Fed Proposes Strict Rules for Stablecoin Issuers Under GENIUS Act
The Federal Reserve has proposed new rules for payment stablecoin issuers under its supervision. The move advances implementation of the GENIUS Act's regulatory framework, which was established to cover areas including reserves, capital, liquidity, and risk management.
The first proposal would require stablecoins issued by Board-supervised firms to be fully backed by permitted reserve assets, such as short-term Treasury bills and other high-quality liquid assets. This is in addition to establishing standardized capital requirements covering credit and operational risks associated with stablecoin activities.
The Fed also proposes requirements for firms that safeguard stablecoin reserve assets and clarifies which stablecoin-related activities are permitted for banks under its supervision. A second proposal would establish a tailored application process for Board-supervised banks seeking approval to issue payment stablecoins, requiring the submission of information including a business plan and financial documentation.