Treasury to Finalize Stablecoin Rule on Jan. 7, Issuers Must Hold Full U.S. Treasury Reserves

The Rule and Its Requirements

WASHINGTON, Jan. 5: The Treasury Department will publish a final rule on Jan. 7 requiring the largest U.S. dollar stablecoin issuers to back every token with U.S. Treasury securities or cash held at federally insured American banks, according to two Treasury officials familiar with the rulemaking. The regulation, titled "Stablecoin Issuer Reserve and Redemption Requirements," will take effect on March 1 and will apply to any issuer whose tokens in circulation exceed $10 billion, the officials said.

The rule ends a three-year debate over whether stablecoin reserves could include commercial paper, corporate debt, or foreign sovereign bonds. Under the final text, reserve assets must mature within 90 days and be held in segregated accounts subject to monthly attestations by a certified public accountant, the officials said. Issuers must also redeem tokens within one business day of a customer request and publish daily reserve disclosures on their websites by 9 a.m. Eastern Time.

A bank compliance officer familiar with the rulemaking said the regulation had been circulated to the Office of the Comptroller of the Currency and the Federal Reserve on Dec. 30 for final legal review. The officer, who was not authorized to speak publicly, said the 187-page document includes a new requirement that stablecoin wallet providers register with the Financial Crimes Enforcement Network if they process more than $1,000 in transfers per customer per day.

The proposal drew more than 4,700 public comments after it was released in September, according to one Treasury official. The official said the final rule rejected industry requests to allow reserves composed of prime money-market funds or short-term municipal debt, citing liquidity concerns during the March 2023 banking stress. The official said Treasury lawyers completed the final regulatory impact analysis on Jan. 2.

FedNow Access and Surveillance Provisions

The same rule will direct the Federal Reserve to open FedNow instant-payment access to qualified stablecoin issuers by July 1, according to a lobbyist briefed on the draft. The provision, contained in Section 412 of the document, would let issuers settle redemptions through FedNow rather than relying on private banking rails, the lobbyist said. Three Federal Reserve officials confirmed that technical testing is scheduled to begin at the Federal Reserve Bank of Boston on Jan. 22.

The lobbyist said the draft includes a financial-surveillance mechanism that requires issuers to report any stablecoin transaction exceeding $10,000 to FinCEN within 15 days, mirroring the existing currency-transaction report threshold for cash deposits. The provision would also require issuers to collect and verify the identity of any wallet holder who receives more than $3,000 in a single transfer, the lobbyist said.

The rule would affect issuers including Circle Internet Financial and Tether Holdings, which together account for roughly $170 billion of the $180 billion stablecoin market, according to the bank compliance officer. The officer said foreign-issued tokens that are accessible to U.S. residents through decentralized protocols or offshore exchanges will be required to block U.S. Internet addresses or register with FinCEN by April 1.

Two Treasury officials said the rule was drafted after a series of closed-door meetings at the Treasury Building on Dec. 16 and Dec. 18. The final signing ceremony is scheduled for 10 a.m. on Jan. 7 in the Cash Room at 1500 Pennsylvania Avenue, the officials said. Treasury Secretary Scott Bessent is expected to attend, though the officials said no public remarks are planned.

Background and Market Context

The regulation arrives two and a half years after the collapse of TerraUSD, an algorithmic stablecoin that lost roughly $40 billion in market value over 72 hours in May 2022. Since then, lawmakers have introduced multiple bills to create a federal stablecoin framework, but none reached the president's desk in the last Congress. The Treasury Department is relying on authority under the Bank Secrecy Act and the International Emergency Economic Powers Act to issue the rule without new legislation, according to one Treasury official.

Officials in the European Union began enforcing the Markets in Crypto-Assets regulation in 2024, and officials in Singapore and Hong Kong have issued stablecoin licensing regimes. The Treasury rule is designed to keep dollar-denominated stablecoin issuance centered in U.S. financial institutions rather than offshore entities, the lobbyist said. The lobbyist added that the $10 billion threshold was chosen to capture the two largest issuers while giving smaller firms until Jan. 1, 2027, to comply.

Industry Reaction and What Comes Next

Industry groups are preparing legal challenges. The lobbyist said a coalition of digital-asset firms plans to file a complaint in the U.S. District Court for the District of Columbia by Jan. 10, arguing that the $10,000 reporting threshold violates the Fourth Amendment. A Treasury official dismissed the threat, saying the department expects the rule to survive review because it mirrors existing Bank Secrecy Act requirements.

The Office of the Comptroller of the Currency is preparing a companion interpretive letter, OCC Interpretive Letter 1185, that will clarify how national banks can custody stablecoin reserves, according to the bank compliance officer. The officer said the letter is scheduled for release at 2 p.m. on Jan. 8, one day after the Treasury rule.

The Federal Reserve Bank of Boston will host a technical workshop for issuers on Jan. 22 and Jan. 23, according to the three Federal Reserve officials. The officials said FedNow access will initially be limited to issuers that maintain master accounts at the Federal Reserve Bank of New York or the Federal Reserve Bank of Atlanta. Smaller issuers will be required to use a sponsoring bank until a second-phase rollout planned for October 2026.

In the next 48 to 72 hours, watch for the formal publication in the Federal Register, a briefing for bank chief compliance officers at the American Bankers Association headquarters, and a statement from the House Financial Services Committee. The rule's reserve requirements are likely to accelerate consolidation among smaller stablecoin issuers and could push unregulated offshore tokens out of the U.S. market by midyear, the officials said.