Fed Unveils New Stablecoin Rules Under GENIUS Act

The U.S Federal Reserve has proposed two sets of rules to govern payment stablecoin issuers and banks under its supervision, as part of the GENIUS Act. The proposals aim to establish standards for reserve assets, capital requirements, risk management, and compliance.

Under the first proposal, Fed-supervised payment stablecoin issuers would be required to fully back their issued stablecoins with permitted reserve assets, such as short-term U.S Treasury bills and other high-quality, liquid assets. This is intended to ensure that holders can redeem their stablecoins for their underlying value during periods of market stress.

The proposal also introduces standardized capital requirements for supervised stablecoin issuers, which would serve as an additional financial cushion to absorb losses arising from credit and operational risks. Issuers would be required to follow risk-management standards designed to address the risks associated with running payment stablecoin businesses.

The second proposal focuses on Fed-supervised banks that want to issue their own payment stablecoins. These institutions would have a tailored application procedure, requiring applicants to provide information such as a business plan and financial data for assessment by the Fed.

The comment period for public feedback will close 60 days after the proposals are published in the Federal Register. The development coincides with the one-year anniversary of President Donald Trump signing the GENIUS Act.