Fed Proposes Capital Charge for Supervised Stablecoin Issuers

The Federal Reserve has proposed a capital charge for supervised stablecoin issuers, which would make circulation a direct capital cost. According to the proposal, a hypothetical payment stablecoin issuer with $1 billion in circulation and no revenue from activities outside its reserve assets would start with a $20 million baseline operational-risk capital charge.

The growth of a stablecoin would have a direct capital consequence under the proposed framework: more coins outstanding mean a larger baseline operating-risk charge, even if the issuer earns nothing from custody or other activities. The formula would apply to approved stablecoin-issuing subsidiaries of insured state member banks and certain qualifying state-chartered issuers that transition to Fed supervision.

The OCC's pending proposal takes a different route for issuers under its jurisdiction, using a capital amount tailored to each business and a separate pool of liquid assets tied to expenses. The Fed's operating-risk capital charge uses issuance and non-reserve revenue as its starting point, with a rate of 2% on the first $20 billion of payment stablecoins outstanding.