Fed Proposes Rules for Payment Stablecoins Under GENIUS Act

The U.S. Federal Reserve has proposed rules to implement the GENIUS Act, which establishes federal rules for payment stablecoins. The proposals set requirements for reserves, capital, and risk management while laying out a path for supervised banks to issue their own tokens.

Under the Fed's proposal, payment stablecoin issuers supervised by the central bank would have to fully back their tokens with permitted reserve assets, including short-term U.S. Treasury securities and other high-quality liquid assets.

The rules also introduce standardized capital requirements aimed at addressing credit and operational risks associated with stablecoin activities as well as risk-management requirements for issuers.