The GENIUS Act is evolving from static legislative text into a synchronized regulatory architecture executed through parallel rulemaking. Three federal agencies are currently constructing distinct, interlocking layers of the U.S. stablecoins market: the Federal Reserve is defining the underlying technical plumbing, the Treasury is establishing rigorous standards for issuance, and the SEC is governing the offering process. Rather than merely drafting rules, these regulators are simultaneously building the foundational infrastructure that will dictate how these digital assets operate within the broader regulated financial system.
The Federal Reserve’s contribution arrived on September 24, 2026, via two Notices of Proposed Rulemaking (NPRMs) that establish the rigorous standards for Board-supervised Permitted Payment Stablecoin Issuers (PPSIs). The first proposal, proposed federal reserve rules, mandates a strict 1:1 reserve backing requirement, utilizing only high-quality, liquid assets such as U.S. currency, Treasury bills, and central bank reserves. It explicitly bans rehypothecation and imposes standardized capital requirements tailored to the issuer’s business model, rather than traditional bank-style risk-based metrics. The second proposal outlines a streamlined, albeit demanding, application process for insured state member bank subsidiaries to enter the space, promising a 120-day approval window for those that can document their reserve management and financial plans.
This regulatory construction site is crowded. The Treasury’s treasury issuance standards, which govern the issuance and sale of stablecoins, and the SEC’s crypto asset disclosure framework, which creates a disclosure path for investment contracts, are both nearing their comment deadlines. With the Treasury deadline on October 19 and the SEC deadline on October 20, the industry has a 72-hour window to finalize its feedback on the issuance and offering layers before the Fed’s November 30 deadline closes the loop on the operational plumbing.
The complexity of this assembly is compounded by a sudden shift in the SEC’s internal dynamics. The departure of Commissioner Hester Peirce on October 2, 2026, has left the agency with only two commissioners: Chair Paul Atkins and Commissioner Mark Uyeda. As noted in our previous regulatory coverage, this creates a significant quorum risk. Because any regulatory action now requires unanimous agreement, the future of the SEC’s crypto framework—and the safe harbor provisions Peirce championed—rests entirely on the consensus of two individuals. This bottleneck introduces a layer of uncertainty that contrasts sharply with the Fed’s more mechanical, bank-centric approach.
The Fed’s framework suggests a future where stablecoin issuance is a highly exclusive, bank-dominated activity. With only 703 insured state member banks currently under Fed supervision, and estimates suggesting that perhaps only 5 to 10 will seek PPSI subsidiary approval, the regulatory barrier to entry is intentionally high. By offering preemption of state charter requirements for these subsidiaries, the Fed is effectively creating a federal “gold standard” for stablecoin issuers, signaling that the intended market structure is one where stablecoins are treated as bank-grade liabilities rather than experimental digital assets.
This shift aligns with the broader trend toward on-chain institutional finance. As we explored in our on-chain settlement analysis, the infrastructure being built by entities like the DTCC, NYSE, and Nasdaq relies on the assumption that tokenized assets will eventually move across regulated, stable rails. The GENIUS Act is the legislative catalyst for this transition, but the Fed’s NPRMs are the actual blueprints for the pipes. The goal is to ensure that when the January 18, 2027, effective date arrives, the system is not just compliant, but operationally robust.
When the regulatory apparatus is fully assembled, the result will be a tightly controlled environment where the issuance, offering, and operational management of stablecoins are governed by a unified, albeit multi-agency, set of rules. The parallel rulemaking process is a high-stakes exercise in coordination, where the Fed provides the foundation, the Treasury sets the issuance terms, and the SEC defines the investment boundaries. For the institutions currently positioning themselves for this new era, the message is clear: the era of regulatory ambiguity is ending, and the era of bank-grade, statute-compliant plumbing has begun.