Fed Proposes GENIUS Act Rules for Payment Stablecoin Issuers

The Federal Reserve has proposed two rules under the GENIUS Act: one setting application requirements for insured state member banks seeking approval for a permitted payment stablecoin issuer (PPSI) subsidiary, and one governing Federal Reserve-supervised PPSIs, reserve-asset custody providers, tying restrictions, transition of state-supervised issuers, permissible digital-asset activity for supervised banking organizations, and capital treatment of a consolidated PPSI subsidiary. Separately, Treasury, on behalf of the Stablecoin Certification Review Committee, issued an interim final rule on certifying state stablecoin regimes as substantially similar to the federal framework — effective on issuance and allowing a placeholder submission within the one-year state deadline. Comments on both actions are due November 30, 2026.

Divergences from the OCC's earlier proposals matter to counsel and clients: principles-based rather than quantitative reserve diversification; reserves held directly or through a wholly owned, fully capitalized special-purpose vehicle; a ceiling on non-payment stablecoin activities requiring express Fed approval; standardized rather than individualized issuer capital; faster liquidation and redemption after a reserve shortfall; a rebuttable presumption against affiliate-paid yield; and deconsolidation with a CET1 deduction, with stablecoin exposures signaled as likely 100 percent risk-weighted. Counsel should model these differences for issuer and banking-client structures, test reserve and custody arrangements against the proposal, and position comment letters before the November 30 deadline; the SCRC's ownership and comparability rules remain unproposed.