Federal Reserve Proposes Stablecoin Regulation Framework

The Federal Reserve has proposed a framework to govern stablecoin issuers under the GENIUS Act, aiming to bring payment stablecoins deeper into the regulated U.S. financial system.

The proposal, released on September 24, would require Board-supervised payment stablecoin issuers to fully back their tokens with permitted reserve assets, including short-term U.S. Treasury bills and other high-quality, liquid assets.

Federal Reserve Governor Michael Barr emphasized the importance of reliable and prompt redemption, stating that it must remain possible even during periods of market stress.

The proposed framework would also introduce standardized capital requirements to address credit and operational risks associated with stablecoin activities.