Fed Proposes Stablecoin Reserve Requirements and Bank Issuance Rules

The U.S. Federal Reserve has released two proposals to implement the GENIUS Act and create a regulatory framework for stablecoin issuers.

The first proposal focuses on reserves that stablecoin issuers will hold to fully back their stablecoins, proposing that they hold short-term Treasury bills and 'certain other high-quality, liquid assets.'

It also introduces standardized capital requirements to address certain risks involved in payment stablecoin activities and establishes rules for firms that safekeep the reserves.

The second proposal outlines rules for Board-supervised banks looking to issue their own stablecoins, including an application process with required documents such as a business plan and financial information.