Fed Slaps Stablecoin Issuers with Capital Costs

The Federal Reserve has proposed a new regulatory framework for stablecoin issuers under its supervision. According to the proposal, a hypothetical payment stablecoin issuer with $1 billion in circulation and no revenue from activities outside its reserve assets would start with a $20 million baseline operational-risk capital charge.

This charge is based on a formula that takes into account the number of coins outstanding and the issuer's non-reserve revenue. The rate for the first $20 billion of payment stablecoins outstanding is 2%, which falls to 1.5% on the next $30 billion and 1% on the amount above $50 billion.

The proposal also includes a loss scalar that can adjust the operational-risk charge up or down in response to realized losses. In addition, the Fed would require covered issuers to keep eligible reserve assets with a fair value at least equal to the par value of their outstanding coins.