Federal Reserve Proposes GENIUS Act Rules: What Stablecoin Accounting Teams Must Know

The US Federal Reserve published two wide-ranging proposed rules on 25 September 2026 to implement its portion of the Guiding and Establishing National Innovation for US Stablecoins (GENIUS) Act. Both proposals are open for public comment for 60 days. For accounting firms, CFOs, and finance teams that hold, transact, or report on stablecoins, the substance of these drafts has direct consequences for stablecoin accounting policy, balance-sheet classification, and the treatment of any reward or incentive arrangement attached to a stablecoin product.

Background: Why the Fed Is Moving Now

The GENIUS Act required US banking regulators and the Treasury Department to publish implementing regulations by July 2026. That deadline passed without final rules in place, but the agencies have been progressing steadily. The Federal Deposit Insurance Corporation published its portion first, and the Treasury Department followed last month with definitions covering who must comply with the law and what it means to issue a US stablecoin. The Fed's two proposals complete the next layer of that multi-agency framework.

The Digital Asset Market Clarity Act, which would have revised parts of the GENIUS Act, notably around the rewards question, failed to advance through Congress. That means the GENIUS Act as enacted now stands as the primary legal text governing stablecoin rewards, and the Fed's proposed interpretation of that text becomes correspondingly more important.

The Multi-Agency Sequence and Its Accounting Relevance

Each agency's rulemaking adds a piece of the compliance puzzle. The FDIC covered deposit-insurance treatment. Treasury defined the issuer perimeter. The Fed's proposals now address capital adequacy, reserve asset quality, permissible stablecoin activities at supervised banks, and the rewards prohibition. For accounting teams, each layer can affect a different line item: the FDIC's treatment may influence whether a stablecoin deposit sits on or off balance sheet for certain counterparties; the Fed's capital rules determine how much regulatory capital a bank-issuer must hold against outstanding stablecoin liabilities.

What the Two Proposals Actually Contain

The Fed has structured its rulemaking as two distinct documents, each with a separate 60-day comment period.

Proposal One: Capital, Reserves, Permitted Activities, and Rewards

The first and more expansive proposal covers the prudential framework for stablecoin issuance at Fed-supervised banks. Its core requirements are:

• Reserve asset quality: Stablecoins must be fully backed by the most liquid eligible assets. The proposal is designed, as Fed Governor Michael Barr stated publicly, so that tokens can be "reliably and promptly redeemed at par in a range of conditions," including periods of market stress when even otherwise liquid government debt may face pressure.
• Capital adequacy: Issuing banks must maintain a solid capital base to absorb stress at the issuer or its related entities, not just in normal market conditions.
• Permitted activities: The proposal defines which stablecoin-related activities a Fed-supervised bank may conduct, providing the internal compliance and accounting teams of those institutions with a definitive activity list against which to map their chart of accounts.
• Stablecoin rewards: The GENIUS Act prohibits issuers from paying interest or yield on stablecoins. The Fed's proposal sets out a presumption that certain arrangements involving third parties constitute prohibited interest or yield payments. The Fed explicitly aligned this approach with the position already set out by the Office of the Comptroller of the Currency. Narrow carve-outs appear to allow credit-card-style incentive programs, but the perimeter around those carve-outs is tight.

Proposal Two: Application and Approval Procedures

The second proposal establishes the procedural pathway for a regulated bank that wants to begin issuing its own stablecoin. Required submissions include a business plan, financial information, and relevant policies and procedures. From an accounting standpoint, the business-plan requirement signals that regulators expect a prospective issuer to demonstrate how it will account for stablecoin liabilities, manage reserve assets, and report outstanding tokens, before approval is granted, not after.

Stablecoin Accounting Implications Under US GAAP and IFRS

The proposals do not amend accounting standards directly, but they create a regulatory fact pattern that affects several accounting judgments.

Reserve Assets and Balance-Sheet Classification

Under US GAAP, the reserve assets backing a stablecoin program are typically held by the issuing entity and classified according to their nature: US Treasury bills, reverse repos, and central-bank deposits each carry different measurement and presentation requirements. ASC 350-60, the FASB's 2023 standard on crypto assets measured at fair value, does not apply to fiat-backed stablecoins held as monetary assets, but it does apply to any crypto assets the issuer itself holds. The Fed's insistence on the most liquid reserve assets effectively narrows the population of eligible backing instruments, which in turn simplifies the measurement question for many issuers: short-dated government securities are measured at amortised cost or fair value depending on classification intent, and the Fed's liquidity floor pushes issuers toward instruments where fair-value movements are minimal.

For firms under IFRS, IAS 7 and IFRS 9 govern the classification of reserve instruments. Entities applying IFRS crypto asset guidance should also monitor the IASB's ongoing work on digital assets, though no final standard has been issued that would override the monetary-asset treatment of fiat-backed stablecoins.

Stablecoin Liabilities: Par Redemption and Measurement

The Fed's emphasis on par redemption has an accounting corollary. If a stablecoin is redeemable at par on demand, the issuer's liability is a financial liability measured at face value, a straightforward treatment but one that requires robust liquidity management to sustain. Any premium or discount to par that emerges in secondary markets does not affect the issuer's liability measurement directly, but it is a signal auditors and finance teams should monitor as evidence of redemption risk.

Rewards Arrangements: Revenue, Liability, or Prohibited?

