Federal Reserve Proposes Rules for Bank-Issued Stablecoins

Federal Reserve Details Stablecoin Framework

The Federal Reserve on Thursday proposed a set of rules governing payment stablecoins issued by banks. The framework centers on a 1:1 backing requirement: for every dollar of stablecoins in circulation, issuers must hold at least one dollar of permissible reserves.

Redemption of stablecoins for fiat currency would generally need to be available to customers within two business days. The proposal also addresses capital requirements for issuers, stating that those failing to meet them could face forced liquidation. The rules effectively operationalize the 'dollar test' outlined in the GENIUS Act, a bipartisan bill aimed at clarifying the regulatory status of stablecoins.

The proposed regulations are open for public comment for 60 days. While the specifics apply to bank-issued stablecoins, the framework signals the Fed's broader intent to establish a comprehensive regulatory regime for the asset class. The move comes as regulators globally grapple with the systemic risks posed by the rapid growth of stablecoins and their potential impact on financial stability.

The details released Thursday are more granular than previous statements from the Fed, offering concrete requirements for reserve composition, redemption processes, and capital adequacy. The proposal will likely draw scrutiny from both industry participants and lawmakers as they assess its potential impact on innovation and market access.

Source: Bitcoin.com News