Fed Proposes Rules for Stablecoin Issuers Under GENIUS Act

The US Federal Reserve has proposed new rules for issuers of dollar-backed cryptocurrency tokens known as stablecoins, under the GENIUS Act.

The proposed framework aims to ensure that issuers maintain sufficient assets to support the value of stablecoins issued, and would require them to fully back their tokens with permitted reserve assets such as short-term US Treasury bills and other high-quality, liquid assets.

The Fed also proposes introducing standardized capital requirements for stablecoin activities, as well as risk-management standards for supervised firms involved in stablecoin activities.

The proposed framework would extend beyond stablecoin issuers to Fed-supervised banks that safeguard assets backing the tokens, and would establish requirements for banks that provide custody services for stablecoin reserves.