Fed Proposes Tough Rules for Regulated Stablecoins

The Federal Reserve has proposed two new rulemaking packages for payment stablecoin issuers under the GENIUS Act.

Under the first proposal, Board-supervised payment stablecoin issuers would have 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 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 the legal framework created by Congress.

The second proposal deals with the entry point for Board-supervised banks seeking to issue payment stablecoins, requiring a dedicated application process that includes a business plan and financial information.