The Federal Reserve opened a public comment period on two proposed rules implementing the GENIUS Act's payment stablecoin framework, moving the legislation from statute to operational rulemaking. The action, reported by FXStreet, marks the first formal Federal Reserve notice issued under the stablecoin law passed by Congress in 2025 and signed by the Trump administration on July 18.

What did the Federal Reserve propose?

The two notices address discrete components of the GENIUS Act, which directed multiple agencies to establish a federal regime for payment stablecoins. The statute defined payment stablecoins as digital tokens pegged to a fixed value, backed 1:1 by cash and short-dated Treasuries, and redeemable at par on demand. Issuers exceeding $10 billion in circulation fall under federal oversight, while smaller issuers can operate under state regimes that meet federal standards.

The Federal Reserve's role under the statute centers on supervising non-bank issuers and enforcing restrictions on yield payments to token holders, a provision designed to prevent stablecoins from functioning as synthetic interest-bearing deposits outside the banking system. The comment process gives issuers, banks, custody providers and trade associations a formal channel to shape how those restrictions are calibrated.

Why the Fed's role matters

Unlike the Office of the Comptroller of the Currency, which charters and supervises federally licensed payment stablecoin issuers, the Federal Reserve operates primarily as a backstop supervisor under the statute. The Fed's authority extends to non-bank issuers that opt for a federal pathway and to enforcement of the statute's prohibitions on interest, yield or other remuneration paid to holders. That distinction places the central bank in a position closer to market-structure regulator than primary prudential supervisor.

Industry participants have closely watched whether the Fed's rules will codify a narrow reading of permitted reserve assets or expand the menu to include overnight repurchase agreements, bank deposits at non-insured institutions, or tokenized Treasuries. Each choice carries implications for issuer balance sheets, money-market fund competition and Treasury funding dynamics at a time when stablecoin issuers have become meaningful marginal buyers of short-dated government debt.

Market and operational implications

For issuers, the comment period signals the beginning of a multi-quarter rulemaking cycle that will determine capital, liquidity and disclosure expectations before the statute's full effective date. The GENIUS Act set a phased implementation timeline running through 2026 and 2027, with compliance milestones tied to issuer size and charter type. Federal Reserve rules will intersect with parallel rulemaking from the OCC, the Federal Deposit Insurance Corporation and state regulators coordinating through the Conference of State Bank Supervisors.

For banks, the rules will clarify how custodial, reserve-management and treasury-services relationships with stablecoin issuers are treated under existing capital, liquidity and resolution frameworks. Large money-center banks have signaled interest in providing reserve custody, distribution rails and tokenization services, but have pressed for clarity on whether stablecoin-related deposits would receive favorable treatment under the supplementary leverage ratio and liquidity coverage ratio.

What comes next

The Federal Reserve has not yet specified the length of the comment window, but rulemakings of comparable scope under the Bank Holding Company Act and the Dodd-Frank Act have historically allowed 60 to 90 days for initial comments and 30 days for rebuttal submissions. The Fed will then revise the proposals in light of feedback before publishing a final rule.

The next milestone for market participants is the OCC's parallel rulemaking on the federal payment stablecoin charter, expected later in the implementation cycle. Together, the two Fed notices and the OCC charter framework will determine whether the U.S. market consolidates around a small number of federally regulated issuers or remains fragmented across state regimes with optional federal pathways.