Fed Proposes Stablecoin Rules with Capital Charges and Redemption Requirements

The Federal Reserve has proposed new capital and redemption rules for stablecoin issuers under its supervision. The proposal aims to implement the GENIUS Act, which requires stablecoins to maintain reserves backing their tokens on a one-to-one basis. This means that for every $1 of stablecoin in circulation, there must be at least $1 in cash or other eligible assets held in reserve.

The proposed rules also establish operational-risk capital charges for issuers, ranging from 2% to 1% of the first $50 billion in stablecoins outstanding. Issuers would also be required to process redemptions within two business days and publish monthly reports detailing their reserves and outstanding stablecoin balances.

Fed Governor Michael Barr supported the proposal but emphasized that further work is needed for stablecoins to become reliable payment instruments. He highlighted the importance of universal redemption rights and called for public feedback on whether the framework adequately addresses interest-rate and foreign-currency risks.