Fed Sets Strict Rules for Stablecoins as Regulatory Deadlines Loom
The Federal Reserve has taken a major step in shaping the future of stablecoins in the U.S. with the release of two Notices of Proposed Rulemaking (NPRMs) on September 24, 2026. These proposals aim to establish strict standards for Board-supervised Permitted Payment Stablecoin Issuers (PPSIs). The first proposal mandates a 1:1 reserve backing requirement using high-quality, liquid assets like U.S. currency, Treasury bills, and central bank reserves. It also bans rehypothecation and imposes capital requirements tailored to the issuer’s business model.
The second proposal outlines a streamlined but demanding application process for insured state member bank subsidiaries, promising a 120-day approval window for those that can document their reserve management and financial plans. The Federal Reserve’s framework suggests a future where stablecoin issuance is an exclusive, bank-dominated activity, with only 703 insured state member banks currently under Fed supervision. Estimates suggest that perhaps only 5 to 10 will seek PPSI subsidiary approval.
The regulatory construction site is crowded, with the Treasury and the SEC also playing key roles. The Treasury’s issuance standards and the SEC’s crypto asset disclosure framework are nearing their comment deadlines, with the Treasury deadline on October 19 and the SEC deadline on October 20. The Fed’s November 30 deadline will close the loop on the operational plumbing, creating a tightly controlled environment for stablecoins.
The SEC’s internal dynamics have shifted significantly with the departure of Commissioner Hester Peirce on October 2, 2026, leaving only two commissioners: Chair Paul Atkins and Commissioner Mark Uyeda. This creates a quorum risk, as any regulatory action now requires unanimous agreement, adding uncertainty to the SEC’s crypto framework. Despite this, the Fed’s approach remains mechanical and bank-centric, aiming to ensure that the system is operationally robust by the January 18, 2027, effective date.