Federal Reserve Proposes New Regulatory Framework for Stablecoins

The Federal Reserve Board requested public comment on Thursday regarding two proposals to establish a regulatory framework for payment stablecoin issuers. These proposals are mandated by the GENIUS Act and aim to standardize the operational and financial requirements for firms issuing digital assets.

The first proposal requires Board-supervised issuers to fully back stablecoins with permissible reserve assets, including short-term Treasury bills and other high-quality liquid assets. This framework introduces standardized capital requirements to mitigate credit and operational risks, establishes risk management standards, and creates specific rules for firms responsible for safekeeping backing assets.

The second proposal outlines a tailored application process for Board-supervised banks that intend to issue payment stablecoins. Under these rules, banks must submit detailed business plans and financial data for review. The Federal Reserve will accept public comments on both proposals for 60 days following their publication in the Federal Register.