Fed's GENIUS Act Rules Rope in Stablecoins with Deal-Breaking Bans
Published Date: 9/29/2026
Proposed Rule
Summary
The Federal Reserve is rolling out new rules to manage stablecoin issuers under the GENIUS Act, making sure these digital dollars play fair and safe. This affects companies that issue stablecoins and sets clear do's and don'ts, including a ban on tying deals. Comments on these rules are open until November 30, 2026, so stakeholders have time to weigh in before things change.
Analyzed Economic Effects
9 provisions identified: 5 benefits, 3 costs, 1 mixed.
Ban on Non‑PPSI Stablecoin Issuance
The GENIUS Act and the proposed rule say that only permitted payment stablecoin issuers (PPSIs) may issue payment stablecoins in the United States. Digital asset service providers may not offer or sell a payment stablecoin to a person in the United States unless the issuer is a PPSI or a foreign payment stablecoin issuer that meets certain requirements; the prohibition on offering or selling payment stablecoins that are not issued by PPSIs begins on July 18, 2028.
New Rules for Board‑Supervised PPSIs
The proposed rule would set substantive requirements for Board‑supervised permitted payment stablecoin issuers, covering permissible and prohibited activities, reserve assets (Proposed Sec. 247.11), redemption and fees (Proposed Sec. 247.12), risk management standards (Proposed Sec. 247.13), audits, reports, supervision (Proposed Sec. 247.14), and minimum capital (Proposed Secs. 247.15-18). The rule also proposes indexing certain thresholds by nominal GDP growth.
Custody and Segregation Rules for Custodians
Proposed subpart C would impose requirements on Board‑supervised custodians that provide safekeeping for payment stablecoin reserves, payment stablecoins used as collateral, or private keys, including covered asset custodial property requirements (Proposed Sec. 247.21) and segregation and omnibus account rules (Proposed Sec. 247.22). The proposal also includes a self‑custody hardware and software exclusion (Proposed Sec. 247.23).
Board Backup Enforcement for State‑Qualified PPSIs
The proposed rule implements the Board's backup enforcement authority over State‑qualified PPSIs in unusual and exigent circumstances (Proposed Sec. 247.50), meaning the Board could exercise enforcement authority over such PPSIs in those situations.
Transition and Waiver Process for Uninsured State Banks
The Board proposes rules implementing a transition and waiver process for uninsured State‑chartered depository institutions that seek to become State‑qualified PPSIs and transition to the Board's framework (Proposed Sec. 247.51).
Tying Prohibition for All PPSIs
The Board proposes to implement a prohibition on tying under section 4(a)(8) of the GENIUS Act that would apply to all permitted payment stablecoin issuers (PPSIs). The proposed rule includes a tying prohibition (Proposed Sec. 247.40) and sets out exceptions (Proposed Sec. 247.41).
How 'Outstanding Issuance Value' Is Counted
The Board proposes to define 'outstanding issuance value' as the total consolidated par value of all payment stablecoins issued by a PPSI and to exclude payment stablecoins issued by non‑consolidated affiliates. The Board explains this definition will determine which PPSIs are subject to reserve, examination, audit, and capital provisions in part 247.
State Member Bank Subsidiaries: State Authorization Preempted
Section 5(h) of the GENIUS Act, noted in the proposal as self‑executing, preempts State requirements for a charter, license, or other authorization for a subsidiary of a State member bank that is a Board‑supervised PPSI. Such subsidiaries would only need authorization from the Board rather than separate State authorizations.
State Consumer Protection Laws Preserved
Section 7(f)(4) of the GENIUS Act, as described in the proposal, states that nothing in the GENIUS Act preempts State consumer protection laws, including with respect to Board‑supervised PPSIs. States retain consumer protection authority.
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Key Dates
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