Fed proposes new capital, redemption rules for stablecoin issuers

The Federal Reserve has proposed capital, redemption and other regulatory requirements for stablecoin issuers under its supervision as it moves to implement the GENIUS Act.

The GENIUS Act already requires stablecoin issuers to maintain reserves backing their tokens on a one-to-one basis and limits the types of assets they can hold, including cash, bank deposits and short-term US Treasurys. The law left federal regulators to establish more detailed capital, reserve-diversification and risk-management requirements.

Under the Fed proposal, issuers would face an operational-risk capital charge equal to 2% of the first $20 billion in stablecoins outstanding, 1.5% of the next $30 billion and 1% of amounts above $50 billion, along with additional capital requirements tied to credit and operational risks.

Issuers would generally be required to process redemptions within two business days. If reserves fall below the required one-to-one backing, an issuer would have to notify the Fed and either restore its reserves under a remediation plan or liquidate them and redeem outstanding stablecoins.

Issuers would also have to publish monthly reports detailing their outstanding stablecoins and the value and composition of their reserves. The disclosures would have to be examined by a registered public accounting firm and certified by the issuer’s CEO and CFO.