Federal Reserve Proposes 100% Reserve Backing And Capital Rules For Supervised Stablecoin Issuers

The Federal Reserve Board requested public comment on proposed stablecoin rules under the GENIUS Act on 24 September 2026, requiring full 1:1 reserve backing and capital standards for supervised issuers. Benzinga reported the Board issued a press release seeking input during a 60-day comment period that will shape the first federal framework for dollar-pegged tokens issued by institutions under Fed supervision.

The proposal marks the most concrete step yet toward implementing the Guiding and Establishing National Innovation for US Stablecoins Act, the legislative vehicle Congress passed to bring stablecoin issuance inside the federal perimeter. The Fed's rule would apply to supervised issuers, a category the Board is now defining through the notice-and-comment process, and would impose reserve composition, custody, and capital requirements that go beyond the voluntary attestations many issuers currently publish.

Fed's Proposed Stablecoin Rule Sets Capital Standards And Reserve Requirements For Supervised Issuers

The proposed rule establishes that any stablecoin issuer supervised by the Federal Reserve must hold reserves equal to at least 100 percent of the face value of outstanding tokens. The 1:1 reserve backing requirement is the centerpiece of the proposal, and the Board has asked commenters to weigh in on which assets should qualify as permissible reserves. The press release does not enumerate a final list of eligible assets, leaving open whether Treasury bills, overnight reverse repurchase agreements, insured deposits, or central bank reserves will satisfy the mandate.

Capital standards form the second pillar of the proposal. The Fed has not published the precise capital ratios it will require, but the rulemaking signals that supervised issuers will need to maintain loss-absorbing capital separate from customer reserve assets. That distinction matters because a stablecoin issuer that commingles reserves with operating capital can face a run if the reserve portfolio loses value. The Board's approach appears designed to prevent that scenario by forcing issuers to hold a buffer against mark-to-market losses on reserve assets.

The definition of a supervised issuer remains an open question the Fed explicitly flagged for comment. Under the GENIUS Act, the term could capture state-chartered banks that issue stablecoins, bank holding companies with stablecoin subsidiaries, and potentially nonbank issuers that opt into federal supervision. The Board's request for comment asks whether the definition should extend to foreign issuers serving US customers, a question with direct consequences for the largest dollar stablecoins currently issued from offshore entities.

The proposal also addresses reserve asset liquidity. The Fed asked whether reserve portfolios should be subject to minimum liquidity thresholds, such as a requirement that a specified percentage of reserves be convertible to cash within one business day. That provision responds to the core stablecoin risk: redemptions can spike faster than an issuer can sell longer-dated assets without taking losses. A liquidity floor would force issuers to hold shorter-duration instruments, reducing yield but increasing resilience.

Stablecoin Issuers Face New Compliance Burdens Under Fed's 1:1 Reserve Backing Mandate

For issuers already operating under state money transmitter licenses, the Fed's proposal introduces a second, federal layer of compliance. A supervised issuer would need to reconcile state-level reserve requirements, which vary by jurisdiction, with the Fed's uniform 1:1 standard. The Board has asked whether federal preemption should apply to reserve and custody rules, a question that will determine whether issuers face one rulebook or two.

Custody requirements are a central compliance question. The proposal asks whether reserve assets must be held at Federal Reserve member banks, at insured depository institutions, or with qualified custodians subject to federal oversight. The answer will reshape issuer banking relationships. A mandate to hold reserves only at Fed-supervised banks would concentrate stablecoin deposits in a small number of institutions, while a broader qualified custodian standard would preserve the current model where issuers spread reserves across multiple banks and asset managers.

Reporting obligations under the proposal would require supervised issuers to publish reserve composition data on a defined schedule. The Board has not specified whether reporting would be monthly, weekly, or daily, but the direction is toward more frequent disclosure than the attestation model common today. The Fed asked whether reports should be audited by independent public accountants and whether the Board itself should receive real-time reserve data through a supervisory reporting channel.

The compliance burden extends to redemption processing. The proposal seeks comment on whether supervised issuers must honor redemptions at par within one business day, a standard that would eliminate the redemption fees and delays some issuers impose. For issuers holding reserves in Treasury bills, same-day redemption at par requires either a liquidity buffer or access to a standing facility, both of which carry costs that would compress stablecoin margins.

Industry Reactions Split On Fed's Stablecoin Rule As Comment Period Opens

The comment period opened with no formal industry statements yet on record, but the questions the Fed posed already delineate the fault lines. Banks are expected to support the 1:1 reserve mandate and the capital standards, which would level the playing field against nonbank issuers that have operated with lighter oversight. The proposal's custody questions, if answered in favor of Fed-supervised banks, would give traditional banks a structural advantage in the stablecoin market.

