Fed Proposes Reserve Limits and Capital Standards for Stablecoin Issuers

The Federal Reserve has proposed new measures for stablecoin issuers as part of its efforts to implement federal stablecoin law. The central bank wants payment stablecoins to be fully backed by short-term Treasury bills or other highly liquid assets.

The Fed also proposes creating standardized capital requirements and standards to manage risks. This includes a specific application process for board-supervised banks that want to issue those stablecoins.

Federal Reserve Governor Michael Barr supported the latest proposal but expressed concerns about bank anti-money laundering. He wants a standard that would prevent the Board from undertaking supervisory or enforcement actions unless the issue is significant or systemic.