Federal Reserve Proposes Two Stablecoin Rule Packages and Outlines Eligibility

The Federal Reserve published two separate proposals on September 24, 2026 that together define how stablecoins backed by the U.S. dollar may be issued and supervised. One proposal creates an application pathway for insured state member banks that want to create a stablecoin subsidiary; the other sets operating requirements for the issuer, its reserves and its capital.

Application route for insured state member banks

Under the application proposal, an insured state member bank must submit a complete filing to the Federal Reserve. The Board will notify the bank within 30 days whether the filing is substantially complete. Once a complete application is received, the Board has 120 days to render a decision. If no decision is made within that period, the statute’s deemed‑approval provision would apply.

Key elements of the application include a business plan, financial information, governance policies, and details on how the bank will oversee the subsidiary. Control is defined by existing bank‑holding‑company standards – ownership of at least 25 % of voting securities, a majority of directors, or a controlling influence determined by the Board.

Operating requirements for stablecoin issuers

The operating proposal, issued under the GENIUS Act, outlines reserve‑backing, capital and redemption standards for any stablecoin issuer supervised by the Fed. A dollar of qualifying reserves must back each dollar of tokens in circulation, while a separate capital layer absorbs operational risks.

• Initial capital floor: $5 million for a newly approved issuer during its first three years, indexed to nominal U.S. GDP.
• Capital charge: a 2 % charge on uninsured reserve deposits (e.g., $20 million on a $1 billion exposure).
• Transition rule: issuers with more than $10 billion of outstanding tokens must transition over 360 days or cease net new issuance.

Who can qualify?

The GENIUS Act permits three domestic issuer categories:

1. A qualifying subsidiary of an insured depository institution approved by its primary federal regulator.
2. A federal qualified issuer approved by the Office of the Comptroller of the Currency.
3. A state‑qualified issuer approved by its state regulator.

Only insured state member banks can use the Fed’s application route; uninsured banks must seek approval from their state stablecoin regulator while remaining subject to existing Federal Reserve obligations.

Procedural safeguards

The proposals limit denial grounds to findings that the applicant’s activities would be unsafe or unsound under statutory factors. Applicants denied a complete filing may request a hearing and appeal. The 30‑day completeness notice and 120‑day decision window are intended to prevent indefinite regulatory delays.

Implications for upcoming stablecoin projects

Twenty‑one financial institutions announced a joint stablecoin venture slated for launch in early 2027. While the announcement signals intent, the legal structure of the venture will determine whether it can pursue the Fed’s insured‑bank pathway or must follow an alternative licensing route.