Fed Proposes GENIUS Act Stablecoin Rules With 2% Capital Charge to Ensure Par Redemption

Reserves and Tiered Capital Rules

Stablecoins can only earn their place in the payment system if holders are made whole at par, quickly, even under stress — and that premise, spelled out by Governor Michael Barr in his statement accompanying the package, is what the Federal Reserve's two GENIUS Act rule proposals published Thursday set out to enforce. The board proposed reserve, capital and risk-management rules for the stablecoin issuers it supervises, alongside an application process for state member banks seeking to issue payment stablecoins through a subsidiary. Per the Fed's own announcement, a 60-day comment window opens on Federal Register publication. The rules would capture two groups, according to the accompanying staff memo: stablecoin-issuing subsidiaries of insured state member banks, and uninsured, state-chartered issuers holding at least $10 billion of stablecoins outstanding that opt into Fed supervision. The reserve mandate is strict: eligible reserves must equal at least the par value of outstanding tokens at all times. Qualifying assets include cash, Federal Reserve balances, demand deposits, Treasuries with 93 days or less to maturity, certain overnight repo and reverse repo, funds invested only in those assets, and tokenized versions of some of them — a structure now most commonly issued on Ethereum. Redemptions must settle within two business days unless a safe harbor applies. The capital architecture scales down with size: an operational-risk charge of 2% on the first $20 billion of stablecoins outstanding, 1.5% on the next $30 billion and 1% above $50 billion. A second charge equals 25% of an issuer's three-year average revenue from activities outside its reserves, while reserves held as uninsured deposits or undercollateralized reverse repos carry a separate 2% requirement. An issuer that misses its minimum at a quarter's end must file a remediation plan; if it is still short a quarter later, it must liquidate reserves and redeem outstanding tokens.

Yield Presumption and Barr's Objection

The statute prohibits issuers from paying holders interest or yield merely for holding the token, and the Fed's second proposal extends that prohibition one layer out. Mirroring the Comptroller of the Currency's own companion text, the board would presume an issuer is paying prohibited yield whenever it pays an affiliate or a “related third party” — a group spanning yield-as-a-service firms and white-label partners — that in turn pays holders of the issuer's tokens, under the board's yield-presumption proposal. The presumption is rebuttable in writing. Where that net does and does not reach is already a live question: returns from concentrated-liquidity farming on automated market makers, and yield-bearing wrappers built on liquid-restaking models such as Ether.fi (ETHFI), go unaddressed in the text — a gap the comment period may force the board to confront. The economics are not abstract: yield on stablecoin holdings was the central battleground of the Clarity Act, where banks pushed to curb rewards before the bill stalled in the Senate this month. Barr endorsed the package but used his statement to flag one statutory limit: the GENIUS Act would let the Fed act on an issuer's anti-money-laundering lapse only where it is “significant or systemic.” Barr wrote that he is concerned the standard “may have unknown effects” on the board's ability to substantiate that institutions establish and maintain compliant programs — the same objection he raised against the Fed's July bank AML proposal. He also asked that the record seek comment on interest-rate and currency-risk exposure, and said a final rule must make every holder's redemption right explicit. The companion application proposal, for its part, would require applicant banks to file business plans and financial information, with appeal and hearing procedures mapped through to a final decision. Readers tracking the market in real time can follow live spot and futures prices on MEXC.

Jan. 18, 2027 Effective Date

Our reading of the primary documents: both texts are proposals, not final rules — nothing binds an issuer until the board votes after the 60-day comment window closes. The statute beneath them carries a hard clock, however. The GENIUS Act enters force on Jan. 18, 2027 — or 120 days after final rules are issued, whichever comes first — and it will bind exactly the entities these proposals cover, Fed-supervised issuers and bank subsidiaries. The framework targets issuance and reserve integrity rather than secondary trading volume, so the market consequences should route through issuer cost structures, not trading venues. In Barr's own framing, the work is not done: stablecoins can become a trusted payment instrument only with continued additional effort.