Fed Proposes Framework for Stablecoin Issuers Under GENIUS Act

The Federal Reserve Board (Fed) has proposed a regulatory framework for payment stablecoin issuers under its supervision to implement the Guiding and Establishing National Innovation for U.S. Stablecoins Act (GENIUS Act). The proposal would require Fed-supervised issuers to fully back their stablecoins with permissible reserve assets, such as short-term Treasury bills.

The GENIUS Act prohibits anyone other than a permitted payment stablecoin issuer (PPSI) from issuing a payment stablecoin in the United States. According to the proposal, a Fed-supervised PPSI would have to hold segregated reserve assets with a fair value that equals or exceeds the par value of its outstanding stablecoins at all times.

The Fed also proposed a 2 percent capital requirement on reserve assets held as uninsured deposit claims and undercollateralized reverse repurchase agreements. An issuer that remains below its minimum capital requirement at two consecutive quarter-ends would have to liquidate its reserves and redeem its outstanding stablecoins.