- The Federal Reserve has asked for public comment on two proposals covering stablecoin issuers it supervises, under the GENIUS Act.
- The first would require full backing with assets like short-term Treasury bills, plus standardised capital and risk management rules. The second covers how banks apply to issue a stablecoin through a subsidiary.
- Nothing here is in force. No bank has been approved, and the comment clock reportedly starts only once the notices appear in the Federal Register.
Read the coverage of Wednesday’s Federal Reserve announcement and you’d be forgiven for thinking American stablecoin regulation is now live. It isn’t. What the Board published is a request for comment on two draft proposals, which is several steps short of a rule that binds anybody.
Stablecoins are the plumbing most people use without thinking about it: the dollar token you park money in between trades, or move between exchanges because it settles in seconds rather than days. Anything that changes what has to sit behind those changes how safe that habit is.
But the timing matters as much as the content. These are proposals, open for comment, with no start date attached to them yet. If you hold a dollar stablecoin today, absolutely nothing about it changed this week.
What a stablecoin is actually meant to be
A stablecoin is a crypto token designed to hold a fixed value, almost always one US dollar. Unlike bitcoin, it isn’t supposed to move. The whole point is that it doesn’t.
It holds that value because the issuer claims to hold something real behind every token: dollars in a bank, or short-term government debt. Hand back a token, get a dollar. That promise is the product. When it fails, and it has failed before, the token trades below a dollar and everyone holding it takes the loss.
So regulation of stablecoins comes down to a fairly narrow set of questions. What is the issuer allowed to hold as backing? How quickly does it have to pay you back? And what happens if the backing turns out to be worth less than the tokens in circulation?
What the Fed has put on the table
The first proposal would require Board-supervised payment stablecoin issuers to fully back their tokens with permissible reserve assets, which the Fed’s release describes as short-term Treasury bills and other high-quality, liquid assets. It would also set standardised capital requirements covering credit and operational risk, and impose risk management standards on top.
Capital is the part people skim past. Reserves are the assets backing the tokens; capital is a separate cushion the issuer holds so that if something goes wrong operationally, a failed system, a loss on an asset, it doesn’t come straight out of the money meant to be yours.
The same proposal would set rules for firms that safekeep the assets behind stablecoins, and clarify which stablecoin activities supervised banks are permitted to do at all. That last piece is quietly significant: at the moment, plenty of American banks have been unclear on whether they can touch this.
The second proposal, published as a Federal Register notice titled “Application Procedures for Board-Supervised Insured Depository Institutions Seeking Approval for a Subsidiary to Issue Payment Stablecoins”, is procedural. According to reporting from FXStreet, PYMNTS and Securities.io, it would require business plans and financial information from banks applying to issue a stablecoin through a subsidiary, and set out appeals and hearings procedures. Cointelegraph reports the package also includes a two-day redemption window and new reserve disclosures. We haven’t been able to verify those specifics against the notices themselves.
The gap between this and a rule
Governor Michael Barr is reported by several outlets to have spoken about redemption at par and about wanting input on reserve assets and capital treatment, including how interest rate and foreign currency risk should be handled. No source we’ve seen reproduces his words in quotation marks, so treat the substance as paraphrase rather than quotation.
Either way, a regulator explaining what a proposal is meant to achieve is advocacy for the proposal, not evidence that it works. The comment period exists precisely because the Fed doesn’t consider these settled.
Secondary reporting puts the comment window at 60 days from publication in the Federal Register, which is a later step than the press release itself. So even the clock on this may not have started. After comments close, the Board has to read them, revise, and adopt a final rule, which routinely takes many months and sometimes looks materially different from the draft.
Why this doesn’t automatically reach you
Here is the part most of the coverage skips for a UK reader. American rules govern American issuers. They do not govern what you hold.
UK stablecoin regulation sits with the Financial Conduct Authority and the Bank of England, on their own timetable and with their own definitions of what counts as backing and how fast redemption has to happen. A US-supervised issuer’s obligations don’t travel with the token when it lands in a UK wallet. If the issuer of the stablecoin you hold isn’t a Board-supervised American bank, none of this touches it at all.
The EU is further along. Under MiCA, which has been in force since 2024, euro and dollar stablecoin issuers operating in the bloc already face reserve and redemption requirements, which is why some tokens were delisted from European platforms rather than brought into line. The Fed is proposing in 2026 something Europe already has running, and the two frameworks are unlikely to match exactly.
What to watch
Whether the notices actually appear in the Federal Register, because that’s the event that starts the clock. The docket number reported by one outlet as R-1899 is worth checking against the official listing.
Beyond that, the treatment of yield-bearing stablecoins. CoinDesk reports the proposals touch on stablecoin yield programmes, the products that pay holders a return on their tokens, and how those are handled will decide whether several things UK users can currently access survive in their present form. That’s the detail to read the final rule for, whenever it arrives.
If you want the background on holding assets yourself rather than on a platform, our self-custody guide covers it, and the rest of our regulatory coverage sits in Policy.