The Marriner S. Eccles Federal Reserve Board Building in Washington, photographed in March 2011 · Federal Reserve, via Wikimedia Commons · Public domain

Study · STABLE · 2026-09-24 · 8 min read · Stablecoins and bank regulation · Crypto

The Fed's stablecoin rules: full backing and two-day redemption

The last of the federal agencies named in the GENIUS Act has published its proposal, fourteen months after the law and past the deadline it set; Circle, the issuer of USDC, is the public company whose filings say the law will change its business, and the Fed expects five to ten state member banks to ask for a subsidiary of their own.

By the desk. Researched and written by an AI model from the sources listed at the end; nothing here restates another publication's text.

CRCLdirect COINadjacent STTadjacent HOODadjacent GEMIadjacent

What happened

On Thursday 24 September the Federal Reserve Board asked for public comment on two proposals under the GENIUS Act. The first would require the stablecoin issuers it supervises to 'fully back their stablecoins with certain permissible reserve assets, such as short-term Treasury bills and certain other high-quality, liquid assets,' set standardized capital requirements for the credit and operational risks of the business, lay down risk management standards and rules for the firms that safekeep the reserves, and say which activities are permitted. The second would set a tailored application process for the insured state member banks that want a subsidiary to issue a payment stablecoin, with a business plan, financial information and biographical reports, and a process for appeals, hearings and final determinations. Comments run for 60 days after publication in the Federal Register. ^{[1, 2, 3]}

Governor Michael Barr's statement carried the argument: 'Stablecoins will only be stable if they can be reliably and promptly redeemed at par in a range of conditions.' He supported the proposal's limits on reserve assets and its transparent capital standard, asked for comment on whether it handles interest-rate and foreign-currency risk, said 'it will be important that universal redemption rights are clear in the final rule to support public confidence,' worried that a 'significant or systemic' threshold in the anti-money-laundering standard could hinder the Board's enforcement, and closed that 'further work will undoubtedly be required if stablecoins are to be reliable payment instruments.' ^[4]

The notice itself, 392 pages under docket R-1899, puts the rules in numbers. Reserve assets, valued at fair value rather than cost, must equal or exceed the outstanding issuance value 'at all times', and the Board explains why: an issuer with 100 million of coins and a 5 million shortfall could redeem everyone at 95 cents, but after 35 million of redemptions at par the same shortfall leaves 92 cents for the rest. A redemption must be met no later than two business days after it is requested. The operational-risk capital charge would be 2 percent of the first 20 billion dollars of coins outstanding, 1.5 percent of the next 30 billion and 1 percent above 50 billion, plus a quarter of the issuer's three-year average revenue from anything other than reserves. As of 31 December 2025 the Fed regulated 703 insured state member banks, and it estimates that five to ten of them may form a stablecoin subsidiary in the first few years after the rule is final; it also expects about 20 of the firms it supervises to safekeep reserves under the custody rules. ^[5]

Two dates frame the rest. The Act's effective date, the notice says, 'is the earlier of 18 months after the enactment date (July 18, 2025) or 120 days after the primary Federal payment stablecoin regulators issue any final regulations implementing the Act,' which the Treasury puts at 18 January 2027 at the latest. And the Board's staff dated its memo to the governors 3 September, three weeks before the proposal appeared. ^{[5, 12, 2]}

The record

The law is Public Law 119-27, the Guiding and Establishing National Innovation for U.S. Stablecoins Act, enacted on 18 July 2025. It requires a permitted issuer to 'maintain identifiable reserves backing the outstanding payment stablecoins' on 'at least 1 to 1 basis', in coin and currency, insured deposits, Treasury bills, notes and bonds of 93 days or less, and a short list of other liquid assets, and it says that no permitted issuer 'shall pay the holder of any payment stablecoin any form of interest or yield (whether in cash, tokens, or other consideration) solely in connection with the holding, use, or retention' of the coin. It gave the regulators a year to write their rules; CoinDesk noted on Thursday that the agencies are 'well past the legal deadline'. ^{[7, 8]}

The Fed's notice lists the others in its footnotes. The Comptroller of the Currency proposed first, on 25 February, in 376 pages: dollar-for-dollar backing, capital in the form of common and additional tier 1 equity with a 5 million dollar minimum for new issuers, at least half a percent of reserves in insured deposits for issuers above 25 billion, redemption within two business days and a circuit breaker if redemptions pass 10 percent of the coins in a day; comments closed on 1 May. The FDIC's board approved its proposal on 7 April, with the same two-day clock and a statement that deposits held as reserves 'would not be insured to payment stablecoin holders on a pass-through basis'; the credit union regulator published in May; and the Treasury proposed its part on 17 August, on who must be licensed, on foreign-issued coins and on the service providers, with Secretary Bessent promising 'the regulatory certainty businesses need to innovate and grow in America.' The Fed's is the fifth and last. ^{[5, 9, 10, 11, 12]}

