Federal Reserve proposes full-reserve and capital rules for payment stablecoin issuers
- The Federal Reserve proposed two rulemaking packages under the GENIUS Act for payment stablecoin issuers.
- Board-supervised issuers would have to fully back tokens with permitted reserve assets and meet standardized capital and risk-management requirements.
- The proposals are open for public comment for 60 days and are not final rules.
ID: N25-01
Site: NewsBTC
Status: READY
Author: NewsBTC Editorial Team
Focus Keyword: Stablecoin
Image Keyword: Regulation
Category: Regulation
Tags: Federal Reserve, Stablecoins, GENIUS Act, Banking, Regulation
Primary Source: https://www.federalreserve.gov/newsevents/pressreleases.htm
Stablecoins Would Need Full Reserve Backing
Under the first proposal, Board-supervised payment stablecoin issuers must fully back outstanding tokens with permitted reserve assets. The Federal Reserve cites short-term Treasury bills and other high-quality liquid assets as qualifying reserves. Standardized capital requirements would address credit and operational risks. Broader risk-management standards and rules would apply to firms safeguarding stablecoin reserve assets. For banks already under Federal Reserve supervision, the proposal would clarify permissible stablecoin-related activities. Congress established a statutory framework under the GENIUS Act. Institutions require operational detail on reserve composition, capital, custody and supervision to launch products at scale.
Banks Would Get A Dedicated Application Process
The second proposal creates an entry process for Board-supervised banks that seek to issue payment stablecoins. Applicants would submit a business plan and financial information. The framework defines formal processes for decisions, hearings and appeals. The Federal Reserve opened a 60-day public comment period following Federal Register publication. Governor Michael Barr supported the direction and emphasized clear redemption rights and strong safeguards. Redemption at par during stress is a key detail for dependable digital cash. The GENIUS Act set the legal basis. The Federal Reserve is now defining the practical standards for regulated stablecoin issuance.
This article was written by the News Desk and edited by Samuel Rae.
