Fed Unveils GENIUS Act Framework: Stablecoins Must Be Fully Backed by High-Quality Assets
The Federal Reserve has unveiled two regulatory proposals aimed at implementing the GENIUS Act framework for digital asset oversight. The act, signed into law by President Donald Trump last year, establishes comprehensive standards for stablecoin operations in the United States.
The first proposal sets reserve and capital standards for companies issuing stablecoins, requiring them to be fully backed by short-term Treasury bills or equivalent highly liquid instruments. This approach aligns with existing guidance from the Office of the Comptroller of the Currency.
The second proposal outlines an application procedure for banking institutions seeking authorization to issue stablecoins. Applicants must provide comprehensive business strategies, financial projections, and governance frameworks.
Fed Governor Michael Barr expressed support for the proposals while highlighting concerns regarding anti-money laundering enforcement mechanisms. He emphasized the need for explicit enforcement thresholds and advocated for only pursuing regulatory action when violations constitute significant or persistent compliance failures.