Fed proposes GENIUS Act stablecoin capital and 2-day redemption rules
The Federal Reserve on Thursday asked for comment on two GENIUS Act proposals for Board-supervised payment stablecoin issuers—requiring one-to-one high-quality reserves, tiered operational-risk capital, generally two-business-day redemptions, monthly audited reserve disclosures, and a separate bank application path with a 120-day decision clock.
AI-assisted · US Brief desk · Sources listed below
What happened
The Federal Reserve Board on Thursday opened the public comment period on two proposals that would turn the GENIUS Act’s stablecoin statute into a concrete rulebook for Board-supervised payment stablecoin issuers—covering one-to-one reserves, capital, redemptions, disclosures, custody, and how banks apply to issue tokens through subsidiaries.
What the Board announced: In a Sep 24 release timed for 2:30 p.m. EDT, the Fed said the first proposal would require Board-supervised payment stablecoin issuers to fully back their coins with certain permissible high-quality liquid reserve assets such as short-term Treasury bills, set standardized capital requirements for credit and operational risks, and impose risk-management standards. It would also introduce rules for firms that safekeep reserve assets and clarify which stablecoin-related activities are permissible for Board-supervised banks. A second proposal would create a tailored application process for Board-supervised banks seeking to issue payment stablecoins, including business plans and financial information, plus appeals, hearings, and final-determination procedures. Comments run for 60 days after Federal Register publication.
How “fully backed” would work in the proposal: Secondary coverage of the draft text says every $1 of payment stablecoins outstanding would need at least $1 of permitted reserves held separate from other issuer assets. Permissible buckets described in that reporting include U.S. dollars, Federal Reserve Bank balances, certain bank deposits, Treasury securities with 93 days or less remaining to maturity, qualifying repurchase agreements, eligible investment funds, and—in some cases—tokenized versions of permitted assets. If backing slips below one-to-one, the issuer would have to notify the Fed and either restore reserves under a remediation plan the Board directs it to follow or liquidate reserves and redeem outstanding coins.
Why it matters
Congress already locked one-to-one reserve and asset-limit principles into the GENIUS Act; Thursday’s package is where the Fed fills in capital math, redemption speed, reporting, custody, and bank entry rules that markets will price as compliance cost. The law is set to take effect Jan. 18, 2027, or 120 days after federal regulators issue final implementing rules, whichever comes first—so the comment period and any revisions sit on the critical path to a workable U.S. bank-issued stablecoin regime.
What’s next
Federal Register publication dates for both notices and the exact start of the 60-day comment clocks; whether OCC, FDIC, or other agencies release parallel GENIUS Act implementations that diverge from the Fed’s capital or redemption design; bank applications that test the 30-day completeness and 120-day decision timers; and whether final rules land early enough for a Jan. 18, 2027 effective date or instead run on the 120-days-after-finals schedule. Until final rules issue, Thursday’s action is a detailed proposal for comment—not yet the operating rulebook for U.S. payment stablecoins.
More context
Redemptions and capital floors: Cointelegraph and Bitcoin.com News report that issuers would generally have to process redemptions within two business days—even for products marketed around near-instant settlement. Operational-risk capital would tier by size: 2% of the first $20 billion outstanding, 1.5% of the next $30 billion, and 1% above $50 billion, plus additional charges tied to credit and operational risks. Bitcoin.com News adds that if an issuer remains below its minimum capital requirement at the end of the following quarter, it would have to liquidate reserves and redeem its coins. Monthly public reports would detail outstanding coins and reserve composition, examined by a registered public accounting firm and certified by the CEO and CFO.
Banks’ path to issue: The companion application proposal, as summarized in market coverage, would require insured state member banks seeking Fed approval for a payment-stablecoin subsidiary to file a business plan, financials, policies, capital documentation, and three-year projections. Once an application is deemed substantially complete, the GENIUS Act gives the Fed 120 days to decide—or the application is deemed approved. The Fed would have 30 days after receipt to say whether the filing is substantially complete; a material change in finances or business plan could reset the clock.
Who is affected: Fed-supervised banks and their affiliates weighing payment-stablecoin subsidiaries; existing or prospective payment stablecoin issuers that fall under Board supervision; reserve custodians and accountants who would certify monthly disclosures; crypto and fintech firms watching whether bank-issued dollars under this rulebook crowd or complement nonbank tokens; and consumers or merchants who would rely on two-business-day par redemptions in stress, not just boom times.
Uncertainty and competing views: Fed Governor Michael Barr supported the proposals while arguing that stablecoins are only “stable” if they can be redeemed promptly at par in market stress and during strain at an issuer or its affiliates. He welcomed reserve limits and standardized capital but asked for feedback on interest-rate and foreign-currency risks, said universal redemption rights should be clear in the final rule, and criticized a draft threshold that would bar Fed AML supervisory or enforcement action unless a deficiency is “significant or systemic.” Industry readers may push back on capital percentages, the two-day window versus instant settlement marketing, or the deemed-approval clock; consumer advocates may want stronger redemption and AML teeth. US Brief treats Barr’s points and the numeric capital/redemption details as attributed proposal summaries pending the Federal Register text, not as final binding numbers.
4 listed sources
- Federal Reserve Board press release, Sep 24, 2026 (2:30 p.m. EDT) — two proposals under the GENIUS Act for Board-supervised payment stablecoin issuers: reserve/capital/risk-management/custody framework plus tailored bank application process; 60-day comment period after Federal Register publication; linked Board memo and Federal Register notices
- Cointelegraph (Nate Kostar), Sep 24, 2026 — operational-risk capital tiers 2% / 1.5% / 1% by outstanding size; two-business-day redemptions; monthly reserve reports examined by a registered public accounting firm and certified by CEO and CFO; Barr quotes on redeemability in stress; GENIUS Act effective Jan. 18, 2027 or 120 days after final rules, whichever comes first
- Bitcoin.com News (Jamie Redman), Sep 24, 2026 — $1-for-$1 permissible reserves (cash, Fed balances, certain deposits, Treasuries ≤93 days, qualifying repos/funds; tokenized permitted assets); shortfall notice/remediation or liquidate-and-redeem; capital deficiency after following quarter triggers liquidate/redeem; bank subsidiary application materials and 30-day completeness / 120-day decision clock with deemed approval if silent; Barr concern on “significant or systemic” AML enforcement threshold
- Federal Reserve Board press package PDFs referenced in the Sep 24 release — Implementing the Board’s GENIUS Act responsibilities; Application Procedures for Board-Supervised Insured Depository Institutions Seeking Approval for a Subsidiary to Issue Payment Stablecoins; Statement by Governor Barr (linked from FRB release)
References listed by US Brief; a source count is not a verification score.
Editorial sourcing notes
Facts follow the Federal Reserve Board’s Sep 24, 2026 2:30 p.m. EDT press release and Governor Barr’s attributed remarks as reported by Cointelegraph and Bitcoin.com News. Capital percentages, two-business-day redemption window, reserve-asset examples, monthly disclosure/CEO-CFO certification, and the 120-day bank-application clock are from those secondary write-ups of the proposals—not independent US Brief modeling. These are proposed rules open for 60 days of comment after Federal Register publication, not final GENIUS Act implementing rules. Distinguish Board-supervised payment stablecoin issuers from all crypto tokens.
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