Federal Reserve Proposes 1:1 Reserve and Capital Rules for Stablecoin Issuers Under GENIUS Act

On September 24, 2026, the Federal Reserve Board published a formal request for public comment on two proposals that will govern how state member banks issue payment stablecoins. The framework, which implements statutory mandates from the recently passed GENIUS Act, requires institutions to hold a strict 1:1 reserve backing for every digital token they issue into circulation.[1][4]

The rules introduce a tiered system of capital charges designed to absorb potential losses, alongside a mandatory two-day redemption standard. Under this standard, any consumer holding a bank-issued stablecoin must be able to redeem it for fiat currency within a 48-hour window, a mechanism intended to prevent the kind of liquidity runs that have previously destabilized the broader digital asset market.[2][3]

Central to the Federal Reserve's proposal is the operationalization of the GENIUS Act's "Dollar Test." This requirement ensures that the assets held in reserve by the issuing bank are genuinely liquid, strictly denominated in U.S. dollars, and held in segregated accounts, restricting the use of volatile commercial paper or algorithmic stabilization mechanisms.[4][5]

The rules apply specifically to Board-supervised payment stablecoin issuers, drawing a regulatory perimeter around traditional banking institutions that wish to enter the digital asset space. By establishing these guardrails, the central bank is signaling that stablecoins can integrate into the mainstream financial system, provided they adhere to the same prudential standards as traditional payment instruments.[1][3]

The publication of these rules opens a public comment period, allowing industry participants, consumer advocates, and financial institutions to weigh in on the specific capital ratios and compliance burdens before the framework is finalized. The outcome will dictate the economic viability for banks looking to issue their own stablecoins versus relying on third-party digital asset firms.[1][2][5]

For the broader savings and payments landscape, the 1:1 reserve mandate effectively treats bank-issued stablecoins as highly regulated cash equivalents rather than speculative assets. This distinction is critical for retail users who might use these tokens for remittances or daily transactions, ensuring that the underlying value remains insulated from market volatility.[3][4]

The tiered capital charges outlined in the proposal will scale based on the volume of stablecoins an institution issues and the specific risk profile of its reserve assets. This approach mirrors the capital requirements applied to traditional banking activities, ensuring that the issuance of digital tokens does not dilute a bank's overall solvency.[2][5]

As the public comment period progresses through the fourth quarter of 2026, the Federal Reserve will evaluate feedback on the operational challenges of maintaining the two-day redemption standard across different blockchain networks. The final rules will set the baseline for how traditional finance interacts with blockchain-based payment systems in the coming decade.[1][2][3][5]