This is the most operationally sensitive area for accounting teams right now. The Fed's proposed presumption that certain third-party arrangements constitute prohibited yield payments creates a classification problem for firms that have been designing stablecoin rewards programs. If a program falls within the narrow permissible carve-out, the rewards are likely accounted for as a customer acquisition cost or a loyalty liability under ASC 606 or IFRS 15 principles, depending on the structure. If a program is ultimately found to constitute prohibited interest, any accruals already recognised may need to be reversed, and the regulatory exposure could trigger contingent liability disclosures under ASC 450 or IAS 37.

For context on how the rewards debate developed and why the CLARITY Act's failure matters, see our earlier analysis of how the stablecoin rewards debate unfolded under the CLARITY Act.

What Changes for Fed-Supervised Bank Issuers

Banks that hold a Fed charter and want to issue stablecoins will need to satisfy the application requirements in Proposal Two before going live. That procedural gate has several accounting and finance-function implications.

Pre-Application Readiness

The business-plan requirement means finance and accounting teams must be involved well before an issuance decision is made. Specifically, teams should be able to demonstrate:

• How outstanding stablecoin liabilities will be reported on the balance sheet and in regulatory capital calculations.
• How reserve assets will be selected, classified, and measured in line with both the Fed's liquidity requirements and applicable accounting standards.
• What internal controls exist to reconcile on-chain token supply with off-chain reserve balances on a real-time or near-real-time basis.
• How the institution will treat any reward or incentive arrangements within the permitted boundaries.

Ongoing Reporting Obligations

Once approved, issuing banks will face continuing obligations to demonstrate that outstanding tokens remain fully reserved. This creates a reconciliation requirement that sits at the intersection of the bank's core ledger, its custody or trust accounts holding reserve assets, and its blockchain-based token registry. Firms using digital asset accounting software should assess whether their current tooling can produce that three-way reconciliation automatically, because manual processes at scale carry material error risk.

Implications for Non-Bank Firms Holding or Transacting in Stablecoins

The Fed's proposals apply directly to Fed-supervised banks. However, corporate treasurers, investment funds, and accounting firms advising clients who hold stablecoins like USDC or similar instruments should track the final rules closely, for several reasons.

Counterparty Risk Assessment

If your firm holds stablecoins issued by a Fed-supervised bank, the reserve and capital requirements in Proposal One become part of your counterparty credit assessment. A stablecoin backed by a more tightly regulated reserve structure is a different risk profile from one issued under a lighter regime. Finance teams should update their counterparty risk frameworks once the rules are finalised.

Tax and Reporting Considerations

The narrow permissibility of stablecoin rewards creates a US tax question: if a rewards payment clears the regulatory threshold, is it ordinary income to the recipient? The IRS has not issued specific guidance on GENIUS Act-compliant rewards, but the general principle that accessions to wealth are gross income under IRC Section 61 applies unless an exclusion exists. Firms advising clients who participate in stablecoin rewards programs should flag this open point now. For a broader look at the Treasury's role in the GENIUS Act framework, our coverage of the stablecoin accounting implications of the Treasury's GENIUS Act guidance provides useful context.

The Comment Period: A Practical Opportunity

Both proposals carry 60-day public comment periods. For accounting firms and CFOs, submitting comments is not just a civic exercise. Regulators read practitioner submissions, and well-argued technical comments on accounting and reporting mechanics can influence how final rules are drafted. Specific points worth raising include the reconciliation frequency for reserve assets, the accounting treatment of permissible rewards, and whether the capital calculation for stablecoin liabilities should be aligned with existing leverage ratio or liquidity coverage ratio frameworks.

The timeline for finalisation is uncertain. The rulemaking process typically runs several months after comments close, sometimes longer. Given that the agencies are already past the GENIUS Act's statutory July 2026 deadline, there is political pressure to move efficiently, but the volume and complexity of comments received will inevitably shape the pace.

Frequently Asked Questions

Does ASC 350-60 apply to fiat-backed stablecoins held by a corporate treasury?

No. ASC 350-60 covers crypto assets that meet specific criteria, principally assets that do not convey enforceable claims on the issuer. A fiat-backed stablecoin redeemable at par is a financial asset, not a crypto asset under the FASB definition, and is measured under other applicable GAAP guidance, typically as a cash equivalent or a short-term financial instrument depending on its liquidity and redemption terms.

How should an issuing bank account for stablecoin liabilities under US GAAP?

Outstanding stablecoins redeemable at par on demand are financial liabilities. They are recorded at face value, which equals the par redemption amount. The corresponding reserve assets are recorded separately and classified based on their nature, short-dated Treasuries or repo instruments at amortised cost or fair value through other comprehensive income, depending on the bank's classification election under ASC 320 or ASC 825.

Are GENIUS Act-compliant stablecoin rewards taxable income for recipients?

The IRS has not issued specific guidance on rewards paid under the GENIUS Act framework. Under general principles, amounts received that represent accessions to wealth are gross income under IRC Section 61 unless a specific exclusion applies. Recipients of stablecoin rewards should treat them as ordinary income until the IRS provides contrary guidance, and firms advising those clients should document that position.

What should accounting firms do during the 60-day comment period?

Review both proposals with a focus on the reserve asset eligibility criteria, the capital treatment of stablecoin liabilities, and the definition of prohibited rewards arrangements. Assess whether any clients have existing reward programs that may fall within the presumed-prohibited category. Consider submitting technical comments on accounting and reporting mechanics, particularly around reconciliation frequency and the interaction with existing prudential capital frameworks.

When will the final rules take effect?

No effective date has been published. After the 60-day comment period closes, the Fed must review submissions, potentially revise the proposals, and publish final rules in the Federal Register. That process typically takes several months at minimum. Firms should treat the proposals as directionally binding for planning purposes while monitoring the Federal Register for the final text.

Source: CoinDesk Policy