Federal Reserve Proposes Stablecoin Rules Under the GENIUS Act

The Federal Reserve Board proposed two rules on September 24 to implement the GENIUS Act for payment stablecoin issuers, seeking public comment on a framework that would require issuers to fully back their tokens with permissible reserve assets and set new capital and risk-management standards. The proposals, released at 2:30 p.m. Eastern time, mark the central bank’s latest step to put its portion of the U.S. stablecoin law into effect and give banks a clearer path into the business of issuing dollar-pegged tokens. The move hands banks and issuers a first concrete look at how the Fed intends to supervise a market that has grown into a core piece of digital-asset plumbing.

Full reserve backing and capital standards

The first proposal would require Board-supervised payment stablecoin issuers to hold reserve assets whose value fully covers their outstanding coins at all times. Permissible reserves would include short-term Treasury bills and certain other high-quality, liquid assets. Issuers would also face standardized capital requirements to address the credit and operational risks of payment stablecoin activities, as well as risk-management standards set out under the law. The same proposal would introduce rules for Board-supervised firms that safekeep the assets backing payment stablecoins and clarify the permissibility of stablecoin and related activities for Board-supervised banks.