What happened
The Federal Reserve on Wednesday opened two proposals for public comment that translate the GENIUS Act into working rules for stablecoin issuers it supervises, per Decrypt. The first proposal sets the reserve and capital bar: issuers must back tokens fully with safe assets, a standard that closes the door on fractional reserves and forces transparency on what sits behind each dollar of circulating supply.
The second creates an application process for banks that want to issue payment stablecoins, which is the piece US bank holding companies have been waiting on since the GENIUS Act cleared Congress. The Fed did not name specific issuers in the announcement, and the proposals apply to entities under its direct supervision rather than the entire stablecoin market. Comment periods are now open.
The rules take effect only after the Fed reviews submissions and finalizes text, a process that historically runs six to nine months for banking rules of this weight.
Why it matters
This is the operational scaffolding around a law that has been sitting in a policy vacuum since it passed. Congress wrote the GENIUS Act to give stablecoins a federal home. The Fed's job was to define what compliance actually looks like, and until Wednesday, issuers and banks had a statute but no rulebook.
Now they have a draft. The reserve rule matters because it sets the audit floor. Any Fed-supervised issuer will need to prove full backing in safe assets, which means Treasuries, cash at the Fed, and instruments the Fed will list in the final text.