Fed Proposes Full Reserve and Capital Rules for US Stablecoin Issuers

Proposed Reserve Backing Requirements

The Federal Reserve has unveiled two rulemaking packages that would apply to payment stablecoin issuers overseen by the Board under the GENIUS Act. Under the first proposal, issuers would be required to fully back every outstanding token with permitted reserve assets. The Fed cites short‑term Treasury bills and other high‑quality liquid assets as examples of qualifying reserves.

In addition to the 100 % backing rule, the proposal introduces standardized capital requirements intended to cover credit and operational risks. It also sets out baseline risk‑management standards and specific rules for how firms must safeguard the reserve assets that back the tokens.

Application Process for Banks

The second proposal tackles the entry point for banks that wish to issue payment stablecoins. Any Board‑supervised bank would need to submit a formal application containing a business plan, financial projections and details on its intended reserve composition. The framework would establish clear procedures for review, public hearings and appeals.

For banks already under Federal Reserve supervision, the proposals would also clarify which stablecoin‑related activities are permissible, giving institutions a concrete operational framework to move beyond the broad permission granted by Congress.

Next Steps and Commentary

The rules are not yet final; a 60‑day public comment period will begin once the proposals are published in the Federal Register. Governor Michael Barr expressed support for the direction of the rules while stressing the need for clear redemption rights and strong safeguards for users. The GENIUS Act created the statutory foundation, and the Fed is now working to define what regulated stablecoin issuance looks like in practice.

Source: NewsBTC