On September 24, the Federal Reserve System (Fed) initiated a public discussion on two proposed rules aimed at implementing the GENIUS Act for regulated payment stablecoin issuers.
The proposals outline requirements regarding reserves, capital, and the process for asset issuance approval.
The first proposal mandates that payment stablecoins be fully backed by acceptable reserve assets, including U.S. Treasury bills and other high-quality liquid instruments.
Issuers are required to fulfill redemption requests within two business days. If the collateral drops below a 1:1 ratio, they must immediately notify the Fed and submit a recovery plan or commence liquidation of reserve assets and initiate redemptions.
This proposal also introduces a monthly reporting requirement for reserve composition, which must be audited by a registered firm.
Capital to cover operational risks is suggested to be calculated on a tiered scale:
- 2% for the first $20 billion of stablecoins in circulation;
- 1.5% for the next $30 billion;
- 1% for amounts exceeding $50 billion.
The second proposal lays out the application process for banks under Fed supervision that wish to issue payment stablecoins through a subsidiary. This will require a business plan and financial information. Additionally, it specifies the procedures for appeals, hearings, and final decisions.
Michael Barr, a member of the Fed's Board of Governors, endorsed the initiative but called for clearer provisions regarding the universal right to redemption and a better assessment of interest rate and currency risks.
Comments on the proposals will be accepted for 60 days following their publication in the Federal Register.
It is worth noting that on July 18, 2025, President Donald Trump signed the GENIUS Act into law, which will take effect on January 18, 2027, or 120 days after the issuance of final rules by federal regulators—whichever comes first.