Fed proposes GENIUS Act stablecoin rules covering reserves, capital and tying

The Federal Reserve proposed Regulation UU, a rule that would set reserve, capital, activity and anti-tying requirements for payment stablecoin issuers, in a notice published in the Federal Register of Tuesday, September 29, 2026. The proposal, issued under Docket No. R-1899 and RIN 7100-AH29, would add 12 CFR part 247 and amend parts 208, 211, 217, 225 and 263. Comments must be received by November 30, 2026.

What the proposal covers

The rule implements the Guiding and Establishing National Innovation for U.S. Stablecoins Act (GENIUS Act), Public Law 119-27, codified at 12 U.S.C. 5901 et seq., enacted on July 18, 2025. The Board proposes rules for Board-supervised permitted payment stablecoin issuers (PPSIs), for entities providing custody of reserves, for State-qualified PPSIs, and for the GENIUS Act’s prohibition on tying, which applies to all PPSIs regardless of their primary regulator.

Reserve requirements would be strict. A Board-supervised PPSI would have to hold identifiable reserve assets, segregated from its own assets, with a total fair value at all times equal to or exceeding outstanding issuance value — the one-to-one requirement. Permissible reserves would be limited to:

• United States coins and currency, or money standing to the credit of an account at a Federal Reserve Bank;
• eligible deposit claims;
• Treasury bills, notes or bonds with a remaining maturity of 93 days or less;
• overnight repurchase agreements backed by such Treasury securities;
• overnight reverse repurchase agreements collateralized by Treasury securities, subject to overcollateralization in line with standard market terms;
• registered Government money market funds invested solely in those assets;
• other similarly liquid Federal government-issued assets approved by the Board;
• tokenized versions of the above.

Issuers would have to record fair value at least once each calendar day, publish a monthly reserve composition report by noon on the last day of each month, have it examined by a registered public accounting firm, and have the Chief Executive Officer and Chief Financial Officer certify its accuracy. Redemptions would be processed at par within two business days, with limited safe harbors.

Capital, activities and the tying ban

Minimum capital would be based on tangible equity: a 2 percent credit risk requirement for uninsured eligible deposit claims, 2 percent for undercollateralized reverse repurchase agreements, plus an operational risk requirement. Newly formed issuers would face a de novo floor of $5 million, indexed to nominal U.S. GDP, during a three-year de novo period. A PPSI that misses its minimum capital at quarter-end would have five business days to file a capital plan and one quarter to restore compliance; failing that, it would have to liquidate reserves and redeem outstanding stablecoins without charging fees or issuing new coins.

Permitted activities would be limited to issuing and redeeming payment stablecoins, managing reserves, providing custody, assessing fees and directly supporting those activities. Prohibited conduct would include rehypothecation of reserves, deceptive names or marketing, representations of government backing or deposit insurance, and paying interest or yield to holders.

The proposal would also implement the GENIUS Act’s tying prohibition: a PPSI could not condition services on a customer buying another product or refraining from using a competitor. The Board is not proposing exceptions at this time but would consider them case by case.

State-qualified issuers and costs

Uninsured State-chartered issuers that are State-qualified PPSIs and cross $10 billion in outstanding issuance would have to notify the Board within five calendar days, transition to the Federal framework within 360 days or stop issuing new coins, and could seek a waiver to remain State-supervised. The Board estimates that five to 10 insured State member banks may form stablecoin subsidiaries in the first years, at an estimated $39,538 in initial setup and $103,175 in annual ongoing compliance per issuer. As of December 31, 2025, there were 703 insured State member banks, 439 of them small under Small Business Administration thresholds.

The proposal matters beyond bank issuers: it would define how the largest stablecoins are backed, redeemed and disclosed, and it would open a market — currently dominated by two providers, the Board notes — to new entrants. The notice was issued by order of the Board through Michele Taylor Fennell, Associate Secretary of the Board, with comments directed to Secretary Benjamin W. McDonough.

Source: Federal Register, Vol. 91, No. 187, September 29, 2026, Proposed Rules, p. 61580 (official reference: FR Doc. 2026-19860).