The U.S. Federal Reserve on Thursday opened a 60-day public comment period on a proposed rule that would require payment stablecoin issuers under its supervision to fully back their tokens with specified reserves, including short-term U.S. Treasury bills, and to hold capital against credit and operational risks.

The proposal, published in the Federal Register, marks the first formal step to translate the GENIUS Act into binding supervisory requirements. Passed last year, that statute created a federal framework for dollar-pegged digital tokens. The Fed's text targets both stablecoin issuers and the banks that custody their reserves.

What reserves and capital requirements would the Fed impose?

Under the proposal, a payment stablecoin issuer supervised by the Fed would back each token one-to-one with assets the central bank designates as eligible reserves. Short-dated Treasuries, which can be converted to cash at short notice, sit among the identified instruments.

The reserve mandate aims to ensure issuers can meet redemptions during periods of market stress. A separate capital buffer would address a different layer of exposure: reserves protect token holders against liquidity shocks, while capital absorbs losses tied to an issuer's broader business.

The combined structure mirrors the dual approach used in traditional banking, where liquidity and solvency are supervised as distinct categories. It also narrows the operational gap between crypto-native issuers and the regulated financial system.

How would banks fit into the new framework?

The proposal reaches beyond issuers. Fed-supervised banks that hold reserves on behalf of stablecoin companies would face specific guidelines governing those custody relationships.

The Fed also outlined a tailored application process through which those banks could seek permission to issue their own payment stablecoins. That dual track could reshape competition in digital payments.

Banks already operate established customer bases, card networks and compliance functions. A defined path to bank-issued tokens, paired with reserve and capital rules that apply across the industry, would let traditional lenders enter the market without first partnering with crypto-native issuers.

What regulatory shift does the proposal represent?

The rules arrive as Washington moves to replace a patchwork of state oversight with a federal regime for dollar-pegged tokens. The GENIUS Act provides the statutory foundation. The Fed's proposal converts portions of that statute into enforceable standards for institutions within its perimeter.

For the Federal Reserve, the central policy tension is straightforward. Stablecoins function as a payment rail between crypto markets and the dollar system. Integrating that rail more tightly into supervision reduces run and contagion risk.

It also raises the operating cost for issuers that previously relied on less standardized arrangements. Smaller issuers, in particular, may struggle to meet capital thresholds calibrated to bank-style balance sheets.

What happens next?

The comment period runs 60 days from Federal Register publication. Banks, issuers, trade associations and investor groups will use that window to challenge specific provisions before the Fed moves toward a final rule.

The pace of the rulemaking, and any modifications made in response to industry feedback, will determine how quickly issuers and their banking partners must restructure their balance sheets. Final rules would also define which activities Fed-supervised banks may conduct with stablecoin issuers and the reserves they hold.

If the framework is finalized substantially as proposed, reserve quality, issuer capital and the legal status of bank-issued tokens will become the defining variables in the U.S. stablecoin market, pulling the sector further away from its unregulated origins.