If you hold a dollar stablecoin, a crypto token built to be worth exactly $1, the Federal Reserve has written down what the issuers it will oversee would owe you: your dollar within two business days, and, if an issuer's reserves come up short, a fast wind-down designed so every holder takes the same haircut, instead of the quickest getting paid in full.

The 421-page proposal goes into the Federal Register on Tuesday, September 29. All seven Fed governors voted for it on September 24. The public has 60 days to comment.

Why the Fed wants a broken coin shut quickly

An issuer promises $1 for every coin. When its reserves fall short, each holder paid a full dollar leaves less for everyone still holding. The proposal does the math in a footnote:

For example, a PPSI that issues a payment stablecoin with outstanding issuance of $100 million and a $5 million shortfall in reserve assets can theoretically redeem all stablecoin holders at $0.95 for each payment stablecoin. However, if that PPSI processes $35 million in redemptions at par, and the shortfall remains $5 million, the PPSI could only redeem all stablecoin holders at $0.92 for each payment stablecoin.

A PPSI is the law's term for a permitted payment stablecoin issuer. In the Fed's example, the people who got out first cost the people who stayed about three cents a coin. And on a public blockchain, everyone can watch the first redemptions happen.

So the proposal sets a short fuse. Reserves must cover the face value of every coin at all times, checked at least once a day at 5 p.m. Within 24 hours of falling short, an issuer must tell the Fed and file a plan to fix it. By 5 p.m. on the business day after that deadline, it must begin liquidating all its reserves and redeeming every coin, unless it has restored full backing or the Fed directs it to follow its plan. While it liquidates it may not charge redemption fees or issue new coins.

The aim, the Fed says, is that holders "will bear any losses from a reserve deficit on a pro-rata basis, and avoid disproportionate losses to those holders who did not rush to redeem."

Two business days, with exceptions

Each issuer would publish a redemption policy with a deadline no longer than two business days after you ask. It must redeem any amount of one coin or more, "subject to appropriate customer screening and onboarding". Every fee for buying or redeeming must be disclosed, with seven calendar days' notice of any change. Redemption fees are not capped in ordinary times; the Fed asks whether they should be.

Three things narrow the promise:

It binds the issuer, not the exchange. The redemption rules "would not apply to secondary market trading". Buy on an exchange and sell back there, and no two-day clock applies. The Fed notes that "many stablecoin issuers have issuance policies that may limit direct interaction with retail stablecoin holders", and asks whether to require more.
Some delays are excused: extra time for anti-money-laundering and sanctions checks, or delays outside the issuer's control. A crowd at the door is not an excuse; the safe harbor does not cover delays "owed solely to a higher-than-expected number of redemption requests".
The Fed can extend the deadline itself if an issuer's safety and soundness is threatened, if it threatens financial stability, or if an extension is "otherwise in the public interest". One question floats seven calendar days when redemption demands top 10 percent of an issuer's coins in a day.

Governor Michael S. Barr voted yes, but wrote that it will be important for "universal redemption rights" to be clear in the final rule.

Paying you to hold it

The GENIUS Act, the 2025 stablecoin law, already bars issuers from paying interest or yield just for holding a coin. The Fed targets the workaround, following an approach the Office of the Comptroller of the Currency proposed on March 2, 2026: it would presume a violation when an issuer pays an affiliate or a "related third party" that in turn pays holders. That means firms offering yield to holders as a service, and brands whose coins the issuer mints under their name.

An issuer could rebut the presumption in writing; other arrangements would be judged case by case. What the Fed says it is not after: "The prohibition is not intended to prevent a merchant from independently offering a discount to a payment stablecoin holder for using payment stablecoins."

Whose coins this covers

For now, nobody's. The Fed would supervise stablecoin subsidiaries of insured state-chartered banks that are members of the Federal Reserve System (703 at the end of 2025), plus state-approved issuers that are uninsured depository institutions with more than $10 billion in coins outstanding, unless they win a waiver. The proposal says "no Board-supervised bank currently owns a stablecoin issuer".

It sizes the market at about $317 billion in April 2026. Citing an outside source, it puts Tether's USDT at roughly 58 percent and Circle's USDC at about 24-25 percent in late 2025. It does not say either would fall under the Fed. The Comptroller, the Federal Deposit Insurance Corporation and the National Credit Union Administration have proposed rules for the issuers they will oversee.

One piece reaches every licensed issuer, whoever supervises it: a ban on tying, making a customer buy another paid product from the issuer, or shun a competitor, as the price of its services. And no Fed-supervised issuer could suggest its coins are federally guaranteed or insured. By the law's own definition, a payment stablecoin is not a bank deposit.

The dates

September 29, 2026. Both proposals publish: this one (Docket R-1899) and a companion on how member banks apply to form a stablecoin subsidiary (Docket R-1900).
November 30, 2026. The likely comment deadline, by Hugin's count. Sixty days after publication is Saturday, November 28, the Saturday after Thanksgiving, and Federal Register rules move a deadline that lands on a weekend to the next business day. The printed notice will state the date. File before the holiday week.
January 18, 2027. The latest the GENIUS Act can take effect, 18 months after enactment; it starts sooner if regulators finish final rules more than 120 days before then.
July 18, 2028. Exchanges and other digital-asset service providers may no longer offer or sell stablecoins not issued by a permitted issuer.

How to comment

Cite Docket No. R-1899 and RIN 7100-AH29. The Fed prefers its comment site, federalreserve.gov/apps/proposals; email goes to publiccomments@frb.gov with the docket number in the subject line.

The proposal asks 254 numbered questions. For a holder, the closest are Question 97 (is two business days right), Question 102 (limits on redemption fees) and Question 107 (whether issuers must deal with retail holders directly). Comments are posted "without change and will not be modified to remove personal or business information", so leave out anything private.

What the record does not say

Which coins the Fed will supervise. None today, and the proposal names none that would be.
The comment deadline. November 30 is Hugin's count under the Federal Register's weekend rule; the public-inspection copy leaves the date blank.
What any holder would get back in a failure. The 95- and 92-cent figures are the Fed's illustration, not an estimate for any coin.
Whether the final rule keeps any of this. It is a proposal, and on timing alone the Fed asks about one to more than seven calendar days.
The other regulators' rules. Hugin did not read the Comptroller's, FDIC's or NCUA's proposals, or this proposal's capital and custody sections in full.