Treasury to Finalize Stablecoin Rule Requiring 1:1 U.S. Treasury Reserves by March 1

The Rule's Core Requirements

The Treasury Department will finalize a rule by Jan. 14 requiring major stablecoin issuers to hold 1:1 reserves in U.S. Treasuries, cash at Federal Reserve banks, or overnight reverse repurchase agreements by March 1, according to two Treasury officials familiar with the rulemaking. The rule, drafted by the Office of the Comptroller of the Currency and the Financial Crimes Enforcement Network, applies to any dollar-denominated stablecoin with a market capitalization exceeding $10 billion. The officials said the final text has been circulated to the Treasury secretary's office and the White House Office of Information and Regulatory Affairs for final review.

The reserve requirements would prohibit issuers from holding corporate bonds, commercial paper, or uninsured bank deposits as primary backing assets. One Treasury official said the rule explicitly defines permissible reserve assets in three categories: Treasury securities with a maturity of 30 days or less, balances held directly at a Federal Reserve bank, and overnight reverse repurchase agreements executed through the Fed's fixed-rate facility. The official said the rule also requires issuers to publish weekly attestations prepared by an independent certified public accountant and to disclose the identities of the custodians holding the reserve assets.

Issuers that fail to meet the March 1 compliance deadline would face a graduated enforcement regime. The rule authorizes FinCEN to impose civil money penalties of up to $100,000 per day for violations and to refer willful misconduct to the Justice Department for criminal prosecution. The second Treasury official said the department expects at least six major issuers, including Circle Internet Financial and Paxos Trust Company, to qualify as covered entities under the $10 billion threshold. Tether Holdings, which issues the USDT stablecoin, would also fall under the rule if its U.S. dollar market cap remains above $90 billion.

Rulemaking Process and Industry Response

A lobbyist briefed on the draft said Treasury circulated the final rule to selected industry participants on Dec. 18, three weeks after the close of the public comment period on Nov. 25. The lobbyist said the draft incorporated changes recommended by the American Bankers Association and the Chamber of Digital Commerce, including a 90-day transition period for existing reserve portfolios and an exemption for stablecoins issued by insured depository banks. The lobbyist, who spoke on condition of anonymity because the rule has not been made public, said Treasury staff informed trade groups that the final rule would be published in the Federal Register on Jan. 16.

The rule stems from provisions of the Stablecoin Transparency and Accountability Act, which Congress passed in August 2025 and which directed Treasury to establish reserve and reporting standards by Jan. 31, 2026. A bank compliance officer familiar with the rulemaking said the law requires covered issuers to register as money services businesses with FinCEN and to maintain anti-money laundering programs comparable to those required of money transmitters. The officer said banks that custody stablecoin reserves would be required to file suspicious activity reports for transactions involving issuer wallets and to conduct enhanced due diligence on stablecoin issuance and redemption activity.

Industry groups have split over the rule's implications. The Blockchain Association submitted comments opposing the $10 billion threshold as arbitrary, while the Bank Policy Institute supported the reserve restrictions but asked Treasury to require stablecoin issuers to obtain bank charters. A separate lobbying coalition representing payment stablecoins argued that the March 1 effective date would force fire sales of existing reserve assets, potentially disrupting short-term funding markets. Treasury officials disputed that characterization, telling industry representatives on Jan. 6 that the 90-day transition window would allow orderly portfolio rebalancing.

Implementation and Surveillance Provisions

Beyond reserve requirements, the rule expands financial surveillance over stablecoin transactions. The bank compliance officer said the final rule requires issuers to collect and verify the identity of wallet holders for redemption transactions exceeding $3,000 and to report cross-border transfers above $10,000 to FinCEN within 15 days. The officer said Treasury modeled the reporting threshold on the existing Bank Secrecy Act requirement for currency transaction reports and expects issuers to integrate the reports into their existing compliance systems by Sept. 1.

The rule also directs the Federal Reserve to establish a voluntary master account program for stablecoin issuers that meet reserve requirements. Two Treasury officials said the Fed has instructed staff at the Federal Reserve Bank of New York to prepare operational guidelines for the program by April 1. The officials said the master account framework would allow issuers to hold reserves directly at the central bank, reducing reliance on commercial bank custodians and eliminating counterparty risk for the largest issuers.

International coordination efforts are also underway. One Treasury official said the department has shared the final draft with counterparts at the Financial Stability Board and the Bank for International Settlements, both of which are developing global stablecoin standards. The official said Treasury expects the European Union's Markets in Crypto-Assets regulation to recognize U.S. compliant stablecoins as equivalent instruments by mid-2026, reducing friction for cross-border payments. A Treasury delegation is scheduled to present the rule at a G20 working group meeting in Basel on Jan. 27. The official said the department views the March 1 deadline as a baseline and may accelerate reserve reporting requirements if market volatility increases.

Congressional oversight hearings are scheduled to follow the rule's release. A Senate Banking Committee aide said Chair Tim Scott has scheduled a hearing for Jan. 21 to examine the rule's market impact, while the House Financial Services Committee expects a briefing from Treasury officials on Jan. 23. Market analysts at JPMorgan Chase estimated in a Dec. 30 research note that compliance costs for the six covered issuers could reach $400 million annually. Watch for the final rule's publication on Jan. 16, issuer registration filings by Feb. 1, and any lawsuit challenging the rule in the U.S. Court of Appeals for the D.C. Circuit.