Fed Proposes Rules for Stablecoin Issuers Under GENIUS Act

The US Federal Reserve has proposed two sets of rules to regulate payment stablecoin issuers under the GENIUS Act. The proposals, released on September 24, aim to bring traditional financial institutions into the development of digital payments and focus on the infrastructure behind stablecoins.

The first proposal would require covered issuers to fully back their stablecoins with permitted reserve assets, including short-term US Treasury bills and other high-quality, liquid assets. It would also introduce capital and risk-management requirements, as well as rules for firms safeguarding stablecoin reserves.

The second proposal establishes an application process for Fed-supervised banks seeking approval to issue payment stablecoins through subsidiaries. Applicants would need to provide business plans, financial information, and other documentation, while the framework would also cover hearings, appeals, and final decisions.