Two Draft Regulations Lay the Groundwork for Fed-Supervised Stablecoin Issuance
The U.S. Federal Reserve on Thursday advanced its portion of the multi-agency regulatory framework required to govern stablecoin issuers under the Guiding and Establishing National Innovation for U.S. Stablecoins (GENIUS) Act. The central bank published two separate rule proposals, each now open to a 60-day public comment period, that together would create the legal architecture for how tokens are backed and how banks under Fed supervision can begin issuing them.
The GENIUS Act, signed into law last year, mandated that the U.S. banking regulators and the Treasury Department deliver implementing regulations no later than July 2026. With that deadline already in the past, the agencies have been pushing to close remaining gaps over recent months. The Fed's Thursday filings represent a significant step in that effort.
Capital, Reserves, and the Narrow Window for Stablecoin Rewards
The first of the two proposals addresses capital and reserve requirements designed to guarantee that every stablecoin in circulation is fully backed by the most liquid assets available and that issuers maintain a sturdy financial cushion during periods of market stress. The same document outlines which stablecoin-related activities are permissible at banks the Fed supervises and carries the provisions dealing with stablecoin rewards.
A particularly sensitive issue is the GENIUS Act's prohibition on issuers paying interest or yield simply for holding stablecoins. The Fed's draft mirrors the approach already taken by the Office of the Comptroller of the Currency, treating certain third-party arrangements as presumed violations of that ban. In practical terms, the agencies appear to be leaving only a very narrow path for crypto platforms to offer token-holder incentives comparable to credit-card reward programs.
The question of how much companies like Coinbase can reward stablecoin users was one of the principal points of contention during the legislative battle over the Digital Asset Market Clarity Act, which ultimately failed to pass. Because that revision never took effect, the GENIUS Act now stands as the governing statute for stablecoin rewards, and the Fed's draft rules will shape how the prohibition is enforced in practice.
A Second Proposal Maps the Path for Banks to Launch Their Own Tokens
The second Thursday filing sets out the procedural steps a regulated bank must complete before it can begin issuing its own stablecoins. Under the draft, applicants would be required to submit a business plan, detailed financial information, and a package of relevant policies, procedures, and supporting documents before receiving approval.
Fed Governor Michael Barr, who headed the central bank's supervision program prior to the current administration, framed the rationale in a public statement. He emphasized that stablecoins can only be considered genuinely stable if they can be redeemed at par value quickly and reliably across a wide range of market conditions, including episodes of broad market stress that pressure even otherwise liquid government debt and periods of strain specific to an individual issuer or its affiliated entities.
A Multi-Agency Timeline and the Road Ahead
The Fed's move follows a broader regulatory push spanning several agencies. Last month, the Treasury Department released its own draft outlining federal definitions of what constitutes issuing U.S. stablecoins and identifying which entities must comply with the law's requirements. The Federal Deposit Insurance Corporation kicked off its portion of the process back in December, making it the first of numerous federal bodies to begin translating the statute into binding rules. In June, multiple agencies jointly proposed that stablecoin issuers adopt customer-identification practices consistent with those already expected of other regulated financial firms.
Proposed regulations of this kind must collect and weigh public feedback before the Fed can revise the texts and issue them in final form. That cycle typically spans several months and can stretch considerably longer depending on the volume and nature of comments received.
As stablecoins transition from a crypto-native asset class into the regulated financial mainstream, analysts note that the Asia-Pacific region is emerging as a critical testing ground for the technology's institutional use cases, with regional regulators and token issuers such as Ripple's RLUSD working to establish parallel frameworks.
