A one-to-one reserve requirement answers the obvious question about a stablecoin: is there enough value behind the tokens to redeem them? It does not answer what happens when the issuer suffers an operational loss, which assets count as acceptable reserves, who can safeguard them or how a supervised bank gets permission to enter the business.

The Federal Reserve's September 24 package starts filling in those gaps. Both documents are proposals rather than final rules, and their scope is specifically tied to payment stablecoin issuers and banking organizations supervised by the Board.

The reserve is supposed to remain fully backed

Under the first proposal, Board-supervised payment stablecoin issuers would have to back outstanding tokens completely with permissible reserve assets. The Fed specifically points to short-term Treasury bills and other high-quality, liquid assets as examples.

That makes asset composition part of the prudential framework rather than treating every nominal dollar of reserves as equivalent. A reserve portfolio needs to remain usable when holders want their money back, including periods when redemption demand is less convenient for the issuer.

The proposal would also establish requirements for Board-supervised firms that safeguard stablecoin reserve assets. Custody sits one layer away from issuance, but a failure there can affect the same pool of assets that token holders depend on.

One-to-one reserves do not replace operating capital

The Fed is separately proposing standardized capital requirements designed to address certain credit and operational risks. In practical terms, the reserves backing the token and the resources available to absorb losses at the issuer perform different jobs.

Risk-management standards would sit alongside that capital framework. The proposal therefore reaches beyond the composition of the backing portfolio into how a supervised issuer is expected to manage the business around it.

Governor Michael Barr voted to support the proposal and highlighted several issues for the public-comment process. His statement points to interest-rate and foreign-exchange risks as areas that deserve examination and argues that redemption rights need to be clear in the eventual final framework. He also raised a separate concern about how anti-money-laundering deficiencies would be treated under related supervisory standards.

Banks do not simply get to switch stablecoin issuance on

The second proposal creates an application process for Board-supervised banks seeking to issue payment stablecoins through a subsidiary. Applicants would be expected to provide a business plan, financial information and other material needed for the Fed's review.

It also lays out procedures for appeals, hearings and final determinations. Meanwhile, the broader proposal would clarify which stablecoin-related activities are permissible for banks under Federal Reserve supervision.

That distinction leaves room for several roles inside the same market. A bank could be involved in safeguarding reserve assets or other stablecoin infrastructure without necessarily being the entity whose token is circulating.

There is still a rulemaking process ahead

The September 24 documents do not put these requirements into force immediately. Public comments will remain open for 60 days after publication in the Federal Register, and the Board can revise the proposals before issuing final rules.

The GENIUS Act established the federal legal framework for payment stablecoins in 2025. This stage is more mechanical: regulators now have to decide how reserve quality, capital, custody, risk controls and bank approvals work in practice.

For supervised issuers, the emerging model is increasingly clear even while the details remain under consultation. The token may sit on a blockchain, but the machinery behind it is starting to look much more like prudential financial infrastructure.