Fed Proposes Reserve and Application Rules for Stablecoin Issuers

The Federal Reserve Board is asking for public comment on two proposals that would establish a regulatory framework for payment stablecoin issuers it supervises under the GENIUS Act. The measures are proposed rules, not current final requirements.

Backing, capital and custody

The first proposal would require supervised issuers to fully back their stablecoins with permitted reserve assets, including short-term Treasury bills and certain other high-quality, liquid assets. It would add standardized capital requirements for credit and operational risks, along with risk-management standards.

That proposal would also set rules for Board-supervised firms that safeguard the assets behind payment stablecoins. In addition, it would clarify which stablecoin and related activities are permitted for banks under the Board's supervision.

A separate path for bank applications

The second proposal would create a tailored application process for Board-supervised banks seeking approval for a subsidiary to issue payment stablecoins. Applicants would have to provide a business plan, financial information and other documents. The process would also address appeals, hearings and final determinations.

Comments will remain open until 60 days after the proposals are published in the Federal Register. The Federal Reserve did not give a fixed calendar deadline in its announcement because the closing date depends on that publication event. The final framework could change after comments are considered.