Fed Proposes Stablecoin Rules With Lenient Reserve Caps But Strict Capital Requirements

The Federal Reserve has released its proposed stablecoin oversight framework under the GENIUS Act, becoming the third federal regulator to do so after the Office of the Comptroller of the Currency (OCC) and the Federal Deposit Insurance Corporation (FDIC). The proposal applies to a narrower population than those of its peers: stablecoin subsidiaries of state-chartered banks that are Federal Reserve System members, plus uninsured state-chartered depository institutions such as Wyoming’s special-purpose banks, once their issuance crosses $10 billion. Most major issuers currently hold state or national trust charters and therefore fall under OCC jurisdiction, not the Fed’s.

On reserves, the Fed’s proposal is markedly less prescriptive than its counterparts. The OCC and FDIC each proposed capping reserves held at any single financial institution at 40%, and the OCC further required that at least 10% be held in bank or Fed accounts alongside a 20-day average maturity ceiling. The Fed proposes none of those numerical constraints. Its reserve rules ask issuers to diversify sufficiently to remain fully backed under stress conditions, describe reserve composition as “predominantly” Treasuries, and leave the precise parameters open to consultation responses.

Where the Fed breaks from leniency is on capital, where it takes the most prescriptive stance among the three regulators. The practical effect for operators is a bifurcated compliance landscape: charter type and issuance scale determine which rulebook applies, and the Fed’s version will be largely irrelevant to today’s largest issuers unless their structure or scale changes. Whether the consultation phase narrows the Fed’s currently open-ended reserve language is the critical variable to watch as the rulemaking progresses.