Fed Floats Sweeping Stablecoin Rulebook: Daily 1:1 Reserve Valuation, Two-Day Redemptions, Weekly Data Filings

The Federal Reserve on Sept. 24, 2026 released two proposed rules that would operationalize Congress' payment-stablecoin framework under the GENIUS Act, setting detailed, enforceable standards for reserves, redemptions, capital, custody and ongoing reporting, and laying out a separate application path for Fed-supervised banks to form stablecoin-issuing subsidiaries. Both proposals are open for public comment for 60 days after publication in the Federal Register. The rules would apply directly to payment stablecoin issuers and related banks under Federal Reserve supervision, and are expected to become a benchmark for banks, custodians and institutional clients assessing stablecoin businesses. Issuers would need to rebuild core workflows—reserve accounting, redemption operations, risk measurement and regulatory reporting—so compliance becomes part of daily production. 1) 1:1 reserves, turned into daily operating requirements The GENIUS Act requires payment stablecoins to be backed 1:1 by qualified assets. The Fed proposal specifies how that ratio must be measured and evidenced in day-to-day operations. Under proposed 12 CFR §247.11, issuers would be required to mark reserve assets to fair value at least once each day, as of 5:00 p.m. in the time zone of the supervising Federal Reserve Bank, and ensure reserve value never falls below the redemption value of outstanding stablecoins. Eligible reserve assets would be tightly limited, centered on instruments intended to convert to cash quickly: cash; balances held at Federal Reserve banks; qualifying bank deposits; U.S. Treasury securities with remaining maturities of 93 days or less; qualifying overnight repo and reverse repo; and certain money market funds. The proposal also converts "reserve management" from a portfolio-choice problem into a continuous cash-flow discipline. Deposits must meet specified institutional and account standards; repo must use eligible collateral and qualified counterparties; money market funds must themselves hold only short-term assets that fit within the reserve definition. Products marketed as "cash management" would not qualify if their underlying assets fail maturity, counterparty or liquidity tests. Operationally, issuers would need to replenish qualified assets as issuance grows, pre-position liquidity and manage maturity ladders as redemptions cluster, and manage valuation moves in short-term Treasuries and other reserve tools when rates change. The proposal also limits flexibility around excess reserves. Amounts above the statutory requirement could not be pulled out at will; the draft allows withdrawals of excess reserves only monthly, after review and certification, at month-end—reducing the ability to temporarily "window dress" reserves around reporting dates. Custody requirements are spelled out as well. Reserve custodians would need to maintain separate accounting records distinguishing customer reserves from the custodian's own assets, with books sufficient to verify each issuer's entitlement. Omnibus accounts would be permitted, but internal records would have to continuously identify each client's share. Custody arrangements would also need to support timely release of assets for redemptions—meaning issuers must contract for account structure, reconciliation cadence and operational retrieval paths, not merely pick a custodian that can hold Treasuries. 2) Two-business-day redemptions, set as a service standard Proposed §247.12 would require issuers to publicly disclose redemption policies and to complete payment no later than two business days after receiving a valid redemption request. Disclosures would have to explain submission methods, conditions and processing steps, and be kept continuously available, including via a website. The two-day standard is designed to make par redemptions verifiable, even though many users are accustomed to instant onchain transfers. The Fed proposal implicitly acknowledges that redemption is still an offchain process involving bank accounts, reserve liquidation, identity checks and sanctions screening, all constrained by banking hours and fiat rails. To meet the timeline, issuers would likely need pre-positioned cash, automated compliance checks, and operating arrangements with banks and custodians that can support night and weekend workflows. The rule could also reshape competition: institutional clients are expected to probe average settlement times in normal conditions, queue and prioritization mechanisms in stress, direct redemption thresholds, and intermediary fees. In effect, reserve quality answers "Where is the money?"; redemption operations answer "When do holders get it back?" While regulators could restrict redemptions under specific circumstances, the draft does not give issuers broad discretion to unilaterally halt redemptions. Fed Governor Michael Barr said the final rule should clearly articulate the right to redeem. Comment-period debate is likely to focus on stress liquidity, interest-rate risk and foreign-exchange risk. 3) Capital rules extend to operational and technical failure Because stablecoin reserve assets are intended to be short-term and highly liquid, the proposal focuses capital not only on credit risk but also on operational risk tied to outages, private-key failures, cyber incidents, third-party disruptions and processing errors—all of which can create compensation, remediation and legal costs. Under proposed §247.15, issuers would calculate credit-risk capital daily and operational-risk capital quarterly. New issuers would also face a minimum capital floor of $5 million, indexed to U.S. nominal GDP, with the Fed able to require higher levels based on scale and risk. The approach pulls technology architecture into prudential oversight. Concentration on a single cloud provider, a single custodian or a narrow set of blockchains