The Federal Reserve released two draft stablecoin rules on September 24, one covering which banks can apply to issue a token and one setting reserve, capital and redemption terms for approved issuers. Only an insured state member bank can use the Fed's application route, and its subsidiary would face a $5 million capital floor plus a 2% charge on uninsured reserve deposits.
Only a bank subsidiary can use this route
The Federal Reserve published its two proposals at 2:30 p.m. Eastern time on September 24. The application notice, Docket R-1900, runs 60 pages; a separate 392-page notice implements reserve, capital, redemption and custody requirements under the GENIUS Act. Both are open for comment, not final rules, and the comment period closes 60 days after Federal Register publication, a date the notices had not yet supplied.
The application notice applies only to an insured state member bank seeking approval for a subsidiary to issue payment stablecoins. It does not give every fintech a direct route to the Fed — federal qualified issuers apply through the OCC, and state-qualified issuers apply through their state regulator instead. The bank, not a technology partner, is the applicant. Twenty-one financial institutions committed in September to a joint stablecoin venture targeting a launch in the first half of 2027, but that announcement does not by itself show which licensing path the eventual company will use.
The 120-day clock has conditions attached
Under the proposal, the Board would notify an applicant within 30 days whether its filing is substantially complete. The 120-day decision period then runs from the date a Reserve Bank received the final material needed for completeness, not from the initial filing date. A material change to the business plan or the applicant's financial condition can reset that clock. If the Board misses the 120-day deadline on a complete application, the statute's deemed-approval provision applies — but a denial is limited to a finding that the activities would be unsafe or unsound, with a hearing and appeal process attached.
Reserve choices change the capital bill
The Fed proposes a $5 million initial capital floor during a three-year de novo period, indexed to nominal U.S. GDP, applied as the higher of that floor or a calculated risk-based requirement. Separately, proposed section 247.17(a)(1) assigns a 2% capital charge to uninsured eligible deposits held as reserves — $5 million on a $250 million exposure, $20 million on $1 billion. The notice cites Circle's roughly $3.3 billion in uninsured USDC reserves at Silicon Valley Bank when regulators closed the lender in March 2023 as the risk this charge targets. The Fed also proposes a redemption rule capping timely redemption at two business days after a request.
A $10 billion line triggers a second test
A state-qualified issuer whose outstanding coins pass $10 billion would face a proposed 360-day transition to federal supervision unless it halts net new issuance above that line or secures a waiver. The issuer would have to notify the Board within five calendar days of crossing the threshold, complete a capital analysis within 270 days, and file any waiver request within 240 days. The Fed is separately asking whether that $10 billion measurement should use a point-in-time count or a rolling average.
Source: crypto.news
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