The US Federal Reserve Board has requested public comment on two proposals designed to establish a regulatory framework for supervised payment stablecoin issuers under the GENIUS Act. The first proposal mandates that issuers fully back their stablecoins with reserve assets, specifically including short-term Treasury bills and other high-quality, liquid assets. This measure also aims to standardize capital requirements to address credit and operational risks while setting specific risk-management standards.
The second proposal establishes an application process for banks seeking to issue payment stablecoins, requiring them to submit business plans and financial information. It further creates a structured process for appeals, hearings, and final determinations regarding these applications. The comment period will close 60 days after publication in the Federal Register. This action follows reports from July indicating that US regulatory agencies had missed a rule-making deadline under the GENIUS Act, which was signed into law by President Donald Trump on July 18, 2025, to create the first comprehensive federal regulatory framework for stablecoins in the US.
The Federal Reserve’s move to solicit comments on reserve asset composition and bank issuance procedures signals a transition from legislative intent to operational enforcement under the GENIUS Act. By explicitly linking stablecoin backing to short-term Treasury bills and high-quality liquid assets, the regulator is anchoring crypto infrastructure to traditional sovereign debt markets. This approach prioritizes systemic stability over innovation flexibility, effectively treating stablecoins as money market instruments rather than distinct digital assets. The requirement for standardized capital and risk-management protocols further aligns issuer behavior with existing banking regulations, reducing arbitrage opportunities between traditional finance and crypto-native entities.
Institutional adoption may accelerate as clarity emerges, but operational risks remain elevated due to the compressed timeline following previous missed deadlines. The establishment of formal appeal processes for bank applicants suggests the Fed anticipates significant friction in granting charters or approvals. Market participants should monitor the volume and nature of public comments, particularly regarding the definition of "high-quality" liquid assets, as this will determine the liquidity buffer required during stress events. The interplay between these new rules and existing state-level frameworks could also create compliance complexities for multi-jurisdictional issuers.