could translate into higher assessed continuity risk. Multi-chain issuance increases complexity across nodes, smart contracts and reconciliation processes. Bank issuers may benefit from existing governance and capital frameworks but still face integration costs between core banking systems and blockchain infrastructure. Nonbank technology firms may need bank partners, outsourced arrangements or capital structures to operate inside the regulated perimeter. The proposal also addresses marketing conduct. Issuers would be barred from suggesting stablecoins are backed by the U.S. government, federal deposit insurance or other public credit support. They also would not be allowed to compensate users solely for holding, using or retaining stablecoins, consistent with the GENIUS Act's yield restrictions. How this applies to platform rewards, affiliate subsidies and bundled offerings could influence customer acquisition strategies. 4) Weekly and quarterly filings, built for continuous supervision Stablecoin oversight has often relied on monthly reserve snapshots. Proposed §247.14 would increase reporting intensity: confidential operational data would be submitted weekly; financial condition and income reports would be filed quarterly; CFO and director certifications would be required; and anti-money laundering and sanctions compliance would be certified annually. Weekly reporting is intended to give regulators near-continuous visibility into issuance, redemptions, reserve changes and operational anomalies instead of waiting for month-end. That requirement pushes issuers to enforce consistent data definitions across general ledgers, onchain monitoring, customer systems and custodial records. Any lag in reconciling onchain circulating supply with internal liability ledgers would surface quickly. More frequent reporting also increases accountability for boards and management. Once quarterly reports are certified, discrepancies are harder to dismiss as technical noise. Issuers would need clear governance over which system is the source of statutory numbers, who reviews reserves and circulating supply, how anomalies escalate, and how delays in third-party data are handled. For multi-chain tokens, a unified ledger for minting, burning and cross-chain transfers becomes a likely starting point for examinations. Barr also flagged a concern that a standard triggering action only when AML deficiencies are "material or systemic" could weaken day-to-day oversight. The episode underscores the dual-control model: reserve and capital rules protect financial integrity, while KYC, transaction monitoring and sanctions screening protect the legality of flows—and both must function inside the same operational chain. 5) A 120-day decision clock for bank subsidiary applications The second proposal lays out how Fed-supervised banks could apply to establish subsidiaries that issue stablecoins. Required materials would include a business plan, financials, governance, risk management, and detailed reserve and redemption protocols. After receiving an application, the Fed would determine within 30 days whether the submission is substantially complete. Once complete, the Fed would generally decide within 120 days, with a legal mechanism that deems an application approved if no decision is issued beyond that period. The timeline reduces a major uncertainty for banks considering issuance. Previously, banks often entered via custody, reserve banking or technology partnerships, with self-issuance dependent on supervisory dialogue and internal risk appetite. With published requirements and a defined clock, banks can plan capital, technology and partnerships around the approval timeline. The clock starts only when materials are complete, so front-end preparation still drives total time. Banks would need to specify target customers, expected issuance scale, blockchain platform, smart-contract governance, reserve custody, redemption channels and exit strategy, and integrate these into existing risk frameworks. If a third-party technology provider is involved, application materials would need to describe subcontracting, data access, disaster recovery and the bank's retained control rights. The Fed is positioned to evaluate the project as a full banking product, not a standalone blockchain procurement. 6) Stablecoin competition shifts toward operational execution The central move in the Fed draft is to break "safety and stability" into observable, reportable and accountable daily actions. While short-term Treasuries are likely to remain the dominant reserve asset, issuer differentiation is expected to increasingly show up in cash management, redemption speed, resilience, data consistency and collaboration across banking networks. Scale makes ad hoc manual controls harder to sustain. The proposals also sharpen the division of labor in the market: banks bring capital, accounts and compliance systems; technology firms bring blockchain engineering, wallets and developer tooling; payment institutions bring merchant networks and cross-border rails. A complete issuance stack requires integrating all three. The market may converge toward a small set of direct issuers supported by a broader ecosystem of reserve custodians, compliance technology providers, onchain monitoring firms and distribution channels. Service-level competition becomes more specific as well: custodians must support daily valuation, asset identification and rapid release; onchain monitoring providers must translate address activity into issuer- and regulator-usable account data; payment partners must reduce the time from redemption to bank-account receipt. Even where functions are outsourced, issuers remain responsible for the numbers submitted in weekly reports and quarterly certifications. Systems that tightly connect onchain supply, reserve accounts and customer redemption records are positioned to become core infrastructure. 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