Fed Proposes Strict Rules for Stablecoin Issuers Under GENIUS Act
The Federal Reserve has proposed two new rulemaking packages for payment stablecoin issuers under the GENIUS Act. The proposals would require Board-supervised issuers to fully back their tokens with permitted reserve assets, such as short-term Treasury bills and other high-quality liquid assets.
The Fed also wants to implement standardized capital requirements aimed at covering credit and operational risks, alongside broader risk-management standards and rules for firms safeguarding stablecoin reserve assets.
For banks already under Federal Reserve supervision, the proposal would clarify which stablecoin-related activities are permissible, providing much-needed guidance on how to operate in this new regulatory environment.
The second proposal deals with the application process for Board-supervised banks seeking to issue payment stablecoins. These banks would need to submit an application including a business plan and financial information, as well as adhere to formal processes for decisions, hearings, and appeals.