Fed Proposes Tighter Stablecoin Oversight Under GENIUS Act

The Federal Reserve has proposed two new rules to regulate stablecoin issuers under the GENIUS Act. The proposals, announced on Thursday, aim to establish oversight for payment stablecoins and require their issuers to fully back their tokens with approved reserve assets.

The first proposal would set capital requirements for credit and operational risks, as well as add risk management standards for stablecoin activities. It would also clarify which stablecoin activities are allowed for banks supervised by the Fed.

Fed Governor Michael Barr said that stablecoins can only remain stable if users can quickly redeem them at full value, even during market stress or financial strain.