Fed Proposes Full Reserve And Capital Rules For US Stablecoin Issuers

The useful part

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.

How it works

• That is important because the legal framework created by Congress still needs to become something institutions can actually operate under.
• The framework would also create formal processes for decisions, h...
• 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.

What to take from it

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.

Details worth keeping

A law can establish the broad permission to issue regulated stablecoins.