$Genius Act: Fed Proposes Stablecoin Reserve Rules for Board Supervised Firms

The Federal Reserve has proposed new rules for stablecoin issuers under its supervision, advancing implementation of the $GENIUS Act's regulatory framework. The proposals would require stablecoins issued by Board supervised firms to be fully backed by permitted reserve assets, including short-term Treasury bills and other high-quality liquid assets.

The Fed is also proposing standardized capital requirements covering credit and operational risks associated with stablecoin activities, alongside broader risk management standards. This would apply to banks that safeguard stablecoin reserve assets, clarifying which stablecoin-related activities are permitted for banks under its supervision.

The second proposal establishes a tailored application process for Board supervised banks seeking approval to issue payment stablecoins. Banks would need to submit information including a business plan and financial documentation, with procedures established for appeals, hearings, and final decisions on stablecoin applications.