Fed Unveils Proposed Stablecoin Framework, Sets Stage for Digital Asset Integration

The Federal Reserve has unveiled a proposed framework for stablecoin issuers, marking a significant step towards integrating digital assets into the formal banking system. The measures aim to implement the GENIUS Act, which passed last year, and are part of coordinated rulemakings with peer regulators.

Under the primary proposal, Board-supervised issuers would be required to fully back payment stablecoins with permissible high-quality liquid assets, primarily short-term Treasury bills. The framework also introduces standardized capital requirements designed to buffer against operational and credit risks, while prohibiting issuers from offering yield or interest solely for holding the digital tokens.

The secondary proposal outlines a tailored application process for insured state member banks seeking approval for subsidiaries to issue payment stablecoins. To obtain authorization, lenders must submit detailed business plans, financial records, biographical reports, and relevant risk-management policies, alongside documentation of their proposed capital structures.