Fed Proposes New Stablecoin Rules Under GENIUS Act
The US Federal Reserve has proposed new rules for payment stablecoins under its supervision, as part of the regulatory framework created by the GENIUS Act. The proposals set out reserve, capital and risk-management requirements to ensure stablecoin issuers can meet customer redemptions.
The first proposal requires Board-supervised payment stablecoin issuers to fully back their tokens with permitted reserve assets, such as short-term US Treasury bills and other high-quality, liquid investments. This is crucial in maintaining the reliability of stablecoins, which are digital tokens designed to maintain a stable monetary value, commonly by reference to the US dollar.
The proposals also introduce standardised capital requirements addressing credit and operational risks associated with payment stablecoin activities. Issuers would face additional risk-management standards, while Fed-supervised firms that safeguard assets backing stablecoins would become subject to specific rules governing those activities.
The Federal Reserve will accept comments on the proposals for 60 days after they are published in the Federal Register and could amend the framework before adopting final regulations. This consultation period provides an opportunity for stablecoin issuers, banks, and their advisers to influence how the GENIUS Act is translated into detailed supervisory rules.