Fed Proposes Full Reserve And Capital Rules For US Stablecoin Issuers
The Federal Reserve has proposed two new rulemaking packages for payment stablecoin issuers under the GENIUS Act. Board-supervised issuers would have
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The Federal Reserve has proposed two new rulemaking packages for payment stablecoin issuers under the GENIUS Act.
Board-supervised issuers would have to fully back tokens with permitted reserve assets and meet standardized capital and risk-management requirements.
The proposals are not final rules yet, with a 60-day public comment period ahead.
Tags: Federal Reserve, Stablecoins , GENIUS Act, Banking, Regulation
Primary Source: https://www.federalreserve.gov/newsevents/pressreleases.htm
Under the first proposal, Board-supervised payment stablecoin issuers would have to back their outstanding tokens fully with permitted reserve assets.
The Fed specifically points to short-term Treasury bills and other high-quality liquid assets as the sort of reserves that could qualify.
It also wants standardized capital requirements aimed at covering credit and operational risks, alongside broader risk-management standards and rules for firms safeguarding stablecoin reserve assets.
For banks already under Federal Reserve supervision, the proposal would also clarify which stablecoin-related activities are permissible.
That is important because the legal framework created by Congress still needs to become something institutions can actually operate under.
A law can establish the broad permission to issue regulated stablecoins. Banks still need detailed answers about reserve composition, capital, custody and supervision before launching products at scale.
Banks Would Get A Dedicated Application Process
The Fed’s second proposal deals with that entry point.
Board-supervised banks seeking to issue payment stablecoins would have to submit an application including a business plan and financial information.
The framework would also create formal processes for decisions, hearings and appeals.
The Federal Reserve is seeking public comment, with the comment period closing 60 days after publication in the Federal Register.
Governor Michael Barr backed the direction of the proposal while emphasizing the need for clear redemption rights and strong safeguards.
That debate is likely to become one of the important details.
A stablecoin only behaves like dependable digital cash if holders believe they can get their dollars back at par even during stress.
The GENIUS Act created the statutory framework.
The Fed is now starting the much harder work of deciding what regulated stablecoin issuance actually looks like in practice.
*This article was written by the News Desk and edited by Samuel Rae.*
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