Fed Proposes Strict Stablecoin Reserve Requirements

The US Federal Reserve has proposed two draft rules for issuers of payment stablecoins as part of implementing the GENIUS Act. The first rule requires issuers supervised by the Fed to fully back issued stablecoins with eligible reserve assets, such as short-term U.S. Treasury bonds and other high-quality, highly liquid assets.

The second document establishes a special procedure for banks under the Fed's supervision that wish to issue their own payment stablecoins. Banks will be required to submit a business plan, financial information, and other documents.

Federal Reserve Board Member Michael Barr emphasized the need to ensure that stablecoins can be reliably redeemed at par value even under conditions of market stress.