Fed Opens Public Comment on Two Rules That Will Define How Banks Issue Stablecoins
The Federal Reserve Board voted Thursday to propose two rules implementing the GENIUS Act, giving banks and the public 60 days to shape the regulatory framework that will govern dollar-backed digital tokens issued by US-supervised financial institutions.
Washington, September 24, 2026. The Federal Reserve Board approved two proposed rules today that would set the operational and prudential standards for payment stablecoin issuance by state member banks, bank holding companies, and their subsidiaries. The proposals translate core requirements of the GENIUS Act (Guiding and Establishing National Innovation for U.S. Stablecoins Act), which became law on July 18, 2025, into enforceable banking regulation. A 60-day public comment period begins upon publication in the Federal Register.
What the Proposals Require
The first proposal addresses reserve backing and financial soundness. It would require that every payment stablecoin issued by a Fed-supervised bank be backed one-to-one by permissible reserve assets, defined as short-term US Treasury bills and comparable high-quality liquid instruments. Issuers would be prohibited from rehypothecating those reserves (that is, using them as collateral for other transactions). Reserves must be kept in segregated accounts, separate from the institution's operating funds. The rule also establishes standardized capital requirements to cover credit and operational risks.
The second proposal creates a formal application pathway. Banks seeking approval to issue stablecoins would need to submit business plans, financial documentation, and compliance procedures, and would have access to an appeals process with defined hearing procedures.
Governor Michael Barr issued a supporting statement alongside both proposals. "Stablecoins will only be stable if they can be reliably and promptly redeemed at par in a range of conditions," he said in his statement. Barr added that he is seeking public input on whether the rules adequately address interest-rate and foreign-currency risks and on the question of universal redemption rights for all holders, regardless of their location.
Where These Rules Fit in the Broader Framework
The GENIUS Act created a two-track licensing system. Nonbank companies can seek a limited federal charter through the Office of the Comptroller of the Currency (OCC). Banks fall under the Federal Reserve. The OCC has been running its own parallel process: it issued a proposed rule in early 2026 and conditionally granted national trust bank charters to Circle, Paxos, and three other firms in December 2025. The GENIUS Act directed regulators to finish implementing rules by July 18, 2026. The Fed's proposals arrive roughly two months after that deadline, a delay the Brookings Institution attributes to the difficulty of reconciling traditional bank supervision with a new asset class.
The statute's effective date remains January 18, 2027. The 60-day comment period closes approximately November 23, 2026, leaving regulators roughly eight weeks to finalize rules before that deadline. Separately, the Federal Reserve has also proposed offering limited "skinny" master accounts to stablecoin issuers, featuring capped balances and no discount window access, a parallel development that signals the Fed's evolving posture toward stablecoin issuers.
Market Scale
The rules will govern a market that has grown substantially. Total stablecoin market capitalization stood at approximately $302.8 billion as of September 10, 2026, up roughly 95 percent from $161.5 billion in mid-2024. Tether (USDT) holds about 59 percent of that market at around $183.4 billion, with USD Coin (USDC) at roughly $74.2 billion, or about 23 percent. Global stablecoin transfer volume reached approximately $4.5 trillion in Q1 2026 alone. The U.S. Treasury Secretary has projected the total market could reach $3 trillion by 2030, a figure that would represent a near-tenfold increase from current levels.
What This Means Outside the United States
Because nearly all widely used stablecoins are pegged to the US dollar, the Fed's reserve and redemption standards will function as de facto global rules for these tokens, regardless of where a user holds them.
Asia is the largest end-user base: roughly two-thirds of Q1 2026 global stablecoin transfer volume originated in Asian markets, according to XREX data. South Asian remittance corridors, particularly those serving India, Pakistan, Bangladesh, and Sri Lanka, already run informally on USDT and USDC rails. A formalized US framework makes those rails more durable but also extends US anti-money-laundering and sanctions compliance requirements to the issuers, which could affect large-volume users globally through enhanced identity verification requirements.
The implications for Africa are more acute. Sub-Saharan Africa recorded more than $205 billion in on-chain crypto value in the 2024 to 2025 cycle and ranks as the world's third fastest-growing crypto market. Nigeria, South Africa, Kenya, Egypt, and Ghana lead adoption. Approximately 99 percent of circulating stablecoins are pegged to the US dollar. Stephen Z. Chundama of the UN Economic Commission for Africa has warned that foreign-denominated stablecoins create a "parallel shadow money supply" that undermines central bank authority. UNECA has called on African regulators to require stablecoin issuer reporting to monetary authorities before the GENIUS Act takes effect in January 2027, noting that deposit substitution and monetary policy transmission breakdown are live risks, not theoretical ones. UNECA has also recommended that African central banks coordinate a common continental position through existing regional structures in response to the approaching US regulatory deadline.
What Comes Next
The comment period gives banks, consumer advocates, fintech companies, and international observers a formal opportunity to push back on or refine the proposals. Key open questions flagged by researchers at the Brookings Institution include whether stablecoins should be permitted to pay interest (a point banks oppose, fearing deposit outflows), how to guarantee redemption at face value during market stress, how to prevent illicit financial flows through stablecoin secondary markets, and what operational resilience and continuity standards should apply to issuers. Barr himself flagged the illicit finance gap as recently as June 2026, stating the GENIUS Act framework "does not do enough so far" to address risks from secondary market transactions.
Final rules will need to clear the comment and revision process in time for the January 2027 effective date, leaving regulators a narrow window to act.