The Fed Wrote the Bank-Stablecoin Rulebook — and Regulation Gets Cheaper as You Scale

The Federal Reserve on Thursday proposed the two rules that turn the GENIUS Act from law into operating machinery: one setting reserve, capital, risk-management and custody standards for the stablecoin issuers it supervises, the other opening a formal application path for banks to issue their own dollar-backed tokens. Both proposals now sit in a 60-day comment window that begins when they are published in the Federal Register — the first time the market has seen exactly how the Fed intends to supervise dollar tokens, and the fine print favors the issuers big enough to absorb it.

The rulebook in four requirements

The Fed's release puts 'Board-supervised payment stablecoin issuers' under a full reserve mandate: every token outstanding must be backed one-to-one by permissible reserve assets at all times, not merely on reporting dates. The eligible list is the boring end of the spectrum — cash, balances at the Federal Reserve, demand deposits, Treasuries maturing in 93 days or less, certain overnight repurchase agreements, funds invested only in those assets, and tokenized versions of some of them, according to the Board's staff memo as reported by Unchained. Reserves must be segregated from the issuer's other assets, redemptions must generally settle within two business days, and issuers would publish monthly reserve disclosures certified by their chief executive and chief financial officers.

Coverage reaches two groups, according to the staff memo: stablecoin-issuing subsidiaries of insured state member banks, and uninsured state-chartered issuers with at least $10 billion of stablecoins outstanding that opt into Fed supervision. That is the market's upper echelon. The dollar stablecoin market runs about $300 billion, per a September White House economic analysis cited by crypto.news — and only Tether and Circle sit near the opt-in threshold today.

Capital gets cheaper as you scale

The operational-risk capital charge is where the proposal gets interesting. It would run at 2% on an issuer's first $20 billion of stablecoins outstanding, 1.5% on the next $30 billion, and 1% on anything above $50 billion, according to reporting on the staff memo from Unchained, The Block and others. Run the arithmetic on a hypothetical $60 billion issuer: $400 million on the first tranche, $450 million on the second, $100 million on the third — $950 million in total, an effective rate of about 1.6% that keeps falling with every billion added. A $10 billion issuer pays the full 2% on everything.

Two more charges sit on top. One equals 25% of an issuer's three-year average revenue from activities outside its reserves — a direct bite at the non-core businesses some issuers have built around their tokens. Reserves parked as uninsured deposits or undercollateralized reverse repos would carry a separate 2% capital requirement. Enforcement has teeth: an issuer that misses its capital minimum at a quarter's end must file a remediation plan, and if it is still short a quarter later it must liquidate its reserves and redeem every token outstanding.

The desk's read: this is a curve drawn with scale in mind, whether or not the Fed says so. A megabank running a stablecoin book measured in tens of billions would face a lower marginal charge than a startup issuer just getting started — regulation that gets cheaper as you grow is rare, and it tells you exactly who can afford to play. Governor Michael Barr backed the proposal, saying he was 'encouraged by provisions for reserve asset limitations, as well as transparent and standardized capital requirements,' but he questioned an anti-money-laundering provision that would let the Fed act only when a lapse is 'significant or systemic,' warning it could weaken the Board's ability to enforce compliant programs.

The application door is now open

The second proposal is the one banks have been waiting for: a tailored application process for Board-supervised banks to issue payment stablecoins through a subsidiary, with formal procedures for appeals and hearings. Applicants would submit business plans and financial information, and under the GENIUS Act the Fed gets 120 days to decide once an application is substantially complete — if it does not act, the application is deemed approved. The package also clarifies which stablecoin-related activities Board-supervised banks may engage in and sets rules for firms that safekeep backing assets.

The market did not wait for the paperwork. On Sept. 22 — two days before the Fed's proposals — SoFi announced stablecoin settlement was live across its full debit and credit card program on Mastercard's network, migrating a program expected to process more than $25 billion in annualized volume onto its SoFiUSD token, which SoFi Bank issued in December 2025 and backs 1:1 with cash reserves. SoFi says it is the first nationally chartered bank to reach that milestone. SoFi Bank is supervised by the OCC rather than the Fed, so it sits outside these particular proposals — but it is a working preview of the bank-issued-coin model the Fed is now formalizing.

Washington is counting on the demand

Two days before the Fed acted, Deputy Treasury Secretary Francis Brooke put a number on why Washington wants this to work. Speaking Sept. 22 at the Treasury Market Conference at the New York Fed, Brooke said stablecoin providers 'already own nearly $200 billion of Treasury bills and other close-to-maturity Treasury securities,' and that Treasury 'may see stablecoin providers continue to grow and add to their holdings' as GENIUS Act rules are completed. The Fed's 93-day Treasury cap is the mechanism that turns that wish into plumbing: every compliant dollar token is, by regulation, a buyer of short-dated U.S. government debt.

The administration is thinking bigger. Bloomberg reported Sept. 23 that the Treasury Department, State Department and the U.S. International Development Finance Corporation are discussing public-private ventures to promote dollar stablecoins abroad — with no countries, partners, funding or timeline disclosed — aimed at reinforcing dollar dominance and creating more Treasury buyers. The GENIUS Act itself, signed in July 2025, is expected to take effect on January 18, 2027, or 120 days after all primary regulators issue final rules, whichever comes first; the OCC is targeting a final rule by November.

The yield war moves to two continents

Both continents agree on one thing: stablecoin holders do not get paid. The GENIUS Act bars issuers from paying interest or yield solely for holding a token, and the Fed's proposal — mirroring an OCC draft — would presume an issuer is paying prohibited yield if it pays an affiliate or a 'related third party' that in turn pays holders. Issuers could rebut the presumption in writing, but the burden is theirs. The fight mattered enough to help sink the CLARITY Act: the Senate failed to invoke cloture on Sept. 15 in a 49-50 vote, well short of the 60 needed, and lead sponsor Senator Cynthia Lummis declared the effort over for the year.

Europe reached the same conclusion on the same day Brooke spoke. In its Sept. 22 response to the European Commission's MiCA review consultation, the European System of Central Banks said the payment of stablecoin remuneration 'should continue to be prohibited' — electronic money, it wrote, 'is intended to be used for making payments and not as a means of saving' — and urged lawmakers to close loopholes that let yield return through lending, staking or tri-party schemes.

The market isn't waiting for the final rule

Binance made its own bet on the regulated-token economy on Sept. 22: a $100 million investment in Circle through a private placement that closed Sept. 17 — 1,237,011 Class A shares at $80.84 each, about a 5% discount to the market price — alongside a new five-year commercial agreement to push USDC across its platform with explicit priority on emerging markets. Circle will pay Binance monthly incentive fees tied to qualifying USDC balances held through its wallet infrastructure.

What happens next is the comment period. Once the proposals hit the Federal Register, the industry gets 60 days to argue over the tier thresholds, the reserve-asset list and the anti-money-laundering standard — the last systematic chance to move the numbers before a final rule. Watch the OCC's expected November final rule, which could start the law's 120-day clock toward an effective date the January 18, 2027 statutory backstop would still govern. And watch which bank files the first subsidiary application. The law is done; the machinery is now being built in public.