Federal Reserve drafts new rules for stablecoin issuance by banks

How Banks Would Meet the Fed’s New Stablecoin Standards

On September 24, 2026, the Federal Reserve released two proposals outlining how insured state member banks could seek approval to issue dollar-backed stablecoins through subsidiaries. The announcements came from Washington as part of broader efforts to regulate digital assets while maintaining financial stability. The rules focus not only on reserve backing but also on governance, capital requirements, and oversight mechanisms for any bank-affiliated stablecoin project.

The first proposal allows qualifying banks to establish a stablecoin subsidiary under strict conditions, requiring the parent bank to maintain full responsibility for the token’s operations. The second proposal details standards for reserve composition, mandating that holdings consist primarily of cash, short-term Treasury securities, or other highly liquid assets with minimal credit risk. Both frameworks emphasize transparency, requiring regular public disclosures and independent audits to verify that tokens remain fully backed at all times.

To gain approval, a bank must demonstrate that its stablecoin subsidiary operates with separate capital and risk management systems, insulated from the parent institution’s other activities. The Fed proposes that issuers hold reserves equivalent to 100% of outstanding tokens, with monthly attestations from third-party auditors. Capital buffers would also be required, calibrated to the scale of the stablecoin’s circulation and potential redemption pressure during market stress.

What Happens If a Bank Fails to Comply?

Officials noted that the proposals aim to prevent runs on stablecoins by ensuring issuers can meet redemption demands even under adverse conditions. One Fed governor stated during a briefing that „the goal is not to stifle innovation but to ensure that any bank-issued digital dollar carries the same trust as physical currency.” The rules would apply only to state member banks, leaving national banks and non-bank entities under separate regulatory tracks.

Non-compliance could result in enforcement actions, including fines, restrictions on subsidiary activities, or forced winding down of the stablecoin program. The Fed reserves the right to halt issuance if reserves fall below required levels or if governance weaknesses are identified. Repeat violations might lead to broader sanctions against the parent bank, particularly if risks threaten the safety and soundness of the depository institution.

The proposals are open for public comment for 60 days, after which the Fed may revise the framework before finalizing. Industry observers suggest that only a handful of large, well-capitalized banks are likely to pursue approval initially, given the operational and compliance burdens. Still, the move signals a shift toward integrating regulated stablecoins into the traditional banking system under federal oversight.

Frequently Asked Questions

Can any bank issue a stablecoin under these rules? Only insured state member banks that meet the Fed’s capital, governance, and reserve requirements can apply to create a stablecoin subsidiary. National banks and non-bank financial firms are not covered by this specific proposal.

What assets can back a stablecoin under the Fed’s proposal? Reserves must consist of cash, short-term U. S. Treasury securities, or other highly liquid, low-risk instruments that can be quickly converted to cash without significant loss in value.

Will these rules apply to existing stablecoins like USDT or USDC? No, the proposals govern only bank-issued stablecoins created through subsidiaries of state member banks. Existing privately issued stablecoins remain under separate regulatory scrutiny.