Nothing here is final, but the Federal Reserve has now put its share of the GENIUS Act rulebook on paper, and that changes what stablecoin issuers and the banks behind them can plan around. The central bank issued two proposals on Thursday, one on capital, reserves and permitted activities, the other on how a Fed-supervised bank applies to issue stablecoins.
They are proposals, not rules. Both are open for 60-day public comment periods, and the law’s deadline for regulators to have rules in place, July 2026, has already passed, according to CoinDesk.
Key Takeaways
- The Fed proposed two rules on Thursday under the GENIUS Act, each with a 60-day public comment period.
- One covers capital and reserve requirements, permitted activities at supervised banks, and stablecoin rewards. The other sets the application procedure for banks that want to issue stablecoins.
- On rewards, the Fed says certain third-party arrangements would be presumed to be prohibited payments of interest or yield, matching the approach the OCC has already proposed.
- The agencies are past the law’s July 2026 deadline for regulations, and finalizing rules usually takes several months, sometimes much longer.
What the Fed actually proposed
The first proposal is the substantive one. It sets capital and reserve requirements meant to ensure stablecoins are fully represented by the most liquid assets and that issuers have a solid foundation in times of stress, CoinDesk reports. It also outlines which stablecoin activities are accepted at Fed-supervised banks. The stablecoin rewards component sits in this same proposal.
The second proposal is procedural. It describes how a regulated bank can begin issuing its own stablecoins, including submitting a “business plan; financial information; relevant policies, procedures, and other documents.” In plain terms, it is the application path, not a set of limits on what the token can do.
Together, CoinDesk describes the two proposals as accomplishing the Fed’s part of the multi-agency work needed to establish issuer oversight. They would establish the legal safety net behind the tokens being issued.
Rewards: a presumption, not a ban on everything
The rewards language deserves the closest reading, because the law and the proposal do different jobs. The GENIUS Act bans issuers from paying interest or yield for holding stablecoins. The Fed’s proposal addresses how that ban applies when third parties are involved.
“Under the proposal, certain types of arrangements involving third parties would be presumed to be prohibited payments of interest or yield,” the Fed wrote, adding that its approach is consistent with the Office of the Comptroller of the Currency’s. A presumption is a rebuttable starting position, not a flat prohibition, and the proposal’s final wording could still change.
CoinDesk’s read is that the agencies appear to be allowing a very narrow approach for crypto platforms to offer rewards akin to credit-card incentive programs. That is the outlet’s characterization of where the regulators seem to be heading, not language from the Fed’s text.
The stakes are real for platforms. The question of how much companies such as Coinbase could reward stablecoin users was one of the sticking points in the debate over the recently failed Digital Asset Market Clarity Act, per CoinDesk. Because efforts to revise the law through that bill did not succeed, the GENIUS Act is now the primary law governing stablecoin rewards.
Barr on redemption at par
Fed Governor Michael Barr, who ran the Fed’s supervision program before the administration of President Donald Trump, framed the safety case around redemption. “Stablecoins will only be stable if they can be reliably and promptly redeemed at par in a range of conditions,” he said in a statement. He added that this includes during market stress, when pressure can be put on the value of even otherwise liquid government debt, and during strain on an individual issuer or its related entities.
That framing lines up with the first proposal’s focus on liquid reserves and issuer resilience.
Where the wider process stands
The Fed is not moving alone. CoinDesk reports that it joins other federal agencies that are still in the middle of finishing stablecoin regulations. The sequence so far:
- The Federal Deposit Insurance Corp. started the process in December, the first of the federal entities that needed to set its part of the law into regulations.
- In June, multiple agencies proposed requiring stablecoin issuers to identify their users the way other regulated financial firms do.
- Last month, the Treasury Department proposed its own piece, outlining federal definitions of what it means to issue U.S. stablecoins and who must follow the rules.
- The OCC has its own proposal on interest and yield, which the Fed says it sought to closely match.
That alignment matters because a bank issuer could face several regulators. Consistent treatment of rewards across the Fed and the OCC reduces the chance of a bank’s charter deciding what a platform partner may offer, though neither set of rules is final.
What to Watch
The 60-day comment periods are the next hard marker. After they close, the Fed has to review input and revise the proposals before publishing final versions, a process CoinDesk says usually takes several months and sometimes much longer.
Two open questions follow. First, whether the final rewards language stays as narrow as the agencies’ current approach suggests, given that the Clarity Act’s attempt to revise the issue failed. Second, how quickly the remaining agencies finish their pieces, since all of them are already past the July 2026 deadline.
