The U.S. Federal Reserve has moved on two proposals to implement the GENIUS Act for stablecoins, opening each to 60-day public comment Thursday. The move puts the central bank at the center of a push to regulate digital tokens that are tied to dollars, euros, pounds, or other currencies.
The GENIUS Act, passed last year, requires banking regulators and the Treasury Department to put regulations in place by July 2026. The Fed’s proposals cover capital and reserve requirements and the procedures for Fed-regulated banks issuing stablecoins. One proposal also addresses stablecoin rewards and third-party arrangements presumed to be prohibited interest or yield payments.
The GENIUS Act Timeline
| Date | Action |
|---|---|
| Last year | GENIUS Act passed |
| Thursday | Fed proposes two rules |
| July 2026 | Deadline for regulations |
What the GENIUS Act Does
The GENIUS Act requires banking regulators and the Treasury to put regulations in place by July 2026. The Fed’s proposals are part of that effort.
The proposals cover capital and reserve requirements, which determine how much money banks must hold against the stablecoins they issue. They also cover the procedures for Fed-regulated banks issuing stablecoins, meaning banks will need to follow specific steps when they create or redeem these tokens.
One proposal specifically addresses stablecoin rewards and third-party arrangements. Rewards are payments for holding stablecoins. Third-party arrangements are agreements between a stablecoin issuer and another party.
The Reward Proposal
The reward proposal is notable because it deals with payments that could be considered interest or yield. The Fed’s approach is consistent with the OCC’s proposal, according to the Fed.
Fed Governor Michael Barr said: “Stablecoins will only be stable if they can be reliably and promptly redeemed at par in a range of conditions.”
The Digital Asset Market Clarity Act failed, leaving the GENIUS Act as the primary law governing stablecoin rewards. That means the OCC’s proposal remains the key rule for rewards, even though the Fed’s approach echoes it.
How the Rewards Rule Works
The OCC’s proposal treats certain third-party arrangements as presumed prohibited interest or yield payments. The Fed’s approach is consistent with that proposal, which suggests smaller banks and crypto firms can still offer rewards through third-party arrangements.
The key difference is that the OCC’s proposal applies to national banks, while the Fed’s applies to Fed-regulated banks. The overlap means both sets of rules will likely converge, though the final regulations will determine whether that happens.
Other Regulators Moving
The Treasury Department proposed its part of the GENIUS implementation last month. The FDIC began the process in December as the first agency to set its part of the law into regulations.
Multiple agencies proposed user identification requirements similar to other regulated financial firms in June. These requirements apply to stablecoin issuers, exchanges, and custodians.
| Agency | Action |
|---|---|
| Fed | Proposed two rules |
| OCC | Proposed rewards rules |
| Treasury | Proposed its part |
| FDIC | Began in December |
| Other agencies | Proposed ID requirements |
The Public Comment Period
The 60-day comment period gives stakeholders time to respond to the proposals. Banks, crypto firms, and consumer groups will likely weigh in on the details.
The comments will help shape the final rules, which the Fed is expected to publish after several months of review.
What Happens Next
The Fed will review the comments and finalize the rules. The OCC will also finalize its rewards rules. The final regulations will determine whether the two sets of rules converge.
Banks will need to comply with both sets of rules, which could create some friction. The Fed’s rules apply to Fed-regulated banks, while the OCC’s apply to national banks.
The Broader Picture
The GENIUS Act is part of a broader push to regulate digital assets. The law applies to stablecoins.
The law requires regulations to be put in place by July 2026. The Fed’s proposals are part of that effort, and they are likely to shape the future of digital finance in the United States.
Where the paper stands
The paper backs small banks and stablecoin issuers against the Fed’s proposed rules and is against the big banks and firms that helped shape those rules. The paper opposes rules that raise the cost of entry for small businesses and protect the biggest players, and it supports oversight narrowly aimed at actual harm rather than broad new rulebooks.
The OCC’s proposal treats certain third-party arrangements as presumed prohibited interest or yield payments, and the Fed’s approach is consistent with it. The Digital Asset Market Clarity Act failed, leaving the GENIUS Act as the primary law governing stablecoin rewards. That leaves the OCC’s proposal as the key rule for rewards, even as the Fed moves toward its own set of rules.
The Fed’s rules apply to Fed-regulated banks, while the OCC’s apply to national banks. Both sets of rules are likely to converge, but the final regulations will determine whether that happens. Smaller banks and crypto firms may find themselves caught between two overlapping rulebooks, with compliance costs that fall hardest on the least able to bear them.
Key Facts
- The GENIUS Act passed last year
- Regulations are required by July 2026
- The Fed proposed two rules Thursday
- Comments are open for 60 days
- The OCC’s approach is consistent with the Fed’s
- The Digital Asset Market Clarity Act failed
The GENIUS Act requires banking regulators and the Treasury to put regulations in place by July 2026. The Fed’s proposals are part of that effort, and they are likely to shape the future of digital finance in the United States.
Source material: “U.S. Federal Reserve moves on proposals to implement GENIUS Act for stablecoins,” CoinDesk.
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