For years, stablecoins lived mostly outside the banking system. A new set of federal rules is about to pull them inside it.

A stablecoin is a digital token designed to hold a steady value, usually one U.S. dollar, that moves on a blockchain instead of through traditional bank networks. Congress set the first federal framework for them in the GENIUS Act, signed in July 2025. Since then, regulators have been writing the detailed rules. The last major pieces arrived at the end of September.

What happened

On September 24, the Federal Reserve Board unanimously approved two proposals. They were published in the Federal Register on September 29.

The first sets the operating rules for stablecoin issuers the Fed supervises, including subsidiaries of state-chartered member banks. The second creates the application process a bank would follow to launch one. According to a Willkie Farr & Gallagher analysis, all 703 insured state member banks could potentially apply, though larger institutions are expected to go first.

A day later, on September 30, Treasury issued an interim final rule laying out how it will review state stablecoin regimes. Smaller issuers, those under $10 billion in outstanding tokens, can choose state oversight instead of federal if the state's rules are "substantially similar." The OCC, FDIC and NCUA have released their own versions for the banks and credit unions they oversee.

The key rules, in plain English

Full backing. Every stablecoin must be backed one-for-one at all times by safe assets: cash, balances at the Fed, and Treasury bills maturing in 93 days or less, among others.

Fast redemption. Issuers must publish their redemption policy and pay out within two business days of a request.

No interest. Issuers can't pay holders interest or yield just for holding the coin. That keeps stablecoins from competing directly with savings accounts.

Separate custody. Firms holding the backing assets must keep customer property segregated from their own.

No tying. An issuer can't require you to buy another product to get access to its stablecoin.

The proposal also sets a $5 million minimum capital floor for new issuers and annual full-scope exams, with weekly and quarterly reporting to the Fed.

Larger state-supervised issuers don't get to stay small forever. An issuer that grows past $10 billion in outstanding stablecoins must move under federal oversight within 360 days or stop issuing new tokens, unless it gets a waiver.

Fed Governor Michael Barr voted yes but sounded a note of caution. He said "further work will undoubtedly be required if stablecoins are to be reliable payment instruments."

Why it matters

The fight over who issues digital dollars is a fight over deposits. If businesses and consumers park money in stablecoins issued by tech or payments firms, banks lose cheap funding. These rules give banks a regulated path to issue their own, alongside the tokenized deposits we covered when Canada's largest banks began exploring a shared network.

For consumers, the important distinction is this: a regulated stablecoin is not a bank deposit. It is backed by reserves, but it is not covered by FDIC insurance the way your checking account is. The rules aim to make stablecoins safe and redeemable. They don't make them the same thing as money in the bank.

Banks also pushed back on the details. The American Bankers Association and 52 state bankers associations pressed Treasury to clarify the deadline for states to certify their regimes, and Treasury agreed that any filing by January 18, 2028, even an incomplete one, counts.

What to watch

Comments on the Fed and Treasury rules are due November 30, 2026. The GENIUS Act takes effect on January 18, 2027, or 120 days after regulators finalize their rules, whichever comes first.

After that, watch which banks actually apply. A bank-issued stablecoin is likely to show up first in business payments, such as cross-border transfers and treasury management, long before it reaches a consumer's phone.

Sources: Federal Reserve press release (Sept. 24) · Federal Register (Sept. 29) · ABA Banking Journal (Sept. 30) · PYMNTS (Sept. 24)

Beyond the Bank is for informational purposes only and is not financial, legal, or investment advice.

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