Fed Proposes Stablecoin Rules Focusing on Reserves, Capital, Risk Management

The U.S. Federal Reserve has invited public feedback on new rules for stablecoins issued by payment stablecoin issuers supervised under the GENIUS Act.

The proposals aim to create a framework for stablecoins, focusing on reserves, capital, risk management, and custody, as well as the approval process for banks seeking to issue stablecoins.

The first proposal concerns the contents of the reserves that back stablecoins, requiring issuers to fully back their stablecoins with permissible reserve assets, such as short-term Treasury bills or certain other high-quality, liquid assets.

Banks issuing stablecoins face specific requirements, including a tailored application process, which would involve providing a business plan, financial statements, and other items.