield-sharing arrangements and the treatment of tokens issued by foreign entities that reach US users all remain open. The GENIUS Act’s January 2027 effective date gives the Fed roughly three months after the comment window closes to finalize text on questions that usually take years.
What happens next
The sequence is fixed. Comments run for 60 days from Federal Register publication. The Fed then revises, adopts final rules, and supervised banks can begin applying under the second proposal. Nonbank issuers above the $10 billion threshold in state charters will need to assess whether their structure still works, and several are expected to seek federal charters rather than restructure.
For the market, the near-term effect is mostly informational. USDT and USDC pegs barely moved on the news, and trading volumes were dominated by macro factors. The structural effect arrives later, when the final rules decide which firms can issue under federal supervision and on what terms. The Fed’s own governor has told the public where he thinks the draft falls short, which is as clear an invitation to comment as rulemaking usually produces.