The Federal Reserve Board requested public comment on two proposals on September 24, 2026, to build a regulatory framework for Board-supervised payment stablecoin issuers under the GENIUS Act. The first proposal sets reserve, capital, activity and risk management rules for issuers the Board supervises, and separately introduces rules for Board-supervised firms that safekeep the assets backing payment stablecoins. The second proposal sets a tailored application process for Board-supervised banks that want to issue payment stablecoins. Comments close 60 days after publication in the Federal Register.
Most coverage will read the release as a summary of the Fed’s homework. Read differently, the two documents are the first full picture of what Board supervision costs an issuer. That is the question founders and compliance heads are actually asking: which door do I go through, and what does each door cost in capital, reporting and supervision?
Who goes through the Board’s door
The Board framework applies to two groups only. The first group is subsidiaries of insured state member banks that the Board has approved to issue payment stablecoins. The second is state-qualified issuers that are uninsured state-chartered depository institutions with $10 billion or more in outstanding payment stablecoins, which transition to the Board’s framework. Everyone else’s primary rulebook sits elsewhere: the OCC, FDIC and NCUA have issued their own proposed rules for the issuers they regulate. A state-qualified issuer below the threshold appears to stay with its state regulator unless it grows into the Board’s scope.
Two pieces of the Board proposal reach further than that. The Board’s proposed anti-tying rule would apply to all PPSIs, including those the Board does not supervise. On yield, the proposal would presume certain arrangements involving third parties to be prohibited payments of interest or yield, following the approach the OCC proposed in its own GENIUS Act rulemaking. In our reading, the federal yield analysis is likely to converge around that presumption whichever agency an issuer answers to. The choice of door matters less for tying and yield than for capital, reporting and who examines you.
The choice of door matters less for tying and yield than for capital, reporting and who examines you.
The capital numbers are now concrete
The proposal would impose a 2 percent capital requirement on reserve assets that are uninsured deposit claims and undercollateralized reverse repurchase agreements. Operational risk capital would have two components. The first is a graduated charge on outstanding stablecoins: 2.0 percent on the first $20 billion, 1.5 percent on the next $30 billion, and 1.0 percent on anything above $50 billion. The second equals 25 percent of the three-year average of annual non-reserve asset revenue, which captures custody services and other activity not measured by issuance.
The consequences of a shortfall are mechanical rather than discretionary. A PPSI that misses its minimum capital at quarter end must submit a plan to return to compliance, and if noncompliance persists at the end of the next quarter it must liquidate all reserve assets and redeem outstanding stablecoins. For bank parents, the proposal would amend the Board’s capital rule so that a parent which consolidates a PPSI cannot count the PPSI’s required capital toward its own regulatory capital. The upshot, in our reading, is that PPSI capital is an incremental cost to the group, not a reallocation of capital the bank already holds.
Reserves, redemption and the two-quarter clock
Reserve assets must, in aggregate and at all times, have a fair value equal to or above the par value of outstanding stablecoins, and must be segregated from the issuer’s other assets. Permitted assets include Treasuries with a remaining maturity of 93 days or less and overnight Treasury repo and reverse repo, alongside U.S. dollar cash, Federal Reserve Bank balances, demand deposits at insured institutions and shares of eligible funds invested solely in permissible reserve assets. A PPSI that falls below one-to-one must notify the Federal Reserve and then liquidate reserves and redeem, unless it has a plan to return promptly to full backing and the Board directs it to proceed with that plan. The redemption policy must be public, and its redemption period may not exceed two business days unless a specific safe harbor applies.
Taken together, these terms suggest an issuer whose treasury function looks more like a government money market fund than a bank balance sheet, with a supervisor that can order wind-down on a fixed timetable.
Supervision and reporting: the recurring cost
The Board would generally conduct a full-scope examination of each Board-supervised PPSI at least once in every 12-month period, with the option to stretch that to 18 or 36 months if conditions are met. Each PPSI would file a confidential weekly report on issuance and redemptions, trading volume and reserve assets for every stablecoin it issues, plus quarterly reports of financial condition. Weekly reporting is the item most likely to be underestimated in a budget; it requires reserve, issuance and trading data to be reconciled on a cycle few issuers run today.
For large state-qualified issuers the entry cost is front-loaded. A covered state-qualified issuer that crosses the $10 billion line would undergo an initial examination within six months of notifying the Board, although the proposal also sets criteria for a waiver that would leave the issuer with its state regulator alone. The Board’s back-up enforcement power over state-qualified issuers in unusual and exigent circumstances requires, among other conditions, 48 hours’ prior written notice to the state regulator. For banks, the entry cost is an application. Under the application proposal, an insured state member bank would apply by letter with a business plan, financial information, relevant policies and procedures, capital structure documentation, biographical reports and required certifications.
What still applies
These are proposals, and the numbers may move after comment. The statute does not wait for them. The Act takes effect on the earlier of January 18, 2027 or 120 days after the primary federal payment stablecoin regulators issue any final implementing regulations. Because any one regulator finalizing rules could start that 120-day clock, the effective date could arrive before the Board’s own rules are final. Issuers should treat the Act’s reserve, redemption and activity restrictions as live from the effective date, whichever rulebook they land under. Nothing in the Board’s proposals relaxes those statutory terms; they add detail, procedure and capital on top.
What firms should do
First, decide the door on paper before the comment period closes. Map your charter, your parent and your expected outstanding volume against the two Board-supervised categories. If you are not a state member bank subsidiary and do not expect to hold $10 billion outstanding, your primary rulebook is likely the OCC, FDIC, NCUA or your state, and you should read those proposals with the same care.
Second, model the capital. The 2 percent reserve credit charge, the 2.0/1.5/1.0 percent operational tranches and the 25 percent revenue charge are specific enough to run against a three-year projection. Add the parent-level deduction if you sit inside a bank group. The result is a capital number a board can discuss.
Third, rebuild the reserve policy to the permitted asset list and the diversification expectation, and stress it against the two-business-day redemption period. Document the plan you would present if you fell below one-to-one.
Fourth, build the weekly report now. Decide who owns issuance, redemption, trading volume and reserve data, and prove you can reconcile them on a weekly cycle before a supervisor asks.
Fifth, review every third-party rewards, distribution and bundling arrangement against the yield presumption and the anti-tying prohibition. Both reach further than the Board’s supervisory perimeter.
Sixth, file a comment if the numbers do not fit your model. A 60-day window is short, and the tranche thresholds and the revenue charge are exactly the kind of detail regulators adjust when issuers show their working.
Taft helps issuers choose the route, model the requirements and build the reserve, reporting and governance program to meet them; see how we launch and expand digital asset businesses. For the wider set of obligations that sit alongside the GENIUS Act, our crypto compliance guide for digital assets sets out the questions to answer first. Where a structuring decision turns on a reading of the statute, take legal advice.
Sources
- Federal Reserve Board requests public comment on two proposals related to establishing a regulatory framework for Board-supervised payment stablecoin issuers under the GENIUS Act, Federal Reserve Board
- BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM, Federal Reserve Board
- BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM, Federal Reserve Board
Taft does not provide legal advice. Content is for informational purposes only and subject to regulatory guidance.