GENIUS Act: The Fed Launches Consultation to Better Regulate Stablecoins

The Fed's two proposals to regulate stablecoin issuers

The Federal Reserve Board of Governors published two draft rules this Thursday, September 24, related to the GENIUS Act, the U.S. stablecoin legislation. These cryptocurrencies are of great strategic interest to the United States, as the main existing stablecoins, such as Tether's USDT or Circle's USDC, are pegged to the U.S. dollar.

@federalreserve requests public comment on two proposals related to establishing a regulatory framework for Board-supervised payment stablecoin issuers under the GENIUS Act: https://t.co/WD0OsCS9cS

— Federal Reserve (@federalreserve) September 24, 2026

These two texts concern a specific category of actors: subsidiaries of banks under Fed supervision. The GENIUS Act distributes roles among several regulators. First, the OCC (Office of the Comptroller of the Currency), the watchdog for national banks, regulates non-bank issuers and national trust banks. Then, the FDIC (Federal Deposit Insurance Corporation), the federal bank deposit insurer, oversees the subsidiaries of the banks it supervises.

Issuers with outstanding amounts under 10 billion dollars may opt for state supervision if the regime is deemed equivalent to the federal framework. Large stablecoin issuers have turned to the OCC, such as Circle, which received final approval for its national trust bank in July. This is also the case for Paxos, which has had a similar bank approved to issue its stablecoins. For its part, Tether issues USDT from abroad and uses the Anchorage Digital Bank, licensed by the OCC, for its USAT stablecoin dedicated to the United States.

Mandatory full coverage for stablecoins compliant with the GENIUS Act?

The first text proposed by the Fed seeks to impose full backing of issued tokens with authorized reserve assets, such as short-term Treasury bills and other high-quality liquid assets. It also sets standardized capital requirements to address credit and operational risks, as well as risk management standards.

This same project regulates the institutions responsible for holding the assets backing the stablecoins. It also clarifies which stablecoin-related activities are permitted for banks supervised by the Fed.

A tailored authorization procedure for banks

The second proposal creates a dedicated application path for banks wishing to issue payment stablecoins via a subsidiary. Candidates must provide a business plan and financial information. The text also organizes the appeal process, hearings, and final decisions. The public will have 60 days to provide comments on these proposals from the date of publication in the Federal Register, the U.S. federal government's official journal.

Governor Michael Barr supports these proposals, presenting them as a step in the right direction, while expressing several reservations. "Stablecoins will only be stable if they can be redeemed at their face value reliably and quickly, under various conditions," he writes, including during periods of market stress. He welcomes the limits imposed on reserve assets and transparent capital requirements. However, Michael Barr is awaiting public feedback on the consideration of interest rate and exchange rate risks and is calling for universal redemption rights to be clearly enshrined in the final rule.

These rules are intended to complement those proposed in August by the U.S. Treasury under Scott Bessent, as the GENIUS Act is set to take effect in early 2027.

Regulators are moving forward without waiting for Congress

The Fed published its two regulatory framework proposals nine days after the stalling of the CLARITY Act in the U.S. Senate, a bill intended to set a framework for the entire crypto market. The very next day, the SEC and CFTC regulators announced their intention to build this framework by their own means.

CFTC Chairman Mike Selig stated as early as August that his agency could regulate the sector without waiting for the CLARITY Act. The SEC has since unveiled an exemption that opens U.S. markets to tokenized stocks.

The two chairmen of these institutions have personally displayed their determination. Paul Atkins, head of the SEC, has promised to act "with or without legislation." Mike Selig stated he was "locked in" to advancing crypto regulation without waiting for Congress. And now, with its two proposals, the Fed joins this effort to fully regulate the crypto sector, even if it is specifically focused here on stablecoins.

Sources: Federal Reserve, Governor Barr's statement