The Federal Reserve's GENIUS Act proposal: yield, white-label partners and single-brand issuance

On 29 September 2026, the Federal Reserve Board published two proposed rules in the Federal Register to implement its responsibilities under the GENIUS Act. The main proposal sets out how the prohibition on stablecoin issuers paying holders interest or yield would apply to the issuers the Board supervises. It states that the prohibition is not intended to stop those issuers sharing profits with a non-affiliate white-label partner. Separately, it asks whether each of those issuers should be limited to a single brand of stablecoin.

For crypto-asset service providers (CASPs) that distribute, or pay rewards on, a stablecoin issued by a Board-supervised issuer, two points are open for comment: how holder rewards are treated, and the single-brand question. Comments close on 30 November 2026.

What was published

The Board approved both proposals by seven votes to none on 24 September 2026. Both were published in the Federal Register on 29 September:

• Implementing the Federal Reserve Board's Responsibilities Under the GENIUS Act (FR Doc 2026-19860, Docket R-1899). This covers reserve assets, capital, risk management, custody, the prohibition on interest and yield, and tying.

• Application procedures for Board-supervised insured depository institutions seeking approval for a subsidiary to issue payment stablecoins (FR Doc 2026-19899, Docket R-1900).

The main proposal applies to different groups in different parts:

• Board-supervised issuers. Most of the rules, including those on interest and yield, apply to subsidiaries of insured State member banks approved by the Board to issue stablecoins, and to uninsured State-chartered depository institutions that transition to the Board's framework. The Board states that "there are no such entities at this time".

• Board-supervised custodians. A separate part covers institutions the Board supervises that safekeep stablecoin reserves, "any payment stablecoin used as collateral", and the private keys used to issue stablecoins.

• All permitted issuers. The tying rules would apply to every permitted payment stablecoin issuer.

The prohibition on interest and yield

Section 4(a)(11) of the GENIUS Act prohibits an issuer from paying holders interest or yield. The proposal restates this for Board-supervised issuers: they must not pay any form of interest or yield, "whether in cash, tokens, or other consideration", "solely in connection with the holding, use, or retention of such payment stablecoin".

The Board adds a rebuttable presumption, following the approach the Office of the Comptroller of the Currency (OCC) proposed in March 2026. An issuer is presumed to be paying prohibited interest or yield if both of the following apply:

• the issuer has an arrangement to pay interest or yield to an affiliate or a related third party; and

• that affiliate or related third party, or an affiliate of the related third party, has an arrangement to pay interest or yield, in cash, tokens or other consideration, to holders of the issuer's stablecoin, solely in connection with holding, using or retaining it.

A related third party is either "a person offering to pay interest or yield to payment stablecoin holders as a service", or a person on whose behalf, or under whose branding, the issuer issues a stablecoin. For a white-label partner, the presumption applies only to holders of that partner's branded stablecoin. The issuer may rebut the presumption by submitting written materials that, in the Board's judgment, show the arrangement is neither prohibited nor an attempt at evasion.

The presumption are not thereby permitted. The proposal states: "Other arrangements that are not captured by the presumption may also violate the statutory prohibition or constitute an evasion thereof." The Board would assess those arrangements case by case. The proposal also contains a general prohibition on activity the Board determines to be evasion.

White-label arrangements

The Board sets two limits on the reach of the prohibition. It is not intended to prevent a merchant from independently offering a discount for paying in stablecoins. Nor is it intended to prevent a Board-supervised issuer "sharing in the profits derived from the payment stablecoin with a non-affiliate partner in a white-label arrangement".

The presumption depends on the issuer paying the partner interest or yield. Whether a profit share counts as "interest or yield" is not defined, and Question 39 asks whether those terms should be clarified. In our view, a partner that passes a profit share on to holders as a reward could fall within the presumption if the issuer's payment is itself treated as interest or yield. Otherwise, it would be assessed case by case.

A single brand per issuer

The proposal asks whether a Board-supervised issuer should be allowed to issue more than one brand of stablecoin. The Board acknowledges that white-label arrangements can widen the range of stablecoins available. It also states that they "may also foster uncertainty about reserve assets and encourage contagion and run risk among brands of payment stablecoins”.

