The Federal Reserve’s September 24 stablecoin proposals make an important distinction: an asset can qualify as a reserve without being immediately usable to meet a redemption wave.
That turns stablecoin design into a treasury-control problem. The central questions are not only what sits in the reserve, but who owns it, where it is held, how often it is valued, how quickly it can become cash and whether the operating system can process redemptions when volumes spike.
The judgment
- Implication: One-to-one backing is necessary but not sufficient. Stablecoin liquidity depends on legal segregation, intraday valuation, monetization capacity and a functioning redemption process.
- What would change the conclusion: A final rule with a prescriptive cash minimum, tested stress-liquidity standard and unambiguous direct-redemption rights could narrow the operating uncertainty. The current proposals ask for comment on several of those points.
- Management action: Any organization accepting or holding stablecoins should set approved-issuer, custodian, concentration and redemption-testing rules before treating the balance as cash or a cash equivalent for internal liquidity planning.
What the Fed proposed
The Board issued two proposals under the GENIUS Act. The broader proposal covers Board-supervised permitted payment stablecoin issuers, reserve custodians and certain related bank activities. The second would establish an application process for Board-supervised banks seeking approval for a subsidiary to issue payment stablecoins.
Under the broader proposal, reserve assets would have to be identifiable, segregated from the issuer’s other assets and unavailable to other creditors until stablecoins are redeemed at par. Their fair value would have to equal or exceed outstanding issuance at all times.
The proposal would require issuers to record reserve fair value at least once each calendar day at 5 p.m. in the time zone of the supervising Federal Reserve Bank. The document says more frequent assessments may be necessary when the cushion is narrow. It would also define timely redemption as no later than two business days after a request, while allowing issuers to promise a shorter period.
The Fed also proposed risk-management, audit, reporting and standardized capital requirements. Its analysis treats operational failure as a financial risk because a technology or processing breakdown can create a mismatch between reserve assets and tokens in circulation. Comments are due 60 days after the proposals are published in the Federal Register.
Reported fact: These are proposed rules, not final requirements. Numbers & Judgment analysis: Their design still provides a useful control framework for corporate treasurers deciding whether and how stablecoins belong in working-capital operations.
Eligible assets are not the same as available cash
Short-term Treasury securities can be high quality and highly liquid. They still have to be valued, sold or financed, settled and converted into the form needed for a redemption. Those steps introduce timing, market, counterparty and operational dependencies.
The Fed’s proposal recognizes that gap. It asks whether issuers should hold a minimum share in on-demand deposits or Federal Reserve balances, whether maturity profiles should be diversified and whether readily available reserves should cover outflows projected by an internal liquidity stress test.
This is the same distinction behind liquidity drills for faster discount-window access: nominal capacity matters less than tested time-to-cash. A reserve policy should therefore specify the conversion path, not merely list eligible instruments.
The one-to-one ratio needs a control system
A single reserve ratio can hide several different risks. Finance teams should be able to reconcile at least four ledgers:
- Tokens outstanding. Issuance, burns, pending transactions and any tokens locked by incident response.
- Reserve ownership. Legal title, account location, encumbrances and whether assets are protected from claims by other creditors.
- Reserve valuation. Fair value, accrued interest, settlement receivables and any cushion above par liabilities.
- Redemption obligations. Requests received, customer screening status, cash due, processing exceptions and settlement completion.
The regulatory proposal requires documented ownership and appropriate internal controls. For management, the practical test is whether those four views reconcile quickly enough to support a daily close and an intraday exception process. A policy that reaches one-to-one only at a convenient measurement time would not address the proposal’s at-all-times standard.
A two-day promise is an operating-capacity promise
Redemption speed is partly a portfolio question and partly a throughput question. Even cash reserves do not solve weak customer onboarding, wallet screening, approval queues, banking cutoffs, key-management failures or reconciliation breaks.
That is why the proposal’s treatment of custodial assets, private keys and operational risk belongs in the same conversation as reserve composition. The control design resembles other high-stakes financial-system cutovers: map the critical path, define escalation authority, preserve evidence and test the first live cycles. The same disciplines appear in Treasury’s auction-system control test.
For an issuer, a redemption drill should measure more than whether a Treasury bill can be sold. It should track request receipt to final cash settlement, including the slowest handoff. For a corporate holder, the equivalent test is whether a material balance can be redeemed into an operating bank account inside the organization’s required liquidity window.
What corporate treasury policy should cover
An organization does not need to issue a stablecoin to inherit stablecoin risk. It can acquire that exposure by accepting customer payments, using a payment platform that settles in tokens or holding balances with a treasury service provider.
A minimum policy should address:
- Purpose: payment rail, settlement bridge or investment balance. Do not let a transaction balance become a yield position by default.
- Approved exposure: issuer, token, custodian, blockchain and banking counterparties, with concentration limits that reflect correlated failure.
- Liquidity classification: classify balances by tested redemption time and failure dependencies, not by the word “stable.”
- Controls: wallet permissions, transaction approval, address allowlists, reconciliation ownership and incident escalation.
- Accounting and tax: confirm treatment with advisers rather than assuming token balances are equivalent to deposits.
- Exit plan: pre-approved conversion routes, backup custodians or venues and management authority during a market or issuer-specific disruption.
The free Forecast Scenario Planner can help separate a normal-redemption case from slower-settlement and access-loss cases without forcing one false point estimate.
What to watch in the final rule
Three choices will matter for liquidity design: whether the Fed sets a prescriptive minimum for immediately available assets; how any stress test translates into a required buffer; and how direct-redemption rights work for holders who are not already customers of an issuer.
Governor Michael Barr’s statement makes the objective explicit: stablecoins must remain promptly redeemable at par during market stress and strain at the issuer or a related entity. The proposal is important because it begins to translate that objective into finance architecture. The final rule will determine how much of that architecture is mandatory and how much remains principles-based.
Sources and method
- Federal Reserve Board press release, September 24, 2026.
- Proposed rule: Implementing the Federal Reserve Board’s Responsibilities under the GENIUS Act, including reserve, redemption, custody, risk-management and capital provisions.
- Proposed application procedures for Board-supervised insured depository institutions.
- Statement by Governor Michael S. Barr, September 24, 2026.
Descriptions of the proposals are reported facts from Federal Reserve materials. Treasury-policy implications, control recommendations and judgments about liquidity classification are Numbers & Judgment analysis.
