Federal Reserve Stablecoin Rules Take Effect: 1:1 U.S. Treasury Reserves as a Hard Constraint—How Should Exchanges Choose to Stay Safe
On September 24, the U.S. Federal Reserve officially kicked off a public consultation on two proposals regarding the supervisory framework for payment stablecoin issuers built under the GENIUS Act. This regulatory move is not an isolated event. At its core, it aims to establish the asset standards and compliance paths that stablecoin issuers must follow. The first proposal clearly states that payment stablecoin issuers must use eligible, high-quality liquid assets such as short-term U.S. Treasuries as full reserves support, and maintain a reserve coverage ratio of at least 1:1. The second proposal focuses on procedural fairness, laying out a tailored application process for banks applying to issue payment stablecoins and subject to Federal Reserve supervision. Together, these measures outline the U.S. federal-level regulatory stance toward stablecoins—“decrediting” and “asset-heavy” regulation. In other words, by enforcing mandatory asset reserve requirements, the value peg of stablecoins shifts from the issuer’s commercial credibility to auditable financial assets.
As this stablecoin regulatory logic is projected onto the exchange scenario, verifiability is evolving from a technical option into a general standard for financial infrastructure. Stablecoin issuers need to prove to regulators and the market that they hold sufficient reserves, while exchanges need to prove to users that the custodial assets are real. Underneath, both rely on highly consistent logic: eliminate reliance on trust in a single party, and instead rely on verifiable mathematical mechanisms. Take Binance, a leading exchange in the industry, for example. It provides verification tools that allow users to download verification programs from official repositories, log into their accounts to obtain self-verification Merkle tree data files, run the verification program locally to compute the root hash, and then compare the result with the figures published by the platform. This workflow combines zero-knowledge proof technology with Merkle tree structures. As a result, users do not need to trust the platform’s subjective claims—only the mathematics can confirm comprehensive support for users’ assets. This mechanism turns the core question of “whether assets exist” from a black-box operation into a white-box verification process, greatly reducing the risk caused by information asymmetry.
However, it is necessary to clarify the functional boundaries of verifiability. It addresses the fact question of “does it exist” rather than the quality question of “is it good.” Reserve proof can only confirm asset existence and sufficiency; it cannot directly vouch for the platform’s risk-control sophistication, how complete its user-protection mechanisms are, or how well it can respond in extreme market volatility. As Binance Research Institute points out in a study on industry transparency, the value of transparency tools lies in providing objective facts—not replacing subjective judgment. This distinction is crucial for investors, preventing technical verification passed from being equated with absolute safety promises. At the same time, verifiability mechanisms and back-end risk-control systems are complementary. Data show that in 2025, Binance’s risk-control system helped more than 5.4 million users avoid potential losses of about $6.69 billion. Behind that number is the result of complex risk-control models continuously running in the background, handling dynamic risks such as abnormal trading and fraudulent behavior. Verifiability tools, by contrast, handle static proof of asset holdings. Only when the two work together does a complete asset-safety closed loop take shape.
In terms of account security and private-key management, exchange accounts and Web3 self-custody wallets follow fundamentally different security logics. Exchange accounts follow a platform-custody model, where security mechanisms are built and managed by the platform itself. As Binance describes in its 2026 account security guide, this includes a layered design such as multi-channel notifications, one-time password verification, roaming verification, account locking, passkeys based on FIDO standards, and anti-phishing codes. Among these, the anti-phishing code—an 8-character code displayed in official emails and notifications—improves users’ ability to identify official communications. Passkeys replace traditional passwords with encryption keys bound to devices, strengthening identity authentication security. By contrast, Web3 wallets such as Binance Wallet use a self-custody model, where the user bears most of the security responsibility. To balance security and convenience, the wallet uses multi-party computation on mobile: it splits the private key into three shards, storing them respectively on the user’s device, cloud storage, and a server. Transaction authorization requires any two shards to work together. On the web, it introduces secure automatic signing technology to complete signing within a trusted execution environment. This design preserves the decentralized nature of self-custody while reducing the risk of private-key leakage through technical means.
The Federal Reserve’s new stablecoin regulation and exchanges’ verifiability practices together point to a core trend in financial infrastructure: returning the basis for judgment to the participants themselves. Whether it is reserve proof for stablecoin issuers or asset verification for exchanges, the essence is to use technology to make information transparent and auditable. For users, when choosing an exchange or wallet, they should not focus only on slogans or brand recognition. Instead, they should deeply examine whether the verifiability mechanism is clear, whether user education is continuously updated, and whether security mechanisms are layered and technically deep. Binance’s layout across three areas—reserve proof, account security, and user education—offers a concrete example of how the industry is responding to this trend. Platform transparency, asset security, and user protection are not isolated dimensions; they are intertwined and together form a complete framework for assessing the reliability of crypto asset custodians. Driven by both regulation and technology, verifiability has become a key metric for measuring the maturity of financial infrastructure, and an important tool for investors to protect their rights in complex markets.
