Fed Unveils New Stablecoin Regulations Amid Market Uncertainty
The Federal Reserve has proposed new regulations for stablecoin issuers under its supervision. The proposal aims to implement the GENIUS Act, which requires stablecoins to maintain reserves backing their tokens on a one-to-one basis and limits the types of assets they can hold.
The Fed's proposal includes operational-risk capital charges ranging from 2% to 1% for issuers with stablecoin holdings above $50 billion. Issuers would also be required to process redemptions within two business days and notify the Fed if reserves fall below the required backing.
Fed Governor Michael Barr supported the proposal, stating that stablecoins will only be stable if they can be reliably redeemed at par in a range of conditions, including during market stress. He encouraged public feedback on whether the framework adequately addresses interest-rate and foreign-currency risks.