Fed Proposes Tough New Rules for Stablecoin Issuers

The US Federal Reserve has proposed new rules for issuers of dollar-backed cryptocurrency tokens known as stablecoins. The proposal is in response to last year's GENIUS Act, which established a federal regulatory framework for these tokens.

Under the proposed rules, payment stablecoin issuers under Fed supervision would be required to fully back their tokens with certain reserve assets, such as short-term Treasury bills. This would address concerns about the risk of stablecoins being used for illicit activities or collapsing in value.

The proposal would also impose capital requirements on stablecoin issuers to address credit and operational risks. Additionally, it would introduce guidelines for Fed-supervised banks that custody reserves on behalf of stablecoin issuers and outline stablecoin-related activities these banks can engage in.