Fed Unveils Stablecoin Rules with Reserve, Capital Requirements

The Federal Reserve has proposed new rules for stablecoin issuers under the GENIUS Act. The proposal sets reserve and capital requirements, as well as an application process for banks that want to issue stablecoins through a subsidiary.

The rules would cover subsidiaries of insured state member banks approved to issue stablecoins, and uninsured state-chartered issuers with at least $10 billion in stablecoins outstanding that move under Fed oversight. Issuers would need reserves worth at least the par value of their outstanding tokens at all times, and redemptions would have to be completed within two business days.

The operational risk capital charge would scale down as an issuer grows: 2% on its first $20 billion in stablecoins, 1.5% on the next $30 billion, and 1% on anything above $50 billion. A second charge would equal 25% of an issuer’s three-year average revenue from activities outside its reserves.

The proposal also bars issuers from paying interest or yield solely for holding a stablecoin, mirroring a previous proposal from the Office of the Comptroller of the Currency. Governor Michael Barr questioned an anti-money laundering standard that would let the Fed act on an issuer’s lapse only if it is “significant or systemic.”