Fed Seeks Public Comment on Stablecoin Proposals Under GENIUS Act
The Federal Reserve has announced two proposals under the GENIUS Act that would establish a regulatory framework for payment stablecoin issuers supervised by the central bank. The proposals, open to public comment, aim to provide safeguards while allowing stablecoins to develop as payment instruments.
The first proposal requires Board-supervised payment stablecoin issuers to fully back their tokens with permitted reserve assets, including short-term Treasury bills and other high-quality, liquid assets. It also introduces standardized capital requirements to address credit and operational risks associated with stablecoin activities, alongside risk-management standards.
The second proposal focuses on the approval process for Board-supervised banks seeking authorization to issue payment stablecoins through subsidiaries. Applicants would be required to submit business plans, financial information, and other documentation, while the proposed framework would establish procedures for appeals, hearings, and final application decisions.
Fed Governor Michael Barr emphasized that stablecoin issuers must honor redemption requests even during periods of market stress. 'Stablecoins will only be stable if they can be reliably and promptly redeemed at par in a range of conditions,' he stated.