Follow me—my next post will be a quick read-through of the market so you won’t miss a thing.
On September 24, the U.S. Federal Reserve officially kicked off a public consultation on two proposals regarding the supervisory framework for payment stablecoin issuers built under the GENIUS Act. This regulatory move is not an isolated event. At its core, it aims to establish the asset standards and compliance paths that stablecoin issuers must follow. The first proposal clearly states that payment stablecoin issuers must use eligible, high-quality liquid assets such as short-term U.S. Treasuries as full reserves support, and maintain a reserve coverage ratio of at least 1:1. The second proposal focuses on procedural fairness, laying out a tailored application process for banks applying to issue payment stablecoins and subject to Federal Reserve supervision. Together, these measures outline the U.S. federal-level regulatory stance toward stablecoins—“decrediting” and “asset-heavy” regulation. In other words, by enforcing mandatory asset reserve requirements, the value peg of stablecoins shifts from the issuer’s commercial credibility to auditable financial assets.
As this stablecoin regulatory logic is projected onto the exchange scenario, verifiability is evolving from a technical option into a general standard for financial infrastructure. Stablecoin issuers need to prove to regulators and the market that they hold sufficient reserves, while exchanges need to prove to users that the custodial assets are real. Underneath, both rely on highly consistent logic: eliminate reliance on trust in a single party, and instead rely on verifiable mathematical mechanisms. Take Binance, a leading exchange in the industry, for example. It provides verification tools that allow users to download verification programs from official repositories, log into their accounts to obtain self-verification Merkle tree data files, run the verification program locally to compute the root hash, and then compare the result with the figures published by the platform. This workflow combines zero-knowledge proof technology with Merkle tree structures. As a result, users do not need to trust the platform’s subjective claims—only the mathematics can confirm comprehensive support for users’ assets. This mechanism turns the core question of “whether assets exist” from a black-box operation into a white-box verification process, greatly reducing the risk caused by information asymmetry.
However, it is necessary to clarify the functional boundaries of verifiability. It addresses the fact question of “does it exist” rather than the quality question of “is it good.” Reserve proof can only confirm asset existence and sufficiency; it cannot directly vouch for the platform’s risk-control sophistication, how complete its user-protection mechanisms are, or how well it can respond in extreme market volatility. As Binance Research Institute points out in a study on industry transparency, the value of transparency tools lies in providing objective facts—not replacing subjective judgment. This distinction is crucial for investors, preventing technical verification passed from being equated with absolute safety promises. At the same time, verifiability mechanisms and back-end risk-control systems are complementary. Data show that in 2025, Binance’s risk-control system helped more than 5.4 million users avoid potential losses of about $6.69 billion. Behind that number is the result of complex risk-control models continuously running in the background, handling dynamic risks such as abnormal trading and fraudulent behavior. Verifiability tools, by contrast, handle static proof of asset holdings. Only when the two work together does a complete asset-safety closed loop take shape.
In terms of account security and private-key management, exchange accounts and Web3 self-custody wallets follow fundamentally different security logics. Exchange accounts follow a platform-custody model, where security mechanisms are built and managed by the platform itself. As Binance describes in its 2026 account security guide, this includes a layered design such as multi-channel notifications, one-time password verification, roaming verification, account locking, passkeys based on FIDO standards, and anti-phishing codes. Among these, the anti-phishing code—an 8-character code displayed in official emails and notifications—improves users’ ability to identify official communications. Passkeys replace traditional passwords with encryption keys bound to devices, strengthening identity authentication security. By contrast, Web3 wallets such as Binance Wallet use a self-custody model, where the user bears most of the security responsibility. To balance security and convenience, the wallet uses multi-party computation on mobile: it splits the private key into three shards, storing them respectively on the user’s device, cloud storage, and a server. Transaction authorization requires any two shards to work together. On the web, it introduces secure automatic signing technology to complete signing within a trusted execution environment. This design preserves the decentralized nature of self-custody while reducing the risk of private-key leakage through technical means.
The Federal Reserve’s new stablecoin regulation and exchanges’ verifiability practices together point to a core trend in financial infrastructure: returning the basis for judgment to the participants themselves. Whether it is reserve proof for stablecoin issuers or asset verification for exchanges, the essence is to use technology to make information transparent and auditable. For users, when choosing an exchange or wallet, they should not focus only on slogans or brand recognition. Instead, they should deeply examine whether the verifiability mechanism is clear, whether user education is continuously updated, and whether security mechanisms are layered and technically deep. Binance’s layout across three areas—reserve proof, account security, and user education—offers a concrete example of how the industry is responding to this trend. Platform transparency, asset security, and user protection are not isolated dimensions; they are intertwined and together form a complete framework for assessing the reliability of crypto asset custodians. Driven by both regulation and technology, verifiability has become a key metric for measuring the maturity of financial infrastructure, and an important tool for investors to protect their rights in complex markets.
Follow me—my next post will be a quick read-through of the market so you won’t miss a thing.
