U.S. Federal Reserve moves on proposals to implement GENIUS Act for stablecoins

The U.S. Federal Reserve released two proposed rules to implement major portions of the GENIUS Act, aiming to set capital and reserve standards for stablecoins and to define the approval process for Fed-supervised banks to issue them. The proposals, which include restrictions on stablecoin yield arrangements similar to earlier guidance from the OCC, are open for 60-day public comment.

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U.S. Federal Reserve moves on proposals to implement GENIUS Act for stablecoins

Why It Matters

These Fed proposals form the central bank's portion of a multi-agency effort to regulate stablecoins after the GENIUS Act, joining earlier rulemaking steps by the Treasury and FDIC and filling gaps left when legislative attempts to alter the law failed. The rules will shape how banks can offer stablecoins and whether crypto platforms can provide rewards tied to them.

Key Facts

Agency: U.S. Federal Reserve
Legislation: GENIUS Act (Guiding and Establishing National Innovation for U.S. Stablecoins)
Number of proposals: Two
Public comment period: 60 days
Required regulatory deadline in law: July 2026

The Federal Reserve on Thursday unveiled two proposed rules designed to implement key parts of the GENIUS Act, the 2023 law that requires federal agencies to create a regulatory framework for U.S. stablecoins. One proposal focuses on capital and reserve requirements to ensure issuers back their tokens with highly liquid assets and maintain resilience during market stress. That rule also specifies which stablecoin activities are permitted at banks the Fed supervises and addresses how the law's ban on paying interest or yield on stablecoins should be applied.

The second Fed proposal lays out the approval process for a regulated bank to issue a stablecoin, specifying that applicants must submit materials such as a business plan, financial information, and relevant policies and procedures. Together, the two rulemakings aim to create the legal scaffolding for bank-issued stablecoins and the operational steps a bank must follow to begin issuance.

On the question of rewards and yield, the Fed said its approach closely follows a prior proposal from the Office of the Comptroller of the Currency, presuming certain third-party arrangements to be prohibited payments of interest or yield. While the proposals do not fully bar incentives, they indicate a narrow path for crypto platforms to offer rewards analogous to credit-card incentive programs. The issue drew heightened attention during debate over the failed Digital Asset Market Clarity Act and remains governed primarily by the GENIUS Act following that bill's defeat.

The Fed's rule proposals are now subject to a 60-day public comment period before any final rules are issued—a process that can take months. Other agencies are also advancing rules to implement the GENIUS Act: the Treasury published its definitions for U.S. stablecoin issuance last month, the FDIC began its rulemaking in December, and in June multiple agencies proposed aligning stablecoin issuer customer identification requirements with those for other regulated financial firms. Fed Governor Michael Barr emphasized that reliable, prompt redemption at par across a range of market conditions is essential to stablecoin stability, including during stress on government debt markets or strains on particular issuers or related entities.