Business & Markets
Fed proposes reserve and capital rules for stablecoin issuers
The proposals would require eligible issuers to fully back payment tokens with permitted assets and set a separate approval path for banks. No final rule was adopted Thursday.
Executive summary
- The action: The Federal Reserve Board requested public comment on two proposed rules for payment stablecoin issuers it supervises under the GENIUS Act.[1][2]
- Issuer standards: One proposal would require full backing with permitted liquid assets, standardized capital for credit and operational risks, risk management standards and rules for reserve-asset custody.[1]
- Bank applications: The other would establish an application process for Board-supervised banks seeking to issue payment stablecoins, including a business plan and financial information.[1]
- What follows: Both measures are proposals. Comments are due 60 days after their Federal Register publication, which leaves the calendar deadline dependent on that publication date.[1]
The Federal Reserve Board on Thursday put forward two proposals for payment stablecoins under the GENIUS Act, moving to define how issuers subject to its supervision would hold reserves, manage risk and seek approval. The measures are open for public comment and do not yet impose final new requirements.[1][2]
The first proposal would require those issuers to back their tokens fully with permitted reserve assets, including short-term Treasury bills and other high-quality liquid assets. It would add standardized capital requirements addressing credit and operational risks, risk-management standards and requirements for Board-supervised firms that safekeep backing assets. It would also clarify which stablecoin-related activities Board-supervised banks may undertake.[1]
The second proposal would create a tailored process for Board-supervised banks applying to issue payment stablecoins. Applications would include a business plan and financial information, and the proposed procedure covers appeals, hearings and final determinations. Reuters reported that the proposals implement the federal framework established by last year's GENIUS Act; their immediate reach is the firms the Board supervises, rather than every stablecoin issuer.[1][2]
Reserve quality, capital and custody matter because a token meant to maintain a dollar value depends on its issuer's ability to honor redemptions. The Board says comments will close 60 days after the proposals appear in the Federal Register. Until publication sets that clock and the Board adopts final rules, the requirements and their final form remain unsettled.[1]