Fed proposes reserve and capital rules for stablecoin issuers under GENIUS Act

The Federal Reserve has proposed new rules for payment stablecoin issuers under its supervision, advancing implementation of the GENIUS Act’s regulatory framework. The first proposal would require stablecoins issued by Board supervised firms to be fully backed by permitted reserve assets, including short term Treasury bills and other high quality liquid assets. It would also establish standardized capital requirements covering credit and operational risks associated with stablecoin activities, alongside broader risk management standards. The Fed is separately proposing requirements for firms that safeguard stablecoin reserve assets and would clarify which stablecoin related activities are permitted for banks under its supervision. A second proposal would establish a tailored application process for Board supervised banks seeking approval to issue payment stablecoins. Banks would need to submit information including a business plan and financial documentation. The framework would also establish procedures for appeals, hearings and final decisions on stablecoin applications. The proposals build on earlier GENIUS Act implementation efforts by federal banking regulators. In June, the F...