Two options are described. The first would restrict each Board-supervised issuer to one brand, while streamlining approval for a bank that already has an approved issuing subsidiary to set up another. Under that approach, the issuers could share certain services and back-office functions but would be legally separate. The second would allow several brands but require reserves to be held in a wholly owned subsidiary with no liabilities of its own. Question 45 asks whether the Board should prohibit issuing "different brands or series of stablecoins", and about the reserve-segregation alternative.

Under the first option, a co-branded stablecoin could still be issued, but through its own issuing subsidiary rather than alongside other brands.

Tying

Section 4(a)(8) of the Act prohibits an issuer from making its services conditional on the customer buying an additional paid product from the issuer or its subsidiaries, or agreeing not to use a competitor. The Board proposes to apply this to all permitted issuers, "regardless of their primary Federal or State regulator". It would also apply to any company approved by a unanimous vote of the Stablecoin Certification Review Committee under section 4(a)(12) of the Act, and to that company's affiliates.

The Board notes that the prohibition is narrower than the tying rules in section 106 of the Bank Holding Company Act Amendments of 1970, in two ways:

• It applies to products from the issuer or its subsidiaries, but not from its affiliates, except for section 4(a)(12) companies.

• Varying prices when a customer buys another product would not necessarily breach it, unless the pricing effectively constrains the availability of a service.

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No exceptions are proposed, citing "the nascence of the payment stablecoin market", but the Board would consider requests for exceptions case by case.

Digital asset service providers

The GENIUS Act restricts which stablecoins digital asset service providers may offer to people in the United States. The proposal records two statutory start dates:

• stablecoins from foreign issuers that do not meet the Act's requirements are restricted from the Act's effective date; and

• stablecoins not issued by a permitted payment stablecoin issuer are restricted from 18 July 2028.

These prohibitions are subject to "any regulations issued thereunder by the Department of the Treasury". A Board-supervised issuer could carry on digital asset service provider activities only if, among other conditions, they are "expressly authorized by the Board".

The proposal does not define "digital asset service provider". Question 7 asks whether the statutory scope of the term is "sufficiently clear", which activities should be expressly excluded, and whether the Board should clarify "that only the provision of financial services that directly relate to digital asset issuance would result in an entity becoming a digital asset service provider".

What this means for CASPs

The points below are our assessment rather than statements in the proposal.

• Business model. A profit share from a Board-supervised issuer to a non-affiliate white-label partner is expressly outside the intended reach of the prohibition. Rewards paid on to holders are the point of risk.

• Product. Rewards features on a white-label stablecoin may fall within the presumption where both conditions are met. A single-brand rule would change how a co-branded stablecoin is structured, not whether it can exist.

• Timing. No Board-supervised issuer exists yet, and the application procedures are themselves only proposed. The GENIUS Act takes effect no later than 18 January 2027.

Limits of the proposal

The presumption follows the OCC's March 2026 proposal, and it applies only to Board-supervised issuers, of which there are currently none. Its direct effect therefore depends on how many banks seek approval under the Board's framework, and on whether the final rule adopts a wider prohibition.

Consultation questions of most relevance to CASPs

• Question 7. The scope of "digital asset service provider", exclusions, and whether only issuance-related financial services should bring an entity within it.

• Question 36. Whether the prohibition on interest and yield could be clarified, including through a de minimis exception.

• Question 37. Whether the presumption is appropriately scoped, the standard of review for rebuttals, whether the Board's determination is appealable, and whether a safe harbour should be proposed.

• Question 38. Whether the prohibition should be broader, catching remuneration paid "directly or indirectly", and what should be carved out if it is.

• Question 39. Whether terms such as "interest", "yield" and "solely" should be clarified.

• Question 45. Whether to limit Board-supervised issuers to a single brand, and the alternative of segregated reserves instead.

Key dates

• 24 September 2026. Board approves both proposals, 7–0.

• 29 September 2026. Both proposals published in the Federal Register.

• 30 November 2026. Comment period closes.

• 18 January 2027. Latest date on which the GENIUS Act takes effect: the earlier of 18 months after enactment on 18 July 2025, or 120 days after the primary Federal payment stablecoin regulators issue any final implementing regulations.

• Not yet scheduled. Final rule.

Source: Federal Register, FR Doc 2026-19860.

James Ross is Head of Advisory at denouement. This article is not legal advice.