Fed Proposes New Stablecoin Rules Amid Growing Digital-Dollar Infrastructure

The Federal Reserve has proposed new rules for stablecoins, which are digital tokens pegged to the US dollar. The proposals aim to establish requirements for issuers and introduce an application process for banks seeking to issue their own stablecoins.

The first proposal requires issuers to fully back their stablecoins with high-quality liquid assets, such as short-term U.S. Treasury bills. This is designed to ensure that these digital tokens can be redeemed for cash quickly during times of market stress.

Meanwhile, the second proposal addresses banks seeking to enter the stablecoin market. It would require them to provide detailed business plans and financial information as part of a tailored application process.