Nonbank issuers face the sharper edge of the proposal. The capital standards, if set at bank-like levels, would force stablecoin issuers to raise equity or retain earnings that currently flow to token holders or treasury management. The reserve asset restrictions, if they exclude higher-yielding instruments like commercial paper or corporate bonds, would cut issuer revenue from reserve portfolio interest. The Board explicitly asked whether commercial paper should be excluded, signaling that the final rule may ban the asset class that once backed a significant share of stablecoin reserves.

Industry groups have not yet filed comments, but the questions on preemption and custody suggest the debate will center on whether the Fed's rule complements or conflicts with state frameworks. State regulators have spent years building stablecoin oversight through money transmitter laws, and a federal rule that overrides those frameworks would face resistance from states that see stablecoin licensing as a revenue and policy tool. The Fed asked directly whether the final rule should preempt state law, a question that will draw extensive briefing from both sides.

The 60-day window gives issuers until late November 2026 to submit comments. The Board's request for comment is structured around specific questions rather than open-ended solicitation, which typically produces more focused industry input. Issuers will need to decide whether to argue for narrower definitions of supervised issuers, more flexible reserve asset lists, or longer compliance timelines, and those choices will shape the lobbying landscape through the fall.

Comment Period Deadline And Next Steps For Fed's Stablecoin Rulemaking

The 60-day comment period runs from 24 September 2026, placing the deadline in late November 2026. The Federal Reserve Board has directed comments to be submitted through its online portal or by mail to the Board's secretary, following the standard procedure for Federal Register rulemakings. The press release did not specify an exact closing date, but a 60-day window from the September 24 announcement lands the deadline on or about 23 November 2026.

After the comment period closes, the Fed will review submissions and decide whether to revise the proposal. The Board may issue a supplemental proposal if comments reveal material issues with the reserve asset definitions or the supervised issuer classification, a step that would extend the timeline. If comments are manageable, the Board could move directly to a final rule, a process that typically takes several months after the comment deadline.

The GENIUS Act itself does not impose a statutory deadline for the Fed's rulemaking, leaving the timing to the Board's discretion. The absence of a hard deadline means the final rule could arrive in early 2027 or slip further if the comment record is contentious. The Board's decision to issue a proposal rather than an interim final rule suggests a deliberate pace, with the final rule likely to follow a full notice-and-comment cycle.

Stakeholders who want to influence the final rule should file comments before the deadline. The Fed's questions are specific enough that targeted responses on reserve asset eligibility, custody standards, and the supervised issuer definition will carry more weight than general statements of support or opposition. The Board's staff will summarize comments in the final rule's preamble, and the most detailed technical submissions often shape the final regulatory text.

How Fed's Stablecoin Rule Aligns With GENIUS Act's Broader Regulatory Framework

The GENIUS Act divides stablecoin oversight between federal and state authorities, and the Fed's proposal fills the federal piece for supervised issuers. The Act contemplates a dual framework where state-licensed issuers continue under state money transmitter regimes while federally supervised issuers face the Fed's standards. The Fed's rule would define what federal supervision means in practice, setting the benchmark that state frameworks may eventually converge toward.

The proposal interacts with other federal agencies' stablecoin work. The Office of the Comptroller of the Currency has issued guidance on bank stablecoin activities, and the Federal Deposit Insurance Corporation has addressed deposit insurance treatment of stablecoin reserves. The Fed's rule would sit alongside those agency actions, and the Board asked whether its reserve and custody standards should be coordinated with OCC and FDIC requirements to avoid conflicting obligations for bank issuers.

The state-level interaction is the most contested element of the framework. The GENIUS Act preserves state authority over nonbank stablecoin issuers, but the Fed's proposal could influence state standards through a race-to-the-top dynamic. If the Fed requires 1:1 reserves and bank-grade custody for supervised issuers, state regulators may face pressure to adopt similar standards for the issuers they oversee, effectively federalizing stablecoin regulation through the back door.

The proposal also raises questions about the Federal Reserve's role as a stablecoin supervisor distinct from its monetary policy function. The Board has historically been cautious about expanding its supervisory perimeter, and the GENIUS Act rulemaking represents a significant new mandate. The comment period will test whether the Fed is prepared to build a stablecoin supervision program from scratch, including examination staff, reporting systems, and enforcement capacity.

The next concrete signal will be the comment filings themselves. Large issuers, bank trade associations, and state regulator groups will file in the coming weeks, and the substance of those comments will reveal whether the industry accepts the Fed's framework or fights to narrow it. The final rule, whenever it arrives, will determine whether stablecoins become a regulated banking product or remain a parallel financial system with federal guardrails.

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