The Fed's Stablecoin Rulebook: Backing, Capital, and a Tying Ban

Federal Reserve proposes rules to carry out the GENIUS Act

The Board of Governors of the Federal Reserve System has proposed regulations to implement the Guiding and Establishing National Innovation for U.S. StablecoinsREAD → Act (GENIUS Act). The notice of proposed rulemaking, Docket R-1899, appeared in the Federal Register on 29 September 2026, days after the Board requested comment on 24 September. It covers permitted payment stablecoin issuers (PPSIs) that the Federal Reserve supervises, plus certain custodians and banks. A companion proposal sets an application process for state member banks that want a stablecoin subsidiary. The GENIUS Act became law on 18 July 2025.

Issuers must back every stablecoin one-to-one with safe assets

Under the proposal, a Board-supervised issuer must hold reserve assets at all times. Their fair value must equal or exceed the par value of outstanding stablecoins. This is the one-to-one requirement. Permitted reserves are limited to a short list. It includes U.S. dollar cash, Federal Reserve balances, and insured demand deposits. It also includes Treasury bills maturing in 93 days or less, overnight Treasury repurchase agreements, and shares of funds that hold only these assets. Reserves must stay segregated from the issuer's other assets. The plan also sets diversification standards to limit concentration at any single bank or counterparty.

"Stablecoins will only be stable if they can be reliably and promptly redeemed at par in a range of conditions.", 24 September 2026. — Michael S. Barr, Governor, Federal Reserve Board

Capital rules impose charges and force redemption on failure

The proposal would add capital charges to cover credit and operational risk. Issuers would hold capital equal to 2 percent of reserve assets that are uninsured deposit claims or undercollateralized reverse repurchase agreements. A separate operational-risk charge would run between 1 and 2 percent of outstanding stablecoins, plus an amount tied to non-reserve revenue. An issuer that misses the minimum must file a plan to restore compliance. If the shortfall persists into the next quarter, the issuer must liquidate its reserves and redeem all outstanding stablecoins.

The plan bans tying across all stablecoin issuers

The GENIUS Act gives the Fed exclusive authority to write anti-tying rules for every PPSI, including those it does not primarily supervise. The proposal would bar an issuer from conditioning a service on a customer buying another product from the issuer or its affiliates. It would also bar forcing a customer to agree not to use a competitor. The rule describes how firms can request exceptions.

Dollar stablecoins now exceed $250 billion in value

The market the rules target is large. Tether (USDT) and USDC are the two biggest dollar stablecoins. Together they carried about $258 billion in market value at the time of publication (CoinPaprika, 2 October 2026). Both tokens traded within a fraction of a cent of their dollar peg. Most large issuers are not yet Fed-supervised, but the GENIUS Act requires a permitted issuer for stablecoins sold in the United States.

Comments close on 30 November before the law takes effect

The Fed set a 60-day comment window that ends on 30 November 2026. The GENIUS Act takes effect on the earlier of 18 January 2027 or 120 days after regulators finish their rules. Governor Michael S. Barr backed the proposal while calling for more work.

"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.", 24 September 2026. — Michael S. Barr, Governor, Federal Reserve Board

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