Fed Proposes Stablecoin Rules as GENIUS Act Implementation Looms
The Federal Reserve has proposed new rules for stablecoin issuers under its supervision. The proposal is part of the implementation of the GENIUS Act, which aims to regulate stablecoins and ensure their stability.
Fed Governor Michael Barr said that stablecoins will only be stable if they can be reliably redeemed at par in various conditions, including market stress and episodes of strain on the issuer or its related entities.
The proposal sets a capital charge tied to the number of stablecoins outstanding, with a 2% charge on the first $20 billion, 1.5% on the next $30 billion, and 1% on anything above $50 billion. Issuers would also face separate capital requirements linked to credit and operational risks.
The proposal requires issuers to publish monthly reports on their outstanding stablecoins and reserve assets, which would be checked by an outside accounting firm and signed off by the issuer's chief executive and chief financial officer.