The Board of Governors of the Federal Reserve System published a notice of proposed rulemaking titled Implementing the Federal Reserve Board's Responsibilities Under the GENIUS Act in the Federal Register on 29 September 2026, at 91 FR 61580, under Docket No. R-1899 and RIN 7100-AH29. The Board approved the proposal on 24 September 2026 together with a companion proposal setting application procedures for banks that seek to issue payment stablecoins. Both sit at the proposed rule stage and the comment period closes on 30 November 2026.
The proposal rests on the GENIUS Act, codified at 12 U.S.C. 5901 et seq. Section 4 of the Act, 12 U.S.C. 5903, supplies the permitted activities rule at section 4(a)(7), the tying prohibition at section 4(a)(8), and transition and waiver provisions for uninsured State-chartered institutions at section 4(d). Section 5, 12 U.S.C. 5904, governs applications by subsidiaries of insured State member banks. Section 7(e), 12 U.S.C. 5906, carries back-up enforcement authority in unusual and exigent circumstances, section 10, 12 U.S.C. 5909, addresses custodians, and section 16, 12 U.S.C. 5915, covers additional activities. The rule text would enter the Board's regulations as a new Regulation UU at 12 CFR part 247, with conforming amendments to 12 CFR parts 208, 211, 217, 225 and 263.
Board-supervised permitted payment stablecoin issuers, a class that takes in subsidiaries of insured State member banks and certain State-qualified issuers, would be confined to issuing and redeeming payment stablecoins, managing reserves and providing custodial services, and barred from lending or from issuing stablecoins as loan proceeds. Reserve holdings would face permissible asset, diversification and concentration limits, with reporting, certifications and stated remedies for non-compliance. Minimum capital would cover reserve-related credit risk, other financial risks and operational risk, with a separate de novo requirement. Issuers would also carry operational, managerial, information technology and security standards, enterprise-wide risk management, and Bank Secrecy Act, anti-money laundering and sanctions controls, and would face examination, reporting, audit and change-in-control rules. Board-supervised firms that safekeep the assets backing payment stablecoins, and Board-supervised banks weighing stablecoin activity, fall inside the same package.
The tying prohibition in section 4(a)(8) would reach every permitted payment stablecoin issuer, not only those the Board supervises. Dollar thresholds in the proposal would be indexed to nominal growth in gross domestic product rather than fixed. Section 4(d) carries transition and waiver provisions for uninsured State-chartered institutions. Comments close on 30 November 2026 and the Board has not announced an effective date for either proposal.
Licentium advises payment stablecoin issuers, custodians and banks on United States federal digital asset regulation, drawing on a partner network for US-licensed counsel work. Contact us to assess how the Board's proposal would apply to a planned or existing issuance programme. Work we undertake includes GENIUS Act regulatory pathway analysis, reserve and capital structuring, Bank Secrecy Act and sanctions programme design, change-in-control filings, and comment letter preparation for federal rulemakings.