The rules that will govern America's stablecoin industry just took shape. On September 24, the Federal Reserve released its first proposed rules for dollar stablecoin issuers under the GENIUS Act, the landmark 2025 law that brought stablecoins under federal oversight. The proposals spell out how issuers must back their tokens, how much capital they need, and, most importantly for anyone eyeing the market, exactly who is allowed to issue a stablecoin in the first place. Here's the breakdown.
What the Fed proposed
The Fed Board opened public comment on two proposed rules, each with a 60-day window once published in the Federal Register:
Rule one, reserves, capital, and risk management. Board-supervised issuers would have to fully back their stablecoins with permissible reserve assets, like short-term US Treasury bills and other high-quality, liquid assets, on a one-to-one basis. On top of that backing, issuers would carry an operational-risk capital charge: 2% on the first $20 billion of stablecoins outstanding, 1.5% on the next $30 billion, and 1% above $50 billion. Issuers would also file monthly reserve reports personally certified by their CEO and CFO, a serious accountability requirement.
Rule two, the application process. The second proposal creates a tailored path for Fed-supervised banks to issue stablecoins through subsidiaries, including business-plan and financial requirements, plus procedures for appeals and hearings.
The framing matters: as one analysis put it, the Fed has effectively decided that stablecoins are payment infrastructure, not a crypto product, and payment infrastructure gets bank-grade rules. This is what those look like in draft.
Who actually qualifies to issue one
This is the heart of it. Under the GENIUS Act, as detailed in the Fed's notice, there are three main categories of permitted domestic issuer:
- A subsidiary of an insured bank, a qualifying subsidiary of an insured depository institution, approved by its primary federal regulator.
- A federal qualified issuer, a nonbank approved and supervised at the federal level (via the OCC).
- A state qualified issuer, approved under a state regime, but only up to a size limit.
That size limit is the key catch for smaller and crypto-native players. A state-supervised issuer can operate under state rules only until its outstanding stablecoins cross $10 billion. Past that threshold, the issuer must transition to the Fed's federal framework within 360 days, unless it stops net new issuance or obtains a waiver, and it must notify the Board within five days of crossing the line. In plain terms: you can start small under a state license, but grow big and you get pulled into full federal supervision.
For newly approved issuers, the Fed proposes an initial capital floor of $5 million during the first three years, and a bank seeking approval for a stablecoin subsidiary would get a decision within 120 days of filing a complete application.
The winners and the harder paths
Read together, the rules clearly favor the well-capitalized and the already-regulated. Big banks and established financial institutions are the obvious winners, they already have the capital, compliance infrastructure, and regulatory relationships to clear these bars, and the second proposed rule builds them a dedicated on-ramp. That aligns with the wave of banks (Deutsche Bank, and consortiums of major lenders) moving into the space.
Large, compliance-focused stablecoin issuers like Circle are also well-positioned; bank-grade reserve and capital rules are close to how they already operate, and clear federal rules give them certainty.
The harder path falls on smaller, crypto-native, or offshore issuers. Heavy capital requirements, CEO/CFO-certified monthly reporting, and the $10 billion state-to-federal trigger raise the cost and complexity of competing. It's a framework built around trust, reserves, and accountability, which by design makes it tougher for lightly-regulated players. And it reinforces a global pattern already visible under Europe's MiCA rules: compliance is becoming the price of admission, and it favors incumbents.
The important caveats
A few things to keep in mind. First, nothing is final. These are proposals in a 60-day comment period; the details that survive industry feedback are what will actually bind the market. Fed Governor Michael Barr, while supporting the package, pushed for stronger anti-money-laundering provisions, the only visible friction within the Board so far.
Second, this is only part of the picture. The Fed is one of several regulators writing stablecoin rules, Treasury issued its own proposal in August, the agencies proposed anti-money-laundering requirements in June, and the OCC (the main federal banking regulator here) expects its own final rules and could start processing applications in 2027. A company reading only the Fed's proposals sees a fraction of the eventual compliance surface.
Third, the clock is tight. Key provisions of the GENIUS Act take effect January 18, 2027, and a 60-day comment window opening in late September leaves a narrow path to finalize rules before then, the Fed even acknowledged the agencies have broadly missed the law's original July 2026 deadline.
Why it matters
The Fed's proposal is a defining moment for the stablecoin industry, which has ballooned past $300 billion and now moves trillions of dollars monthly. By setting bank-grade requirements and clearly defining who can issue, the rules will shape which companies get to build the digital-dollar infrastructure of the future, and the early signal is that it'll be the well-capitalized and the well-regulated. For the crypto industry, that's a double-edged outcome: it brings the legitimacy and certainty that unlocks institutional adoption, but it also raises the barrier to entry in a way that favors banks and large incumbents over scrappy startups. It also stands in sharp contrast to Washington's other big crypto effort this month, the CLARITY Act, which died in the Senate on a 49-50 vote. Stablecoin regulation is advancing through agency rulemaking even as broad market-structure law stalls. For anyone hoping to issue a US stablecoin, the message is now clear: the door is open, but only to those who can meet a bank's standards to walk through it.
