Stablecoin Reserve Requirements: A Tale of Convergence and Divergence

Stablecoin regulatory frameworks have been established by various jurisdictions, but one aspect stands out, the reserve requirements. While most agree on a one-to-one backing ratio, differences arise when defining the composition of reserve assets.

The GENIUS Act allows for currency and Treasury bills with residual maturity of 93 days or less, as well as overnight repos collateralized by sovereign debt. In contrast, MiCA requires a minimum of 30% in bank deposits and raises the threshold to 60% for issuers designated as significant.

Interestingly, three jurisdictions have adopted the same backing ratio but exhibit distinct risk profiles. This divergence highlights the importance of reserve composition, legal treatment against creditors, and speed of liquidation without loss.