The Federal Reserve released its implementing framework for payment stablecoins under the GENIUS Act, establishing the supervisory perimeter for a market segment that has until now operated under a patchwork of state trust-company charters and informal agency guidance.

The framework, published by the Fed's Division of Supervision and Regulation, sets out the application, capital, liquidity, and examination requirements for insured depository institutions that issue payment stablecoins or provide custody for the assets backing them. It also defines how the central bank will coordinate with the Office of the Comptroller of the Currency and state regulators under the dual-track oversight structure created by the statute.

What the framework covers

The guidance applies to insured depository institutions and their subsidiaries. It restricts permitted reserve assets to short-dated U.S. Treasuries, overnight reverse repurchase agreements, and balances held at the Federal Reserve, and requires issuers to maintain reserves equal to 100% of outstanding stablecoin supply at all times. Monthly attestations from a registered public accounting firm are mandatory under the rule.

For "qualified" stablecoins with more than $10 billion in circulation — a threshold established in the GENIUS Act — the framework imposes a 24-hour redemption window and requires a written recovery and wind-down plan approved by the primary federal regulator.

Custody providers face requirements that mirror the Fed's existing digital-asset safekeeping guidance: segregation of customer assets, independent reconciliation, and quarterly third-party reviews. Reserves held by banks on behalf of issuers must be treated as custodial assets rather than proprietary funds.

How the regime intersects with existing authorities

The GENIUS Act, signed into law in July, created a tiered oversight system in which issuers above the $10 billion threshold fall under federal supervision by default, while smaller issuers can opt into an approved state regime. The Fed's framework governs only the federal channel; state-qualified issuers remain under their state supervisors, though they must meet identical reserve and redemption standards.

The OCC published a parallel rule earlier this year covering non-bank issuers that elect federal supervision. Together, the two rulebooks complete the operational scaffolding the statute required federal banking agencies to deliver.

Market structure and competitive consequences

The framework formalizes the regulatory perimeter for incumbent bank issuers and clarifies the migration path for the largest existing non-bank operators, including Tether and Circle, both of which have signaled intent to pursue federal qualification. Their current distribution arrangements rely on trust-company charters issued by the New York Department of Financial Services; the Fed's new rules do not displace those charters but layer direct prudential oversight on top of them.

Offshore issuers face a sharper constraint. The GENIUS Act bars non-U.S. issuers from serving U.S. customers unless they register through a U.S. branch or affiliate, a provision the Fed's framework references in its definition of permitted distribution channels.

What to watch next

The framework opens a public comment period on a narrow set of technical questions, including the treatment of tokenized money market funds as reserve assets and the calibration of liquidity buffers for issuers with concentrated redemption profiles. Final rules are expected in the first quarter, after which the OCC and approved state regulators will begin accepting charter applications. The first federal payment-stablecoin charter could be issued within six months of the comment period closing.