The one public company that issues a coin at scale and files with the SEC is Circle. Its second-quarter release put USDC in circulation at 73.3 billion dollars at 30 June, total revenue and reserve income at 701 million for the quarter and net income from continuing operations at 48 million; its quarterly report puts reserve income alone at 667.7 million for the three months and 1,320.2 million for the half. The release says: 'The GENIUS Act will change the payment stablecoin ecosystem and may affect our business in ways that cannot yet be known,' and that the Act excludes coins issued by permitted issuers from the definition of a security, 'which will include USDC', while until those amendments take effect the company continues to rely on its own conclusion that USDC is not a security. Circle also reported final approval for Circle National Trust, 'one of the first stablecoin issuers to hold a federal bank charter', which places its trust under the Comptroller rather than the Fed; the Fed's rules on tying, and the yield prohibition in the Act, reach every permitted issuer whoever supervises it. ^{[13, 14, 5]}

Two of Circle's filed arrangements pay other firms on the basis of USDC held. The collaboration agreement with Coinbase, dated 18 August 2023 and filed as an exhibit to Circle's annual report, entitles the reseller to 'fifty percent (50%) of the Residual Payment Base' and to a share of the daily payment base in proportion to the coins held on its platform, for a three-year term that renews. On 17 September this year Circle's subsidiaries expanded a partnership with Binance under which Circle will 'pay Binance a monthly incentive fee representing a percentage of the amount of USDC held' through Binance's service, for five years, alongside a private placement of 1,237,011 Class A shares to Binance for 100 million dollars. The Fed's proposal, following the Comptroller's, would presume that certain remuneration arrangements violate the prohibition on yield and let an issuer rebut the presumption in writing; it names no company, and whether arrangements that pay a platform rather than the holder fall under it is a question the comment period exists to answer. ^{[16, 15, 5]}

Who it reaches

Circle is direct: the figures and the words above are its own, filed with the SEC, and its file on this site carries its record. Coinbase is adjacent as the reseller under the agreement, paid from the reserve income on the coins its customers hold. State Street told investors on 16 July that it had launched a GENIUS Act-aligned stablecoin reserves money market fund, the kind of vehicle in which the proposal's reserves can sit. Robinhood's quarterly report lists the Global Dollar among the assets it offers, not yet in New York, and names the GENIUS Act with the CLARITY Act among the laws whose effect it watches; Gemini's says its own dollar coin had 39.8 million of customer funds behind it at 30 June, down from 46.6 million at the end of 2025. The five to ten state member banks the Fed expects to apply are unnamed; there are 703 of them. ^{[13, 16, 17, 18, 19, 5]}

None of the eight assets on this site's own record is a stablecoin. The rule that admits an asset needs an SEC-registered product that names it and a record the desk can verify from two independent sources, and no product on the SEC's ticker list names a dollar coin; that is why the stablecoin family on the record has no member, and why this study's subject reaches the record through the companies rather than through a chain. ^[13]

Where the sources disagree

On the deadline. CoinDesk reads the Act's one-year rulemaking clock as missed by every agency, which is arithmetic from July 2025. The Fed's notice does not argue the point; it says the Act's effective date is fixed by the earlier of the two dates in the statute, so a late rule does not move the day the law bites, which the Treasury's own release names as 18 January 2027 for the licensing requirement and 18 July 2028 for the providers that must deal only in licensed coins. ^{[8, 5, 12]}

On the two-day clock. The Comptroller, the FDIC and the Fed all propose two business days as the outer limit for redemption, and the Comptroller adds a circuit breaker at 10 percent of coins in 24 hours. The Fed asks in its questions whether a run of more than 10 percent of outstanding issuance in a day should allow seven calendar days; Governor Barr's statement asks that 'universal redemption rights' be clear. A holder reading the three documents finds the same clock and a different view of what happens when it is broken. ^{[10, 11, 5, 4]}

On what counts as yield. The Act's words are 'solely in connection with the holding, use, or retention'. The Comptroller's proposal, as Nixon Peabody summarizes it, presumes against arrangements that route payments through affiliates; the Fed's notice adopts the same presumption and makes it rebuttable; CoinDesk reads the room left as narrow, 'akin to credit-card incentive programs'. Circle's filed agreements pay Coinbase and Binance, not holders, on their face; the documents do not say what those firms do with the money, and this study does not guess. ^{[7, 10, 5, 8, 16, 15]}

On what law governs. FXStreet reports that the Senate failed to advance the CLARITY Act by 49 votes to 50 last week, which leaves the GENIUS Act as the principal federal law under which the coins are being regulated; the Fed's proposal cites no other statute for its authority over issuers. The market-structure questions the CLARITY Act would have answered stay open. ^{[20, 5]}

What settles it next

The dated records to read. The Federal Register notices, whose publication date starts the 60-day comment clock for both dockets, R-1899 and R-1900, and the comments themselves, which the Board posts as received. The Comptroller's final rule, the first of the five that could set the 120-day clock running. Circle's third-quarter report in November, with USDC in circulation, reserve income and any words on which regulator's rule will govern its trust. The applications the Fed receives from state member banks, which its second proposal would decide within a fixed procedure. And 18 January 2027, the last day on which the Act can take effect if no final rule comes sooner. ^{[1, 6, 9, 13, 12]}

Sources

Every stock is a company; the desk grades the company behind the stock. This article describes; it does not recommend. Adjacent means the company is not named in the event and the path by which it is reached is stated above.

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