Fed Moves to Tighten Stablecoin Rules With Two New GENIUS Act Proposals

Public comments on the Fed's two stablecoin proposals will remain open for 60 days after publication in the Federal Register. The Federal Reserve has proposed two rules to help establish oversight for stablecoin issuers under the Guiding and Establishing National Innovation for US Stablecoins (GENIUS) Act. The proposals were announced by the central bank on Thursday and opened for public comment. Stricter Stablecoin Oversight The first proposal would require payment stablecoin issuers supervised by the Fed to fully back their tokens with approved reserve assets. These include short-term US Treasury bills and other high-quality liquid assets. The proposal also sets capital requirements for credit and operational risks. It would add risk management standards for stablecoin activities. The institution also proposed rules for firms that hold assets backing stablecoins. The rules would clarify which stablecoin activities are allowed for banks supervised by the Fed. The second proposal, meanwhile, focuses on applications from supervised banks seeking to issue payment stablecoins. Banks would need to provide business plans, financial information, and other documents. The proposal also cov...